Florida’s insurer of last resort, Citizens Property Insurance, has come under intense scrutiny over the last year. Now, new data shows the company didn’t pay a dime in 77% of claims it closed from August’s Hurricane Debby.
In February, Gov. Ron DeSantis said the publicly backed Citizens is “not solvent,” prompting the Senate Budget Committee, led by Democratic Sen. Sheldon Whitehouse, to launch an investigation into whether Citizens would eventually need a federal bailout. The company covers the largest share of Florida property owners, including many of the state’s most vulnerable residents.
In the aftermath of back-to-back hurricanes Helene and Milton, Whitehouse told NOTUS in a statement, “Citizens — according to its own documents — is potentially one catastrophic storm or storm season away from finding itself with losses that exceed its immediate ability to pay by many billions of dollars.”
“Trying to recover billions of dollars from Floridians, who are already paying more than four times the national average for property insurance, is unlikely to be feasible economically or politically and raises serious questions about Citizens’ ability to pay out claims in a timely manner,” Whitehouse added.
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Citizens’ Hurricane Debby claim-denial rate is significantly higher than its industry counterparts, NOTUS found, leaving consumer advocates worried politics is playing a role in claims getting denied.
“My concern is that the worries about Citizens’ financial strength are a contributing factor to all these denials,” United Policyholders executive director Amy Bach told NOTUS.
Industrywide in Florida, 68% of closed residential property claims and 52% of all closed property insurance claims from Hurricane Debby resulted in no payment, according to data from the state’s Office of Insurance Regulation, well below the numbers Citizens’ executives presented to their board in a meeting shortly before Hurricane Helene made landfall.
For “those individuals impacted and families impacted, it was terrible,” Citizens Property Insurance CEO Tim Cerio told the board of governors in late September, according to a public audio recording of the meeting. “For us, it was not a horrible event as far as what we’re looking at as far as claims.”
Executives at Citizens also acknowledged to the board that their numbers could raise red flags to the state insurance regulators.
“I do think the [Office of Insurance Regulation] is going to draw some attention to it,” Citizens’ chief insurance officer, Jay Adams, told the board. “When we look at the claims that have been closed with payment, there have been 450 of those, and we have 1,508 closed with no payment.”
“That ratio is probably a little concerning out there in the industry,” Adams added, pointing to two key factors to justify the denials: Citizens not covering flood damage and annual “hurricane deductibles.”
Florida Democrats see the state’s flailing property insurance market as a key issue they can hammer Republicans on leading into the November elections, while Republicans say Democrats are politicizing natural disasters.
Citizens insists it is financially stable even after the two recent storms. According to the insurer, its financial structure — which allows for a special assessment against customers first and all Florida property owners if need be — ensures it won’t need a federal bailout.
But the political pressure against the companies’ financial state is hard to ignore in the face of a high claim-denial rate. “When Citizens’ solvency is a concern that elected officials have been expressing and discussing,” Bach said, “there’s a heightened risk of outcome-oriented claim handling.”
Citizens spokesperson Michael Peltier told NOTUS the organization is structured so that it’s always able to pay claims and that any efforts toward decreasing financial risk are focused on moving customers back into the private market and do not impact claims.
In an email to NOTUS after this story published, Peltier reiterated that claim denials are largely due to uncovered flood damage and hurricane deductibles, and defended Citizens’ disproportionately high denial rate.
“It makes sense that the Citizens’ denial rate would be higher as we insure the riskiest and most flood-prone properties in Florida,” he said in a statement.
Citizens does not cover flood damage. However, there can be a fuzzy line of distinction between wind, structural and flood damage, Florida consumer attorney Chip Merlin told NOTUS, particularly if wind damage comes first and flood damage second and erases evidence.
A 2022 law change pertaining only to Citizens put the burden of proof of insured damages on policyholders in certain cases. “Citizens, rather than giving the benefit of the doubt that many of the carriers will do, doesn’t have to do that,” Merlin said, speculating, “that is one reason for them having a higher rate of declination than others.”
He also added that federal aid can sometimes be dependent on claim-denial letters skewing claim-denial rates higher, something Citizens executives also mentioned.
Citizens executives did provide one indication that customers — at least for the unfortunate double- or even triple-hurricane victims from Helene and Milton — may not be denied payment at as high a rate as Debby.
“Florida does have a calendar year deductible, so we did encourage people to file those claims,” Adams told the board. “Since its an annual deductible, any of these individuals that are impacted by what will be Hurricane Helene, they will have already accrued some of that deductible.”
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