Gray Rohrer
The changes made by lawmakers to limit insurance lawsuits are working, driving down legal battles over claims and reducing payouts, Citizens Property Insurance Corp. officials said. But that doesn’t mean rates are going to drop.
That’s because Citizens, a state-run company, has its annual rate increases capped by state law. As Board members noted, its current rates aren’t “actuarially sound” — any massive hurricane that wipes out its surplus could trigger assessments on its policies, and potentially all policies in Florida.
During a December 2022 Special Session, lawmakers passed SB 2A, which eliminated one-way attorneys fees and assignment of benefits contracts, which insurers said incentivized frivolous claims and lawsuits, leading to large losses. The move came after seven companies went under over an 18-month span and rates skyrocketed for homeowners across the state.
Within the last year, eight property insurers have been approved by regulators to do business in Florida, a sign that both the Office of Insurance Regulation (OIR) and Citizens officials have underlined to show the Legislature’s reforms are working.
Another sign is the number of pending lawsuits for Citizens, which fell from 20,863 in December 2022 to 17,762 in January 2024.
But rates aren’t going to drop automatically, Citizens Vice Chair Scott Thomas said.
“It’s a very important thing that we get the message out that things are looking better but they do take time,” Thomas said. “There’s a certain level of criticism that, ‘Well we did away with the one-way attorney fees on Monday and rates didn’t go down on Tuesday.’ Well that’s not quite how it works.”
In December, OIR approved a rate increase of 10.7% for Citizens’ homeowner policies for primary residences and 38.8% for non-primary residences.
The drop in litigation needs to continue before rate relief is felt, and it’s unlikely to come until Citizens’ rates are increased to an actuarially sound level, Citizens’ Chief of Communications, Legislative and External Affairs Christine Ashburn said.
“Our rates going down isn’t going to be the reflection of what’s going on in the market because our rates aren’t where they’re supposed to be anyways,” Ashburn said. “Our overall rate need might come down but we aren’t going to be wholesale reducing rates because of these reforms right now.”
Board members also asked Ashburn about possible further legislative action next year. She said it could be a Session to “play defense” and consolidate the gains of SB 2A from attempts to reinsert a form of one-way attorneys fees into state law.
“We will probably see efforts to … whittle away at those reforms,” Ashburn said. “We just have to make sure there aren’t efforts to take away what was gained.”
