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The Citizens Property Insurance Corporation’s Board of Governors approved rate adjustments that will raise average premiums by an additional 2.3% in February 2022.

The board for the state-backed insurer unanimously voted in favor of the rate increases, which head to the Office of Insurance Regulation for final approval. If approved, renewing policies after Aug. 1 will increase by an average 5.2%, and policies renewed after February 1, 2022 will see average increases of 7.6%.

Citizens is required to comply with a legislative glide path that caps individual rate increases at 10%, excluding coverage changes and surcharges.

The latest rate adjustments calculate in provisions of SB 76. The law, signed by Gov. Ron DeSantis in June, raises Citizens’ cap through 2026. In 2022, Citizens’ glide path will increase from 10% to 11% under the new law.

“These necessary adjustments reflect the efforts of the Florida Legislature to return Citizens to its role as a residual insurance company,” said Citizens Chairman Carlos Beruff. “Unfortunately, we have become the first choice, or only choice, in too many regions of the state.”

SB 76 also requires Citizens to factor in the reinsurance costs necessary to protect its surplus from a 1-in-100-year storm.

Citizens said the law steers policyholders to private insurance carriers if a private policy premium is within 20% of the comparable Citizens policy premium.

“Over the past couple of years, private market rates have increased due to fraud and increased litigation,” said Kyle Ulrich, president and CEO of Florida Association of Insurance Agents. “Because of the statutory rate cap, Citizens’ rates have become very competitive, if not lower than the private market in some areas of the state. As the market of last resort, Citizens should not be competing with the private market.”

Citizens said that is has seen its policy count jump from 420,000 to more than 640,000 since October 2019 and is now seeing increases of more 5,000 new policies per week. Company officials expect the policy count to exceed 750,000 by the end of 2021.

“We want to get smaller, not bigger,” said Citizens spokesman Michael Peltier. “The market is in a challenging spot right now so we’re stepping up. That’s what we’re supposed to do.”

Private insurers have been implementing rate increases in excess of those Citizens.

If approved, the higher rates will apply to all Citizens policyholders. In April, Insurance Commissioner David Altmaier rejected a recommendation that new policyholders be charged more than existing policyholders.