For the tens of thousands of homeowners in South Florida who rely on Citizens Property Insurance to cover their homes, the news of lower rates came as long hoped for relief last week. But does it mean paying less for insurance when the next bill comes?

Homeowners will have to wait and see.

Annual premiums “could increase primarily because of replacement costs,” said Mark Friedlander with the Insurance Information Institute.

While the underlying insurance rate for the most common homeowner’s insurance is going down for Citizen policyholders in much of South Florida, other factors in addition to the rate are used to calculate a homeowner’s annual cost for insurance.

Gov. Ron DeSantis on Thursday announced average insurance costs charged by Citizens would be falling, including “homeowners’ insurance premium decreases for three-quarters of Miami Dade, and statewide decreases averaging 5.6%,” according to a news release from his office.

However, the decreases are for average insurance rates, not premiums. Premiums are what homeowners pay to have their houses insured. The rate is the cost of insurance.

Citizens confirmed to WLRN that almost three-quarters of its policyholders insuring their homes in Miami-Dade County will see their insurance rate drop when renewals go out June 1. The average rate decrease will be 6.3%. About half of Citizen primary policies will receive a decrease in Broward County. And one in five will be Palm Beach County.

Homeowner average premiums may be different.

“ It costs much more to replace a home today than it did pre pandemic. That's the bottom line,” said Friedlander.

A home’s market value is not the same as its replacement cost. Both rose substantially during COVID-19. Home prices were driven higher by skyrocketing demand. Replacement costs shot up thanks to supply chain issues and inflationary pressures. “The good news is replacement costs are moderating,” said Friedlander.

Homes have different characteristics and homeowners may make different coverage choices that can influence the premium they pay.

The insurance rate decreases for many in South Florida announced last week come after years of fast escalating coverage costs. State lawmakers passed a series of reforms intended to stabilize the property insurance market and attract more competition. The state-backed insurer of last resort, Citizens, had grown to cover more than 1 million homes as private insurers curtailed coverage in Florida or left the state altogether.

South Florida homeowners rely on Citizens as the insurer of last resort more than any other region. As such, the region is impacted more by changes to Citizens rate changes and other forces influencing homeowner premiums.

Citizens asked state insurance regulators to allow it to raise its regular homeowners rate by 13.5% statewide beginning this summer. It was the second consecutive year Citizens asked for such an increase. The Florida Office of Insurance Regulation rejected that and instead approved a much smaller average statewide rate increase of 6.5%, its smallest in three years.

This data is for the most common property insurance used by homeowners to cover their primary residence. HO3 insurance covers the usual things like fire and incidental water damage, along with wind damage.

Florida had the lowest insurance rate increase of any state, according to an analysis by S&P Global. It found the effective homeowners insurance rate was up just 1% while it was up over 10% nationwide. Still, that slowdown comes after a five-year cumulative rate increase of 54%.

“The 2025 rates reflect the many positive developments that have taken place in the Florida property insurance market since our original recommendations were filed,” Citizens said in a statement, echoing Gov. DeSantis’ comments.

“One of the biggest reasons why we're seeing the decline in Citizens rates is similar to what we've seen in the private market,” said Friedlander. “Defense containment costs are coming down.”

That refers to homeowners filing fewer lawsuits against their insurers. In 2022, lawmakers approved a bill that threw out one-way attorney fees blamed by the insurance industry for fueling what it claimed were frivolous lawsuits. The law did away with the decades-old practice of requiring insurers to pay the legal fees of a homeowner if a jury awards the homeowner more than what the insurance company offered in a claims dispute. Other reforms have been passed in the effort to reduce insurance lawsuits.

“ That leads to lower expenses for insurers to defend lawsuits. When those costs are reduced, that's a pass along to consumers,” Friedlander said.

Lower insurance costs for Citizens also helped. Insurance companies reinsurance to protect themselves from major disasters. The cost of that coverage has fallen after double-digit increases in recent years. “ That's also a generator of savings for consumers because now your insurance company doesn't need to increase rates to cover those higher costs,” said Friedlander.
Hurricane paths across Florida between 2016-2023.
NOAA
Hurricane paths across Florida between 2016-2023.

A third factor for rates in South Florida is the stretch of calm hurricane seasons. The last hurricane to make landfall in South Florida was Irma in 2017 in the Keys. The Atlantic coast has experienced a direct hit from only one hurricane, Nicole, the past decade. The Gulf Coast and Big Bend areas, meanwhile, have experienced five hurricanes, including two category 5 storms since 2018.

“That's why you're seeing a better rate picture for South Florida Citizens policyholders versus Gulf Coast Citizens policyholders,” Friedlander said.

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