Citizens Expects to No Longer Be Florida’s Top Insurer

A growing number of policyholders in Florida are dropping their Citizens’ insurance plans for the private market.

Citizens is the insurer of last resort in Florida. If you can’t buy insurance from the private market, you can buy it through Citizens.

Florida’s insurance market was in freefall over the past decade as insurers abandoned the state because of rising litigation costs and an increased risk of disasters.

Florida’s insurance freefall, however, may have stopped; with litigation rates dropping, more insurers are entering the marketplace, giving homeowners more options and allowing them to drop Citizens.

Citizens Expects a 50% Drop from Peak Levels

According to Tim Cerio, Citizens’ president and CEO, as reported by The Palm Beach Post, Citizens expects to have slightly more than half the number of policyholders it had at its peak.

In September 2023, Citizens had approximately 1.4 million policyholders. By the end of 2025, Citizens expects to have around 738,000 policyholders.

In other words, Citizens is forecasting a roughly 50% drop from Florida’s peak insurance freefall.

That marks a big shift in Florida’s insurance market. In some high-risk counties, Citizens insures virtually all properties.

In Monroe County, for example, virtually all properties have insurance through Citizens. Broward, Palm Beach, and Miami-Dade counties, meanwhile, also have thousands of Citizens policyholders.

How Citizens Works

Like most states, Florida offers an “insurer of last resort” to citizens.

If you’re unable to obtain insurance through the open marketplace, then you can buy it through Citizens.

As the insurer of last resort, Citizens is funded by the government to insure homeowners and business owners across Florida.

Let’s say you live in a flood-prone, hurricane-prone region of Florida, like Monroe County. Private insurers believe it’s too risky to provide insurance. They either charge excessively high rates to policyholders or deny new policies entirely. Homeowners still want to live in these areas, so Citizens steps in to offer insurance as a last resort.

Why the Freefall Stopped

As The Palm Beach Post explains, Florida’s insurance market was in a “freefall” for years because of excessive litigation, increased severity of natural disasters, and overall greater risk.

Citizens stepped in to shoulder that risk, but private insurers believe things have changed.

What’s changed? Why is Florida’s insurance market no longer in freefall?

According to Tim Cerio of Citizens, “litigation is really down,” giving companies a greater appetite for regions they previously would have avoided.

Policyholders aren’t suing insurers as often as they used to, reducing costs for policyholders.

In 2021, Florida recorded 100,000 lawsuits against insurers.

In 2024, that number is expected to drop to 57,120 – the lowest number of lawsuits against insurers since 2017.

Legislative Changes Make it Harder to Sue Insurance Companies

Cerio praises legislative changes – not policyholders – for the difference in litigation.

Over the last few years, Florida lawmakers have filed dozens of bills aimed at reducing homeowners insurance premiums. One of the best ways to reduce premiums is to reduce the number of lawsuits.

Some of the legislative changes introduced or proposed in Florida include:

• On March 24, 2023, Florida Governor Ron DeSantis signed HB 837 into law. HB 837 makes it harder to sue insurers for bad faith.
• Typically, policyholders sue insurers for bad faith if they drag their feet, fail to investigate a claim adequately, or deny a claim without good reason.
• Under HB 837, however, insurers can avoid bad faith claims via various methods. As Printy Law Firm explains, HB 837 states “negligence alone” doesn’t constitute bad faith, for example. It makes the requirements for a bad-faith lawsuit more complicated.
• HB 837 also allows insurers to avoid a bad faith insurance claim if they tender “the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim.”
• The Florida legislature voted to repeal the no-fault auto insurance system in 2021, which restricts a policyholder’s ability to sue the at-fault party after an accident. Ron DeSantis vetoed that bill, stating the repeal could have unintended consequences for consumers and the overall insurance market. However, lawmakers aim to continue trying to repeal the no-fault auto insurance system in 2025, arguing it leads to higher rates for Florida drivers.

Other Ways Florida is Trying to Lower Homeowners Insurance Premiums

In addition to legislative changes restricting the right to sue insurers, Florida lawmakers have proposed various solutions to Florida’s high-priced insurance market in general.

Florida has the highest insurance prices in the United States – and it’s not even close.

According to the National Association of Realtors, the average homeowner in Florida pays $11,759 per year for homeowners insurance.

The next costliest states are Louisiana ($7,809), Oklahoma ($5,711), Texas ($4,437), and Mississippi ($4,482).

Florida lawmakers have proposed various ways to lower insurance premiums, including:

• SB 1740 would require insurance carriers in Florida to carry reserves worth at least $35 million more than needed to cover policyholder obligations.
• Executives involved with insurance companies that were unable to pay their debts would be prevented from joining another insurer in a similar role within five years.
• Florida has proposed providing $10,000 hurricane mitigation grants to act as a property insurance credit or discount.
• One Florida senator proposed giving Florida’s Legislature the authority, via resolution SJR 1190, to freeze property taxes for homeowners who install certain mitigation methods – say, elevating their homes to reduce the risk of flood damage.
• Other Florida lawmakers submitted SB 1656 / HB 1429, which would require insurers to disclose fees paid to affiliates. A 2022 report found Florida insurers were paying billions of dollars to out-of-state affiliates.
• Under that same proposal, insurers would need to tell the policyholder how much of their insurance premium is going towards litigation, reinsurance, and affiliate fees.

Despite the doom and gloom, insurers continue to enter Florida’s marketplace, giving homeowners more options on the private market and helping them avoid using Citizens as their insurer of last resort.