• Florida’s Office of Insurance Regulation has authorized a request for $1.25 billion in credit lines for Citizen’s Property Insurance Corporation to prepare for the upcoming hurricane season.
• The authorization grants $750 million in credit with Bank of America and $500 million with Wells Fargo for Citizens to use if needed to pay claims and expenses for personal lines accounts.
• Citizens is required to provide quarterly updates on borrowed amounts, claims settlement costs, repayment amounts, and expected levies for debt repayment.

Ahead of Florida’s hurricane season, the state Office of Insurance Regulation (OIR) has authorized a request for $1.25 billion in credit lines for the state-backed Citizen’s Property Insurance Corporation.

The order, signed by Florida Insurance Commissioner Michael Yaworsky, grants $750 million in credit with Bank of America and $500 million with Wells Fargo.

According to the authorization, Citizens will be permitted to use the money, if needed, to help pay claims and expenses for personal lines accounts through a Revolving Credit Agreement, which includes homeowners’ policies.

As part of the authorization, the OIR is requiring Citizens to provide the state with quarterly updates on amounts borrowed, amounts used to settle claims and associated costs, amounts repaid, and amounts expected to be levied for debt repayment.

“The purpose of the lines of credit is to provide the personal lines account with needed liquidity in preparation for the 2023 hurricane season,” reads the order. “As a result, the Lines of Credit will enable Citizens to efficiently meet its financial obligations.”

Earlier this year, the Citizens Board of Governors internally sanctioned a proposal that grants organizational leaders the opportunity to petition the OIR for authorization to implement a 14.2 percent hike in insurance expenses.

According to the group, the recommended rates for 2023 call for a statewide average increase on all personal lines policies including homes, condominium units, dwellings, renters, and mobile homes due to inflation in the construction market.

Specifically, homeowner policy rates would increase by an average of 13.9 percent while condo owners would see an average 14.6 percent increase. If approved by the Office of Insurance Regulation, the 2023 rates would go into effect for new and renewal personal residential policies beginning November 1.

“No one wants their rates to go up. We completely understand that,” said Tim Cerio, Citizens President, CEO and Executive Director. “But the fact is that Citizens rates remain actuarially unsound and artificially low. This inadequacy is unsustainable and heightens the risk of assessments on all Florida insurance consumers.”

Citizens has seen an increase in policyholders over the past two years, with many private insurers dropping customers and raising rates due to financial difficulties.

The company had 1,223,204 policies in March, a significant increase from the 569,868 policies it had on March 31, 2021, and the 817,926 policies it had on March 31, 2022. Overall in 2022, the group saw its number of policies increase by approximately 50 percent.