Florida’s leading insurer has reportedly failed to pay out on over three-quarters of claims related to Hurricane Debby, raising concerns that a similar number might be denied for damage from the more recent Hurricanes Helene and Milton.
What is more, Citizens Property Insurance has denied a staggering 77% of insurance claims associated with Hurricane Debby, which struck Florida’s Big Bend region in early August. This information comes from a report by NOTUS. Statewide, as of September 27, 51% of all residential claims connected to Debby were finalized without any payment.
Insurance in Florida
Originally established as a state-backed insurer of last resort, Citizens Property Insurance was created to assist Florida residents who were struggling to secure policies due to soaring premiums from private insurers. Over the years, it has grown to become the largest insurance provider in the Sunshine State, boasting over 1.2 million active policies as of October 2024.
- High denial rate for Hurricane Debby claims by Citizens Property Insurance.
- Overall state denial rate for Debby-related claims is over 50%.
- Citizens Property Insurance was formed to help residents facing high premiums.
- Currently, it is the largest insurer in Florida with over 1.2 million policies.
The situation with Hurricane Debby claims and the performance of Citizens Property Insurance highlights a critical issue in Florida’s insurance landscape, especially as residents brace for potential damages from Hurricanes Helene and Milton.
Understanding FEMA Emergency Grants
According to insurance experts, to qualify for a FEMA (Federal Emergency Management Agency) emergency grant, consumers must first submit a flood damage claim to their property insurer. They also need to prove that their claim was denied. This requirement is crucial for those who do not have flood insurance.
Anticipating Future Scenarios
Experts anticipate a “similar scenario” where flood claims for Hurricanes Helene and Milton might also face challenges when filed with property insurers. This highlights the ongoing struggle for consumers dealing with flood-related disasters.
Concerns Over Insurer Solvency
Notably, Democratic Senator Sheldon Whitehouse has voiced his concerns about the insurer’s solvency. According to documents from the insurer, Citizens, there is a significant risk. “Citizens is potentially one catastrophic storm or storm season away from encountering losses that could exceed its immediate ability to pay by many billions of dollars,” he cautioned to NOTUS.
- FEMA Requirements: Submission of a denied flood damage claim.
- Potential Risks: Insurers like Citizens could face financial instability after significant storms.
- Future Projections: Similar challenges expected with upcoming hurricanes.
U.S. Senate Budget Committee Investigates Citizens’ Climate Resilience
Spearheaded by Whitehouse, the chairman of the U.S. Senate Budget Committee, an in-depth investigation has been launched into Citizens’ efficacy in managing “increased underwriting losses stemming from climate-related extreme weather events” in 2023.
Challenges Facing Floridians in Property Insurance
Whitehouse highlighted the potential difficulties of reclaiming billions of dollars from Floridians, who already endure property insurance rates exceeding four times the national average. He noted, “Attempting to recover these funds is economically and politically challenging, raising significant doubts about Citizens’ ability to swiftly settle claims.”
In the aftermath of Hurricane Debby on August 6, Sarasota, Florida, witnessed widespread flooding. Despite the devastation, Florida’s leading insurer failed to compensate more than three-quarters of the claims related to this disaster.
Citizens’ Commitment to Policyholders
In a December 2023 letter addressed to Whitehouse, Citizens CEO Tim Cerio reaffirmed the company’s dedication, stating, “As Florida’s insurer of last resort, Citizens is structured to unconditionally protect its policyholders and ensure that claims are paid.”
Florida Governor Ron DeSantis recently echoed sentiments expressed by the White House earlier this year, remarking that Citizens, the state-run insurer, is “not solvent.” He further commented, “We can’t have millions of people depending on it because if a storm hits, it’s going to create significant problems for the state.”
Challenges Facing Citizens Insurance
The number of policies under Citizens Insurance has sharply increased in recent years. This surge is primarily due to private insurers withdrawing coverage and raising premiums, driven by financial losses from payouts and litigation. Currently, Citizens manages a substantial 1.2 million active policies, a dramatic rise from around 520,000 just five years ago.
Efforts to Reduce Policy Numbers
In response to this growth, Citizens has initiated the process of depopulating hundreds of thousands of policies, transferring them to other insurance carriers. This move aims to alleviate the pressure on the state-backed insurer.
According to Citizens’ website, “Citizens is committed to helping its policyholders find coverage in the private market. As required by Florida law, Citizens’ Depopulation Program matches Citizens policyholders with insurance companies interested in removing their policy from Citizens and providing private-market coverage for their policy.”
- Policy Surge: Citizens has seen a significant increase in policies, growing from 520,000 to 1.2 million.
- Depopulation Strategy: The insurer is actively working to transfer policies to private market carriers.
- State Concerns: Governor DeSantis warns of potential state-wide issues in the event of a major storm.
In the wake of recent hurricanes Milton and Helene, the state of Florida has seen a surge in hurricane insurance claims. The Florida Office of Insurance Regulation (FLOIR) has been diligently tracking these claims, providing a comprehensive overview of the situation.
Hurricane Helene: A Snapshot of Claims
As of October 18, insurance providers in Florida have reported a total of 55,392 claims for residential properties affected by Hurricane Helene. The estimated value of these claims is approximately $570 million.
- Approximately 38.6% of these claims have been closed.
- This includes 13,895 claims closed without payment.
- Another 7,512 claims have been settled with payment.
Milton: A Larger Impact
The aftermath of Hurricane Milton has resulted in a more significant number of claims. Across various insurance providers in Florida, a total of 178,374 claims have been filed for residential properties.
- The total estimated value of these claims is a staggering $2.2 billion.
- Only about 11.4% of these claims have been settled so far.
- This includes 7,297 claims closed with payment.
- An additional 13,108 claims have been closed without payment.