ST. PETERSBURG, Fla. (WFLA) — Citizens Property Insurance customers should get ready for a possible rate hike coming in November.

On Wednesday, the corporation’s Board of Governors approved a statewide average rate increase of 14.2% for “personal lines” policies.

Citizens is supposed to be the “insurer of last resort,” but it’s become the largest insurance company in the state as more private insurers leave Florida and drop their customers.

“A lot of those policies have ended up in Citizens, so it’s really swelled citizens to a size it was never intended to be,” Jake Holehouse, the principal agent at HH Insurance Group explained.

“It’s really a big problem because Citizens is really on the credit of the state of Florida,” Holehouse added. “So if Citizens runs out of money, we as taxpayers have a liability on it.”

According to Holehouse, Citizens was designed for homes in the private market, where private insurance is unaffordable.

“While Florida does have a budget surplus and $19 billion sounds like a lot of money, it’s not a lot of money when we’re talking Hurricane Ian that did five times that in damage if all of those are with Citizens,” Holehouse said.

Tampa Bay homeowners have been feeling the impact of the ongoing property insurance crisis.

“I’ve been a teacher at Pinellas County Schools going on 40 years, [and] my wife was an administrator there for 38,” Joe Fabrizio said.

Fabrizio and his wife, Deborah always wanted to live on the water. Their dream came true almost five years ago when they bought a waterfront home in St. Petersburg.

“We were both raised with grandparents who had the same house for as long as we remember, so this was going to be our grandkids house that they would always remember,” Fabrizio said.

They never thought it would be short-lived, thanks to rising homeowners and flood insurance.

“We have to reassess as far as figuring out what we’re going to do to try to stay in our house,” he said.

Joe’s insurance company left the state, dropping him as a customer, something thousands of Floridians have experienced.

“TypTap dropped us a couple months ago, so now we’re going to have to find another place and that’s going to have to be Citizens,” Fabrizio said.

So, how did we get here?

“It’s really been a five-year insurance crisis in Florida,” said Holehouse.

In 2021, Gov. Ron DeSantis signed legislation to continue insurance reform in Florida.

 “Since 2013, $15 billion has been paid out in claims in Florida,” State Sen. Jim Boyd, R-Palmetto said at the time. “From those funds, 71 percent went to attorney fees, 21 percent to insurers defense costs, and a mere 8 percent went to the property owners for their losses.”

“Only 8% went to the policy holder,” Holehouse noted. “If you could take 92% of cost out, then you would have a much more affordable insurance marketplace.”

“That’s why the state has actively been working legislative now to curb the what some would call ‘legislative abuse’ that’s driven up everybody’s rates,” Holehouse added.

In a normalized market in a state the size of Florida, Holehouse says Citizens should only have around 250,000 to 300,000 policy holders.

In Feb 2019, Citizens Insurance had 421,155 policyholders. In Feb 2023, that number skyrocketed to 1,189,105.

Now the corporation is raising rates in an effort to cut that number down.

Here is a breakdown of the increases per county for Citizens’ Multi-Peril HO-3 plan:

  • Hillsborough 12.2%
  • Pinellas 12.5%
  • Pasco 12.5%
  • Polk 13.1%
  • Manatee 13.7%
  • Sarasota 14.4%
  • Highlands 15.1%
  • Citrus 15.3%
  • Hernando 13.3%
  • Hardee 12.8%

Holehouse says the true increase goes far beyond that.

“What we’re seeing is most policies are increasing 20%-30% to keep up with construction inflation,” he explained. “So you take that 20% to 30% and then you add 12.5%, let’s say, and now you’re really talking a 45% to 60% rate increase.”

“So it’s that compounding effect of rate that has a lot of policy holders alarmed right now,” Holehouse continued.

What does this mean for Tampa Bay homeowners like Joe and Deb?

For flood and homeowners insurances combined, they will need to cough up another $255 a month.

“The middle class is taking a beating and this is part of it,” Joe said. “Now we’re looking, ‘can we cling on to it a couple more years,’ then we’re probably going to have to be somewhere else.”

“Your premiums will go up,” Citizens Property Insurance spokesperson Michael Peltier said. “That’s the bottom line for your viewers.”

“The Legislature has given us a directive and some valuable tools to return Citizens to its role as the state’s insurer of last resort,” said Citizens Chairman Carlos Beruff. “These proposed rates are a step in that direction.”

That statewide average rate increase of 14.2% is for all personal lines policies, including homeowners, condominium units, dwellings, renters and mobile homes.

Individual premiums could rise by more than that due to higher replacement costs because of inflation in the construction market.

“We understand no one wants to see their rates go up,” Peltier said. “Private companies are increasing rates by 25%, 30%, 40%.”

“We are not passing that along to our customers, but rate increases are hard,” he explained. “But we have a responsibility to be financially sound; we have a responsibility to all Floridians to take care of our policy holders without having to levy assessments on other Florida insurance consumers.”

“These rates are intended to get us walking in that direction,” Peltier continued.

But for the Fabrizio family, this could bring a lifetime’s worth of hard work to a halt.

The rate increase will now go before the Office of Insurance Regulation.

They will have a public hearing, then decide if they agree with the rate increase approved Wednesday.

If approved by the Office of Insurance Regulation, the new rates would go into effect on Nov. 1.