Insurance regulators are considering a cap
on Citizens homeowners policies
Article Courtesy of WUSF Public Media
By Jim Saunders
September 7, 2022
With homeowners struggling to find coverage,
insurance regulators are looking at the possibility of lifting a
$700,000 cap on policies sold by the state-backed Citizens Property
Citizens is barred by law from providing
what is known as a “replacement cost” coverage of more than
$700,000 for homes, except in Miami-Dade and Monroe
counties, where the limit is $1 million.
But as Florida’s property-insurance market has crumbled and
home values have soared, many homeowners have been dropped
by private insurers and cannot qualify for Citizens coverage
because of the $700,000 cap.
Susanne Murphy, a deputy commissioner at the Florida Office
of Insurance Regulation, said during a Citizens committee
meeting Wednesday that regulators are analyzing whether they
could increase 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 finding is what allowed the $1 million
coverage limit in Miami-Dade and Monroe counties.
“Whether there’s enough data to support that finding is what
we’re trying to determine,” 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 that the data that we’ve looked at thus
far is not as clear as it was years ago.”
Hurricane Michael caused massive damage and insurance
losses n 2018 in Northwest Florida.It would lift a $700,000 cap on
policies as homeowners struggle to find coverage.
Committee member Lee Gorodetsky, a South Florida
insurance agent, said “clients can’t even squeeze into Citizens
insurance, even though they want to or need to.” That has resulted, for
example, in homeowners having to turn to what is known as surplus-lines
coverage, which is largely unregulated and can include more conditions
Murphy, a member of the Citizens committee, said it will probably take
another month before regulators decide on whether to lift the cap.
The discussion about the cap is more fallout from the troubled private
insurance market, as carriers have shed policies and sought large rate
increases to try to curb financial losses. Since February, five insurers
have been deemed insolvent and placed into receivership.
Citizens, which was created as an insurer of last resort, has been
flooded with policies during the past two years. As of Friday, it had
about 1.02 million policies. By comparison, it had 499,056 policies on
Aug. 31, 2020, and 687,079 policies on Aug. 31, 2021, according to data
posted on its website.
The coverage cap also is tangled in longstanding efforts by state
leaders to have homes insured in the private market, rather than by
Citizens. Those efforts, in part, stem 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 increasing 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 do not 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 sales price for
existing single-family homes of $595,000 in July, according to the
industry group Florida Realtors. In the area that includes Naples,
Immokalee and Marco Island, the median sales price was $748,270.