Wind Insurance - Citizens

Wind insurance affordability is a critical need for our constituents and a key component in preserving housing affordability and the Keys’ strong local economy that is a valuable economic engine for the State. 

High insurance costs and limited coverage negatively impact our citizens, our workforce, our property values, and our economy. Monroe’s already high rates are compounded with annual increases. These costs exacerbate the County’s affordable housing crisis.

Addressing this issue requires working with and monitoring Citizens Property Insurance Company’s coverage of windstorm insurance to find ways to preserve and enhance affordability (and with the Office of Insurance Regulation to address annual rate increases) and to oppose efforts to increase premiums, reduce coverage, and reduce eligibility.

Citizens Property Insurance Company (“Citizens”)

The vast majority of properties in Monroe County have wind insurance coverage through Citizens Property Insurance Company.   

  • Citizens Property Insurance Company (“Citizens”) was created in 2002 by the Florida legislature to provide wind insurance (and general property insurance) for homeowners in high-risk areas who aren’t able to obtain insurance coverage in the open, private insurance market.  It is a government-owned, not-for-profit, insurer of last resort.
  • Citizens is governed by an 8-member Board of Governors that administers its Plan of Operation. The Governor, Senate President, House Speaker, and CFO each appoint reps to the Board. Citizens is subject to regulation by the Florida Office of Insurance Regulation (OIR.)

Citizens and the Florida Legislature

The Florida Legislature and the governing board of Citizens continue to express the need to increase premiums. Some even advocate eliminating the rate cap altogether. Additionally, they continually seek ways to “depopulate” insureds from Citizens by restricting eligibility (home values over a certain amount) or pushing insureds into “take out” private insurance companies (that are not subject to the cap on annual increases.) 

These recent legislative actions demonstrate the constant pressure exerted on Citizens' premiums and eligibility.  

  • During the 2021 Legislative session, lawmakers passed a bill to increase Citizens’ annual rate cap (for the first time since 2010) to 11 percent in 2022, and an additional 1 percent each year for the next 5 years. 
  • During the 2022 Legislative session, lawmakers sought (but ultimately failed to pass) legislation to increase surcharges on Citizens policyholders, remove non-primary residences from the rate cap protections, force take-outs for offers up to 20 percent higher than the current Citizens' premium, and allow take-outs by surplus lines insurers (unregulated, and often undercapitalized companies.) 

Citizens and Monroe County 

Monroe’s insureds pay the highest wind premiums in the State despite a number of factors that should work to lower our premiums:

Wind insurance premiums are unjustifiably highest in Monroe: Monroe’s residential and commercial Citizens’ wind insurance rates are the highest in the State. Monroe’s premium rate is 175 percent higher than the median coastal rate. Our rates have doubled over the past 10 years.

Premiums paid by insureds far exceed claims payouts: Premiums charged by Citizens are not commensurate with actual risk, as indicated by the following:

  • From 2004-2019 Monroe insureds paid in total more than $800M in premiums over claims.  
  • There has never been a single year – including 2017, Hurricane Irma – in which Monroe’s claims exceeded its premiums paid.
  • Monroe Citizens an average of $50M in profit annually. This is the highest profit rate in the State, at twice the state average.

Monroe’s building standards justify lower premiums: Monroe County’s building standards are among the most rigorous in the State, yet this is not reflected in Citizens’ rate calculations for Monroe. 

Modeling used is unfavorable to Monroe: Despite dramatic differences in projected losses for Monroe County from the various rating models, Citizens until this year used only the model most unfavorable to the County to apply statewide increases to Monroe. Catastrophe model loss projections do not incorporate local building codes.

Monroe County is NOT a contributor to Statewide issues that drive up costs for Citizens: Monroe’s insureds cost Citizens $0 in AOB abuse, $0 in sinkhole losses, and is not a contributor to the more recent spate of fraudulent and frivolous lawsuits related to roof replacements underpinning the latest property insurance crisis in the State.

Citizens statute requires affordability: Property insurance affordability is a key component in preserving the Keys’ strong local economy. The legislature recognized the importance of affordable property insurance, but Citizens has failed to apply an “affordability” definition or standard beyond capping annual increases to 10 percent (now 11 percent).

Citizens Property Insurance Corporation statute reads: “The absence of affordable property insurance threatens the public health, safety, and welfare and likewise threatens the economic health of the State. The State, therefore, has a compelling public interest and a public purpose to assist in assuring that property in the State is insured and that it is insured at affordable rates so as to facilitate the remediation, reconstruction, and replacement of damaged or destroyed property in order to reduce or avoid the negative effects otherwise resulting to the public health, safety, and welfare, to the economy of the State, and to the revenues of the State and local governments which are needed to provide for the public welfare.” 

Monroe’s Legislative Advocacy

The preservation of affordable wind insurance is one of the Monroe County Board of County Commission’s highest state legislative priorities. Its current positions include:

  • SUPPORT for a legislative carve-out for Monroe County that reduces the Citizens’ annual rate increase maximum from 10 percent to a COLA-based annual increase, recognizing Monroe’s unique affordability issues, strong building codes, and overall importance to the State of Florida. 
  • SUPPORT for legislation that exempts Monroe County from the annual wind insurance rate increase passed last session (11-15 percent over the next five years) and maintaining the County’s rate cap at 10 percent, recognizing Monroe’s unique housing affordability issues and strong building codes. 
  • SUPPORT for legislation to help lower premiums and annual rate increases by requiring Citizens to: 
    1. Apply mitigation credits that account for Monroe’s rigorous building standards; 
    2. Apply an affordability definition or standard, per the statutory language mandating affordability.
  • OPPOSE legislation that limits eligibility and availability of Citizens’ coverage (particularly in areas such as Monroe, where there is no reasonable degree of competition for windstorm insurance.) 

Fair Insurance Rates for Monroe (FIRM)

Monroe County works closely with FIRM, a highly effective Monroe County-based property insurance advocacy organization to protect and preserve the insurance interests of Monroe’s constituents. More information can be found at their website:

Insurance Issues 2012-Present

Builder’s Risk Reinstated (2013)

  • Builders Risk insurance protects policyholders during construction/renovation and while in other areas, there are often affordable private market alternatives to a policy with Citizens, that is not the case in the Florida Keys
  • In response to a request from the Governor’s Cabinet, Citizens eliminated Builder’s Risk policy options from both their personal and commercial lines in 2012
  • This led to a situation where individuals who had been waiting years for a building permit (because of our permit allocation system) could not afford the insurance necessary to begin building/renovating
  •  Additionally, if someone wanted to purchase a property that needed renovation (like so many of our older homes do), they were unable to find affordable coverage for the construction phase (coverage that any mortgage lender requires unless you are paying cash for your house)
  • In February of 2013, Rep. Raschein sent a letter to Citizens highlighting the lack of private market competition for wind coverage for properties under construction in Monroe County
  • As a result, Citizens restored their Builders Risk coverage

Addition of a Structural Engineer to the Florida Commission on Hurricane Loss Projection Methodology “The Commission” (2013 Session)

  • The Commission is responsible for evaluating the models used by insurance companies to determine our rates
  • Language was successfully added to a Senate bill in 2013 that added additional expertise to The Commission by requiring an additional member: a structural engineering professor with experience in wind mitigation specifically

Glide Path Exemption (2013 Session)

  • A Senate bill passed in 2013 reduced the maximum coverage available from Citizens from $1 million to $700,000 over a period of several years
  • High land/construction costs in the Keys and a lack of private competition would have left homeowners throughout Monroe County unable to keep their policies with Citizens but unable to find private market alternatives that would satisfy the requirements of their mortgage lender
  • An amendment was successfully added to that bill that exempted from that glide path areas where the Office of Insurance Regulation has determined there is no reasonable degree of competition (which they did in Monroe County)

FAM Tours (2013-2014)

  • During that first session, it became clear that there was a great deal of misinformation about wind/flood risk in the Florida Keys among both elected officials and the insurance industry themselves
  • In 2013, the first Monroe County Construction Standards Familiarization Tour (FAM Tour) was organized to bring public and private stakeholders from all sides of the insurance industry to Monroe County to see first-hand how we build our homes
  • The tours have highlighted different types of construction from historic renovations in Key West to new concrete construction in the Upper Keys
  • From these tours, we have seen private market representatives and reinsurers take a second look at the viability of writing policies in the Keys

Flood Memorial/NFIP Affordability Act (2014/2015)

  • As a result of federal action related to the National Flood Insurance Program (Biggert Waters Act passed in 2012) many homeowners in Monroe County saw their flood insurance rates skyrocket
  • One resident saw their policy increase to $49,000 a year for a $225,000 home
  • During the 2014 session, Rep. Raschein filed a resolution to urge Congress to delay the implementation of the bill that was to blame for these increases until an economic impact study could be completed
  • The resolution also called for Congress to utilize a glide path approach (like what we require Citizens to adhere to)
  • Rep. Raschein also worked with FIRM and with our federal representatives to support their efforts to pass the Flood Insurance Affordability Act which rolled back premium rates for a number of homeowners and required a study of flood insurance rates

CBRS (2015)

  • Rep. Raschein introduced a bill in 2015 to ensure that major structures in certain coastal areas would be able to maintain insurance coverage through Citizens should they need to make improvements to their property (for example, after a storm)
  • Existing law would have required Citizens to drop their policy, and with no private market options would have been devastating
  • In Monroe County alone, there are 656 improved parcels that would have become ineligible for insurance with Citizens if they had to make substantial repairs/renovations to the structure
  • Because of that bill, those property owners remained eligible for Citizens coverage should they need to rebuild, remodel, or repair those structures

Operations of Citizens Property Insurance/Condo Amendment (2016)

  • Last session, a pro-consumer bill was passed that revised the depopulation program at Citizens to maximize policyholder options and encourage increased participation by insurers and agents
  • The bill (HB 931) requires Citizens to provide more information to policyholders including estimates of comparable coverage in the private market and the rates available through Citizens
  • Rep. Raschein worked with FIRM to amend this bill to include language that removed the requirement for Citizens to use the public hurricane model as a “benchmark” for rate-making and allows Citizens to take into consideration other models when setting rates (which may result in more accurate rates)
  • These changes were a priority for FIRM and have the biggest impact on personal residential condo associations

Rate Freeze Request (2016)

  • For the first time, one of the models used to calculate Citizens proposed insurance rates showed a divergence from the other models
  • One of the four accepted models showed that our rates should not be going up while the other three continued to show a need for increases
  • Rep. Raschein worked with Citizens, FIRM, and Monroe County to request that OIR reject the proposed increases for Monroe County this year and research why the models were so different