Florida’s state-operated insurance provider has drawn significant concern following a detailed analysis revealing its underwhelming performance in settling homeowners’ claims compared to private insurers in the state. A recent report by a Palm Beach Gardens ratings agency highlights that over half of the claims filed with Citizens Property Insurance last year were not compensated.
Citizens Property Insurance, tasked as Florida’s insurer of last resort, has paid homeowners’ claims less frequently than any other insurer in the state according to recent findings. This disparity shows that about 50.4% of claims were either denied or did not surpass the policyholders’ deductible. This rate of non-payment is higher than that of major private insurers like State Farm and Allstate, which closed claims without payment at a rate of about 46%.
Martin D. Weiss, founder of Weiss Ratings and a long-time critic of the insurance sector, criticized Citizens for its high rate of claim denials. He pointed out that the residents of Florida faced more challenges in getting their claims paid than in any other state, with more than a third of claims unpaid last year.
These findings build on previous scrutiny from NOTUS, which found that Citizens did not pay 77% of claims related to Hurricane Debby. A significant factor contributing to claim denials was damage caused by flooding, an area not covered under Citizens’ policies. Indeed, 30% of claims post-Hurricane Helene were dismissed due to flooding issues.
Michael Peltier, a spokesperson for Citizens, mentioned that the inability to track specific reasons for claim denials complicates matters further. This has coincided with increased rate proposals, including a 14% hike slated for next year, as Citizens tries to navigate the challenges posed by the insurance landscape and legislative environment.
State efforts have been aimed at reducing Citizens’ policyholder numbers, which tripled to 1.4 million after several private insurers ceased operations or left the market. Citizens has since reduced its policy count to approximately 1 million by transferring risks to private insurers and implementing stringent home inspection mandates.
Suing Citizens has become increasingly difficult, as claims disputes are now predominantly handled by administrative law judges appointed by Governor Ron DeSantis and the state Cabinet. This change means hundreds of cases are now redirected away from traditional courts, further complicating policyholders’ recourse efforts.
Despite the challenges, Citizens reported a net income of $746.5 million last year. However, the company’s practices have raised concerns among policymakers like State Representative Hillary Cassel. She attributes part of the issue to Citizens’ immunity from ‘bad faith’ lawsuits, which typically serve as a deterrent against unfair treatment of policyholders. Recent legal reforms have also made suing private insurers for similar reasons more challenging, potentially setting a precedent across Florida’s insurance market.
The analysis of Citizens Property Insurance’s claim handling reflects growing concerns about its operational practices and the regulatory environment affecting Florida’s homeowners’ insurance market. The high rate of claim denials and ongoing legislative changes underscore the complex dynamics facing policyholders and insurers alike.
Source: Sun-sentinel
