According to reports, Florida’s biggest insurer has failed to pay out on more than three-quarters of Hurricane Debby claims, sparking concerns that a similar amount may be denied for damage caused by the more recent Hurricanes Helene and Milton.
Furthermore, Citizens Property Insurance has refused a stunning 77% of insurance claims related to Hurricane Debby, which hit Florida’s Big Bend in early August. This information is from a NOTUS report. As of September 27, 51% of all Debby-related residential claims had been settled without payment.
Insurance in Florida
Citizens Property Insurance was founded as a state-backed insurer of last resort to help Florida residents who were unable to get coverage owing to rising premiums from private insurers. Over the years, it has evolved to become the largest insurance company in the Sunshine State, with over 1.2 million active policies by 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 scenario with Hurricane Debby claims and Citizens Property Insurance’s performance reveals a serious issue in Florida’s insurance market, particularly as homeowners prepare for probable damage from Hurricanes Helene and Milton.
Understanding FEMA Emergency Grants
According to insurance experts, before applying for a FEMA (Federal Emergency Management Agency) emergency grant, consumers must first file a flood damage claim with their property insurer. They also need to show that their claim was refused. This rule is especially important for those who do not have flood insurance.
Anticipating Future Scenarios
Experts predict a “similar scenario” in which flood claims for Hurricanes Helene and Milton may face hurdles when filed with property insurers. This emphasizes the continued challenge for customers affected by flood-related calamities.
Concerns Over Insurer Solvency
Notably, Democratic Senator Sheldon Whitehouse expressed concerns about the insurer’s viability. Citizens’ documents reveal a major 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,” according 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
An in-depth examination into Citizens’ efficacy in handling “increased underwriting losses stemming from climate-related extreme weather events” in 2023 has been initiated under the leadership of Whitehouse, chairman of the United States Senate Budget Committee.
Challenges Facing Floridians in Property Insurance
Whitehouse emphasized the possible problems of collecting billions of dollars from Floridians, who already pay property insurance premiums that are four times the national average. He added: “Attempting to recover these funds is economically and politically challenging, raising significant doubts about Citizens’ ability to swiftly settle claims.”
Sarasota, Florida had widespread flooding from Hurricane Debby on August 6. Despite the devastation, Florida’s biggest insurer failed to compensate for more than three-quarters of the disaster-related claims.
Citizens’ Commitment to Policyholders
In a December 2023 letter to Whitehouse, Citizens CEO Tim Cerio reinforced the company’s commitment, saying, “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 the White House’s remarks earlier this year, stating that Citizens, the state-run insurer, is “not solvent.” He went on to say: “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
Citizens Insurance’s policy portfolio has grown significantly in recent years. This spike is mostly the result of private insurers canceling coverage and boosting premiums in response to financial losses from settlements and litigation. Citizens now administers 1.2 million active policies, a significant increase from approximately 520,000 just five years ago.
Efforts to Reduce Policy Numbers
In response to this development, Citizens has begun the process of depopulating hundreds of thousands of policies and transferring them to other insurers. This decision aims to relieve pressure on the state-backed insurer.
According to Citizens’ website, “Citizens is committed to assisting policyholders in obtaining coverage in the private market.” As mandated by Florida law, Citizens’ Depopulation Program connects Citizens policyholders with insurance firms interested in withdrawing their policy from Citizens and providing private-market coverage.”
- 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.
Following recent storms Milton and Helene, the state of Florida has noticed an increase in hurricane insurance claims. The Florida Office of Insurance Regulation (FLOIR) has been closely monitoring these claims and providing a thorough summary of the issue.
Hurricane Helene: A Snapshot of Claims
As of October 18, Florida insurance providers had reported a total of 55,392 claims for residential properties damaged by Hurricane Helene. The estimated value of these claims is $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 larger number of claims. A total of 178,374 claims for residential properties have been lodged in Florida through various insurance companies.
- 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.
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