Citizens Insurance Coverage Cap Reviewed

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Citizens Property Insurance Corporation website.

As homeowners struggle to find coverage, insurance regulators are considering lifting a $700,000 cap on policies sold by the state-backed Citizens Property Insurance Corp.

Citizens are prohibited by law from providing so-called “replacement cost” coverage over $700,000 for homes, except in Miami-Dade and Monroe counties, where the limit is $1 million. of dollars.

But as Florida’s property insurance market crashed and home values ​​skyrocketed, many homeowners were let go by private insurers and couldn’t get citizen coverage due to the $700,000 limit.

Susanne Murphy, assistant commissioner at the Florida Office of Insurance Regulation, said at a citizens’ committee meeting Wednesday that regulators are analyzing whether they could raise the $700,000 cap in at least some counties.

State law would allow such a move if regulators determine that “there is not a reasonable degree of competition” in the counties. Such a discovery is what enabled the $1 million coverage limit in Miami-Dade and Monroe counties.

“We are trying to determine if there is enough data to support this conclusion,” Murphy told members of the Citizens Market Accountability Advisory Committee. “The last time we did this (with Miami-Dade and Monroe) it was pretty clear…and I think the data we’ve looked at so far isn’t as clear as there is. years.”

Committee member Lee Gorodetsky, a South Florida insurance agent, said “customers can’t even sneak into citizens’ insurance, even if they want or need to.” This has, for example, forced owners to turn to so-called surplus line coverage, which is largely unregulated and can include more conditions on policies.

Murphy, a member of the citizens’ committee, said it will likely be another month before regulators decide whether or not to lift the cap.

The cap discussion has more to do with the fallout from the struggling private insurance market as insurers dumped policies and sought steep rate increases in an attempt to limit financial losses. Since February, five insurers have been declared insolvent and placed in receivership.

Citizens, which was set up as an insurer of last resort, has been inundated with policies over the past two years. As of Friday, it had about 1.02 million fonts. By comparison, it had 499,056 fonts as of Aug. 31, 2020, and 687,079 fonts as of Aug. 31, 2021, according to data posted on its website.

The coverage cap is also entangled in longstanding efforts by heads of state to have homes insured in the private market, rather than by citizens. These efforts stem in part from concerns about financial risks if the state is hit by a major hurricane or multiple hurricanes.

Citizens Policies had a $2 million coverage cap until lawmakers in 2013 passed a measure to gradually reduce it, with the $700,000 limit in place since 2017. Murphy said the increase the $1 million cap in Miami-Dade and Monroe counties — and potentially other counties — would require the legislature to change state law.

Home values ​​vary in different parts of the state, and most don’t exceed $700,000. But the cap issue has drawn particular attention in high-value areas such as Broward and Palm Beach counties.

As an example, the metropolitan statistical area that includes Miami, Fort Lauderdale and West Palm Beach had a median sale price for existing single-family homes of $595,000 in July, according to industry group Florida Realtors. In the area that includes Naples, Immokalee and Marco Island, the median sale price was $748,270.

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