Florida’s state-backed insurer of last resort is trying to clear its name after months spent under a barrage of political scrutiny — and the looming question of whether the state will agree to new rate hikes.
Citizens Property Insurance Corporation announced this week it is launching an “independent audit” into hurricane claim denials after the company made no payment in 77% of closed Hurricane Debby claims as of mid-September, according to data Citizens presented to its board of governors at the time and first reported by NOTUS.
That rate has fallen slightly as more claims have been processed, landing at 74% this week, new data Citizens presented to its board this week show — still higher than the industry-wide rate of 68% of closed residential property claims receiving no payment.
A slightly larger share of customers have received payment from Citizens in Florida’s two more recent storms. About 69% of closed Hurricane Helene claims resulted in no payment (compared to 63% of residential claims industry wide), and that was true of 44% of closed Hurricane Milton claims, lower than the industry wide 49% rate. (More than half of Milton claims are still open as insurers have 60 days to respond.)
Citizen’s newly announced audit also comes after Republican state Sen. Ben Albritton, the president of the Florida Senate, issued a stern warning to insurance companies in late November during his first speech as leader.
“I’m not going to sit idly by if legitimate claims get denied while rates continue to rise. Period.” Albritton told his colleagues.
“Floridians have been paying faithfully their insurance premiums for years, sometimes decades, and now they expect their insurance company to keep up its end of the bargain. I want to make sure that impacted Floridians and insurance companies hear me loudly and clearly — we are watching,” Albritton said, garnering a standing ovation from colleagues.
A Citizens spokesperson declined to comment on Albritton’s statement. Citizens CEO Tim Cerio told the board of governors that the newly planned audit into claim denials was intended to increase public trust.
“To the 77% denial story that’s out there,” Cerio told the board, “Although I do stand behind the data I presented — our Citizens data that we’ve gathered — it is important to maintain public trust and confidence of our policyholders and stakeholders, and so I have asked Joe Martins, our chief of internal audit, to conduct an independent audit of our claims, denials and closures for Debby, Helene and Milton.”
He added that Martins, even though he is a Citizens employee, reports to a board committee, not the CEO, and would be expected to provide any recommendations based on his findings.
Citizens disagreed with the characterization that it is trying to clear its name, instead saying that its “correcting inaccurate reporting,” spokesperson Michael Peltier said. He argued that Citizens’ official “claim denial” rate is actually much lower than the “closed without payment” rates.
According to Citizens, only claims that were closed because of lack of coverage or because of flood damage are formally deemed “denied.” The rest of the claims that were closed without payment — including those that fell below clients’ deductibles and claims that were withdrawn — are not viewed as “claim denials.”
By this metric, Cerio told the board that Citizens had denied 13% of all claims it has received — open and closed — across all three storms.
A comparable industry-wide number is not immediately available because Florida’s Office of Insurance Regulation does not break out claims using Citizen’s narrower definition of “denied claims.”
Martin Weiss — a longtime insurance critic who runs the independent ratings agency WeissRatings, and who the state’s office of insurance regulation recently subpoenaed about his claim that Florida’s insurers are “on the brink of collapse,” as first reported by the Tampa Bay Times — called this distinction pure semantics.
“If I file a claim and I get a letter back saying your claim has been closed with no payment, whether they use the word denial or not, they’re denying my claim,” Weiss told NOTUS. “We look at it from the perspective of the average consumer’s actual experience.”
While arguing that their claim denial rates aren’t as severe as the closed without payment rates look, Citizens executives have also justified having slightly higher denial rates than private insurers as the state’s insurer of last resort responsible for covering the riskiest properties.
Some critics are concerned that outside political and financial pressure — including congressional scrutiny into the agency’s solvency — have incentivized claim denials. Citizens has vehemently disagreed with this characterization.
“We’re a nonprofit, there’s no financial reason for us not to pay claims,” Peltier said.
The new audit, and debate over numbers, is also happening under the looming question of whether the state will authorize Citizens’ requested rate hikes. Citizens’ prices are well below market rates, as they are limited by state law in their ability to raise rates.
Citizens had been hoping to implement the rate hikes Jan. 1, 2025, but the state’s Office of Insurance Regulation has not made a final determination.“Citizens rate filings are rarely approved in the same way they are filed. OIR is looking at the filings carefully and taking the time to get it right so that consumers don’t have to pay more than is absolutely necessary,” a press secretary for the state regulators emailed NOTUS. “A decision on the most recent filings will likely be made before the close of 2024, now that hurricane season has come to a close and all data is available for analysis. However there is no set timeline.”
Citizens’ board of governors approved a request for a rate hike in June, and the state’s insurance regulators held a public meeting about the proposed changes in August.
The rate increases average at 14%, but the changes vary widely by property: secondary Mobile homeowners could see up to 26.6% increases, while some commercial properties would see a rate hike of less than 1%, according to the proposed changes. Under state law, Citizens can increase rates up to 14% on primary homes and up to 50% on secondary homes.
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Claire Heddles is a NOTUS reporter and an Allbritton Journalism Institute fellow.