With homeowners struggling to get coverage, insurance executives are looking to raise $700,000 in policies sold by the state-backed Citizens Property Insurance Corp.
Citizens are prohibited by law from paying so-called “replacement value” of more than $700,000 on a home, except in Miami-Dade and Monroe counties, where the limit is $1 million.
But as Florida’s property insurance market has declined and home prices have risen, many homeowners have been dropped by private insurers and may not qualify for Citizens coverage due to the $700,000 cap.
Susanne Murphy, deputy commissioner of the Florida Office of Insurance Regulation, said at a meeting of the Citizens Committee on Wednesday that the administration is evaluating whether to increase the amount of up to $ 700,000 in some states.
State law would allow such a move if regulators determine there is “not enough competition” in the regions. Such acquisitions allowed for limits of up to $1 million in Miami-Dade and Monroe counties.
“Whether there’s enough data to support that is what we’re trying to figure out,” Murphy told members of the Citizens Market Accountability Advisory Committee. “The last time we did this (with Miami-Dade and Monroe), it made sense…
Committee member Lee Gorodetsky, an insurance agent in South Florida, said “customers can’t even squeeze Citizens insurance, even if they want or need it.” This has led, for example, to home owners turning to what is called surplus-lines coverage, which is unmanageable and can include many conditions on the policy.
Murphy, a member of the Citizens committee, said it could take another month before regulators decide to raise the cap.
Discussions about the cap are a major fallout from the troubled insurance market, as carriers have shed regulations and are seeking major increases to try to reduce financial losses. As of February, five insurers are considered insolvent and placed in receivership.
Citizens, which was designed as a last resort insurance, has been flooded with policies in the last two years. As of Friday, it had about 1.02 million points. In comparison, it had 499,056 points on Oga. 31, 2020, with 687,079 points on Oga. 31, 2021, according to information posted on its website.
This interest also boils down to a long-standing effort by government leaders to have their homes insured on the private market, not by citizens. The efforts, in part, stem from concerns about economic risks if the state is affected by a hurricane or several hurricanes.
Citizen policies had a cap of $2 million until lawmakers in 2013 proposed a gradual reduction, with a limit of $700,000 starting in 2017. Murphy said the $1 million increase in Miami-Dade and Monroe counties – and other constituents may require the Parliament to amend the constitution of the state.
Home prices vary in different parts of the state, with most not exceeding $700,000. But the cap problem has drawn attention in high-elevation areas such as Broward and Palm Beach counties.
For example, the metro area that includes Miami, Fort Lauderdale and West Palm Beach had a median sales price of existing single-family homes of $595,000 in July, according to the Florida Realtors industry group. In the area that includes Naples, Immokalee and Marco Island, the median sales price was $748,270.