It has been claimed that the major insurer in Florida has failed to pay out on more than three quarters of the claims that were associated with Hurricane Debby.
This has raised concerns that a similar proportion of claims are likely to be denied for damage caused by Hurricanes Helene and Milton, which occurred more recently.
To add insult to injury, Citizens Property Insurance has rejected an astounding 77% of the insurance claims that were related with Hurricane Debby, which made landfall in the Big Bend region of Florida at the beginning of August.
This data was obtained from a report that was compiled by NOTUS. As of the 27th of September, approximately 51 percent of all residential claims that were associated with Debby had been completed without any payment being made.
Insurance in Florida
In the beginning, Citizens Property Insurance was established as a state-backed insurer of last choice. Its primary purpose was to provide assistance to people of Florida who were having difficulty obtaining insurance policies owing to the constantly rising costs charged by private insurers.
As of October 2024, it boasts more over 1.2 million active policies, making it the largest insurance company in the Sunshine State. It has grown to become the largest insurance provider in the state from the beginning.
- Citizens Property Insurance has a consistently high incidence of denying claims related to Hurricane Debby.
- More than fifty percent of claims relating to Debby are denied by the state as a whole.
- In order to assist locals who were struggling with excessive premiums, Citizens Property Insurance was established.
- Because it has more over 1.2 million policies, it is currently the largest insurer in the state of Florida.
At a time when residents of Florida are bracing themselves for the possibility of damage from Hurricanes Helene and Milton, the situation with Hurricane Debby claims and the performance of Citizens Property Insurance brings to light a significant problem in the state’s insurance environment.
Understanding FEMA Emergency Grants
For consumers to be eligible for an emergency grant from the Federal Emergency Management Agency (FEMA), it is necessary for them to first file a claim with their property insurer for flood damage.
This is the recommendation of insurance professionals. They are also need to provide evidence that their claim was rejected. Those individuals who do not have flood insurance are required to comply with this obligation.
Anticipating Future Scenarios
According to the experts, a “similar scenario” is expected to occur in which flood claims for Hurricanes Helene and Milton may also encounter difficulties when they are submitted to property insurance.
As a result, this emphasizes the continual problem that customers face while coping with calamities related to flooding.
Concerns Over Insurer Solvency
The reservations that Senator Sheldon Whitehouse, a Democrat, has expressed regarding the insurer’s ability to remain solvent are noteworthy. There is a high danger, as evidenced by the documentation provided by the insurance, Citizens.
As he reminded NOTUS, “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.” This statement was made in reference to the state of Florida.
- The submission of a claim for flood damage that has been refused is required by FEMA.
- The potential risks include the possibility of financial instability for insurers such as Citizens following big storms.
- Forecasts for the future indicate that similar difficulties are anticipated with incoming hurricanes.
U.S. Senate Budget Committee Investigates Citizens’ Climate Resilience
An in-depth examination into Citizens’ effectiveness in managing “increased underwriting losses stemming from climate-related extreme weather events” in 2023 has been initiated.
Whitehouse, who is the chairman of the United States Senate Budget Committee, is the one making the initial move to initiate this probe.
Challenges Facing Floridians in Property Insurance
Although Floridians already have to deal with property insurance rates that are higher than four times the national average, Whitehouse brought attention to the possible challenges that could arise when attempting to recoup billions of dollars from Floridians.
He made the observation that “attempting to recover these funds is economically and politically challenging, raising significant doubts about Citizens’ ability to swiftly settle claims.”
The city of Sarasota, Florida, experienced unprecedented levels of flooding as a result of Hurricane Debby, which struck on August 6.
The leading insurer in Florida did not pay out compensation for more than three quarters of the claims that were associated with this accident, despite the fact that the disaster was devastating.
Citizens’ Commitment to Policyholders
In a letter that was sent to Whitehouse in December 2023, Citizens CEO Tim Cerio reaffirmed the company’s commitment to the state of Florida.
He stated, “As Florida’s insurer of last resort, Citizens is structured to unconditionally protect its policyholders and ensure that claims are paid.”
In a recent statement, Florida Governor Ron DeSantis mirrored concerns that were made by the White House earlier this year. He stated that Citizens, the insurer that is controlled by the state, is “not solvent.”
In addition, he made the following observation: “We cannot have millions of people depending on it because if a storm hits, it is going to create significant problems for the state.”
Challenges Facing Citizens Insurance
Over the past few years, there has been a significant rise in the number of policies that belonged to Citizens Insurance.
The primary cause of this increase is the withdrawal of coverage by private insurers and the subsequent increase in premiums, which is driven by financial losses resulting from settlements and litigation.
The number of active insurance managed by Citizens has increased dramatically from approximately 520,000 just five years ago to a hefty 1.2 million at the present time.
Efforts to Reduce Policy Numbers
Citizens has begun the process of depopulating hundreds of thousands of policies and transferring them to other insurance carriers as a response to the expansion that has occurred.
A reduction in the amount of pressure placed on the state-backed insurance is the goal of this measure.
As stated on the Citizens website, “Citizens is dedicated to assisting its policyholders in locating coverage in the private market.”
The Citizens’ Depopulation Program is designed to match policyholders of Citizens with insurance firms that are interested in removing their policy from Citizens and providing coverage for their policy on the private market. This program is mandated by the law of the state of Florida.
- Citizens have witnessed a substantial increase in the number of policies, which has increased from 520,000 to 1.2 million.
- The insurance company is making concerted efforts to shift policies to private market carriers as part of its depopulation strategy.
- Concerns for the State Governor DeSantis has issued a warning about the possibility for problems that might affect the entire state in the event of a significant storm.
A significant increase in the number of hurricane insurance claims has been reported in the state of Florida as a result of the recent storms Milton and Helene.
A full picture of the problem has been provided by the Florida Office of Insurance Regulation (FLOIR), which has been meticulously tracking these claims.
Hurricane Helene: A Snapshot of Claims
A total of 55,392 claims for residential properties that were impacted by Hurricane Helene have been recorded by insurance companies in the state of Florida as of the 18th of October 2016. The total value of these claims is around 570 million dollars, according to estimates.
- The majority of these claims, approximately 38.6%, have been resolved.
- Included in this are 13,895 claims that were dropped without payment.
- A total of 7,512 further claims have been paid out and finally settled.
Milton: A Larger Impact
The aftermath of Hurricane Milton has led to an increase in the number of claims that have been filed. There have been a total of 178,374 claims in Florida that have been submitted for residential properties among the various insurance companies in the state.
- An astounding $2.2 billion is the entire value that is expected to be associated with these claims.
- There has been a settlement reached for around 11.4% of these claims thus far.
- This encompasses 7,297 claims that have been resolved with payment.
- A further 13,108 claims have been closed without payment from the insurance company.