The longtime head of Florida’s state-created property insurer contended on Wednesday that Citizens Property Insurance needs to increase its rates at a much swifter pace than currently allowed by law.
Barry Gilway, President and CEO of Citizens, maintained that the current rate structure for insurers is “not sustainable” and that Citizens rates are moving further and further out of line with other carriers that have resorted to significant rate hikes as Florida’s overall residential insurance market continues to teeter.
“We’re not supposed to be the cheapest on the street,” Gilway told members of the House Insurance and Banking Subcommittee.
Citizens was established as a so-called insurer of “last resort,” designed as a place for homeowners who couldn’t find coverage or needed some protection from hurricanes and wind damage.
But Citizens has seen its size ebb and flow amid ongoing turmoil and disruptions in the Florida insurance market, which has been impacted by everything from hurricanes blasting the state to ongoing litigation over claims. Former Gov. Rick Scott made a concentrated push to reduce the size of Citizens.
The carrier, however, now has more than 700,000 policyholders and likely will make up 10% of the market by the end of the year, Gilway said. He said Citizens expects to continue to grow in the coming year.
State law, however, caps how much Citizens can raise its rates every year, as opposed to allowing the carrier to file for rates based on its potential exposure.
Gilway told legislators that right now, 91% of Citizens homeowners policy customers pay less than the average charged by competitors. He stressed that the rate imbalance was most acute in places such as Pinellas County and St. Petersburg.
Gilway was asked about eliminating the current rate cap, often called the “glide path.”
While he said it was something he supported, Gilway also said, “is it the time to do it today?”
He suggested that it would be a “balancing act” since many other insurers at work in Florida are under stress.
Gilway also testified he would favor eliminating an “opt-out” clause in state law that allows customers to remain in Citizens even if they get an offer to switch to another carrier.