State-run Citizens insurance had worst rate of paying Floridians’ claims
TALLAHASSEE — Florida’s state-run insurer paid homeowners’ claims less often than any other insurer in the state last year, with over half of claimants receiving nothing, according to an analysis by a Palm Beach Gardens-based ratings agency.
Nearly 17,000 claims, or 50.4%, filed with Citizens Property Insurance, were either denied for a variety of reasons or didn’t meet the policyholder’s deductible.
That’s more often than either State Farm or Allstate, whose Florida subsidiaries had the highest rate of closing claims without payment among private insurers last year at about 46%.
“For them to be at the very top of the range is unforgivable,” said Martin D. Weiss, the founder of Weiss Ratings, which pulled the data from Citizens’ annual reports.
Weiss, who has been critical of the insurance industry for decades, highlighted the high rate of claims closed without payment among private insurers earlier this year. Floridians had the worst chance in the nation of receiving a paycheck when filing a homeowners claim in 2022, the most recent statewide data available, with more than a third going unpaid, his company calculated.
“This is why I think a thorough investigation is urgently needed,” Weiss added.
Over the last five years, Citizens’ rate of closing claims without making a payment has ranged from 40.2% to 50.5%, according to Weiss.
The findings echo scrutiny Citizens received last month by the news outlet NOTUS, which highlighted that 77% of its Hurricane Debby claims were closed without payment.
Why Citizens’ rates are higher is not clear. Citizens spokesperson Michael Peltier said a claim could be denied because it was a result of flooding, which isn’t covered by the company. About 30% of all homeowners claims filed after Hurricane Helene were closed because of flooding.
Or the claim could be accepted, but the damage was determined to be below the deductible owed by the policyholder. Policies can carry windstorm deductibles up to 10%, which could equal tens of thousands of dollars after a hurricane.
Ultimately, Peltier said Citizens couldn’t say for sure, because the company doesn’t track the reasons why claims are denied.
The high rate coincides with years of double-digit rate increases for Citizens customers and a request to raise rates by 14% next year. Meanwhile, state officials have worked to shed policies from Citizens and shield the company from what they say is an avalanche of frivolous lawsuits.
As the state’s insurer of last resort, Citizens saw its number of policies more than triple to 1.4 million as private insurers went out of business or dropped customers. The company has aggressively shed customers to private carriers, and the number of policies today is about 1 million.
The company has instituted a more aggressive home inspection program, requiring homeowners to undertake costly repairs or, in one case, dropping customers who install trampolines, The Palm Beach Post reported.
Suing Citizens has also become more difficult. Since February last year, claims disputes now go to administrative law judges led by an appointee of Gov. Ron DeSantis and the state Cabinet. Hundreds of cases have been filed in the court this year, records show.
Citizens was profitable last year, reporting a net income of $746.5 million last year, according to S&P Global.
State Rep. Hillary Cassel, D-Dania Beach, a former lawyer for insurance companies who now represents policyholders, said she wasn’t surprised by the data.
“This is what I see in my business practice,” Cassel said.
But she pointed to another culprit that she said could be to blame. Citizens is immune from “bad faith” lawsuits, cases in which an insurer can pay more in damages for behaving improperly. Under state law, the cost of those cases can’t be passed on to policyholders.
Without that layer of scrutiny, the company has little incentive to treat customers fairly, she said.
In 2023, Gov. Ron DeSantis and state lawmakers made it harder to sue private insurers for “bad faith” as well.
“I think Citizens is now the precedent for what we can expect to see from other insurance companies across the state of Florida,” she said.