Reports say that Florida’s biggest insurance company has not paid out on more than three quarters of Hurricane Debby claims. This makes people worry that a similar number of claims for damage from Hurricanes Helene and Milton might also not be paid for.
Over 77% of insurance claims related to Hurricane Debby, which hit Florida’s Big Bend region in early August, have been turned down by Citizens Property Insurance. This data comes from a NOTUS report. 51% of all residential claims related to Debby were closed without any payment as of September 27 across the whole state.
Insurance in Florida
Citizens Property Insurance was started as a state-backed insurer of last resort to help Floridians who were having trouble getting policies because private insurers’ rates were going up so fast. It has grown over the years to become the biggest insurance company in the Sunshine State. As of October 2024, it had over 1.2 million active policies.
- 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
Insurance experts say that people must first file a flood damage claim with their property insurer in order to be eligible for a FEMA (Federal Emergency Management Agency) emergency grant. They also need to show that their claim was turned down. People who don’t have flood insurance must follow this rule very carefully.
Anticipating Future Scenarios
Experts say that a “similar scenario” could happen where flood claims for Hurricanes Helene and Milton might also have problems when they are sent to property insurers. This shows how hard it is for consumers to deal with disasters caused by flooding.
Concerns Over Insurer Solvency
In particular, Democratic Senator Sheldon Whitehouse has said that he is worried about the insurer’s ability to pay its bills. There is a big risk, according to papers from the insurance company, Citizens. He warned NOTUS that Citizens could face losses that are much higher than the company’s current ability to pay by many billions of dollars in just one bad storm or storm season.
- 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 look into how well Citizens can handle “increased underwriting losses stemming from climate-related extreme weather events” in 2023 has been started, led by Whitehouse, who is the chairman of the U.S. Senate Budget Committee.
Challenges Facing Floridians in Property Insurance
Whitehouse talked about how hard it might be to get back billions of dollars from Floridians, whose property insurance rates are already more than four times the national average. “Trying to recover these funds is economically and politically challenging, raising serious doubts about Citizens’ ability to quickly settle claims,” he said.
When Hurricane Debby hit on August 6, Florida, it caused a lot of flooding in Sarasota. Even though the damage was so bad, Florida’s biggest insurance company didn’t pay more than three quarters of the claims that were made because of the disaster.
Citizens’ Commitment to Policyholders
“As Florida’s insurer of last resort, Citizens is structured to unconditionally protect its policyholders and ensure that claims are paid,” Citizens CEO Tim Cerio wrote in a letter to Whitehouse in December 2023 to reaffirm the company’s commitment of service.
Recently, Florida Governor Ron DeSantis said the same thing the White House did earlier this year: Citizens, the state-run insurance company, is “not solvent.” He also said, “We can’t depend on it for millions of people, because if a storm comes through, it will cause a lot of problems for the state.”
Challenges Facing Citizens Insurance
In the past few years, there have been a lot more policies under Citizens Insurance. This rise is mostly because private insurers are dropping coverage and raising rates because they are losing money on payouts and lawsuits. Citizens now oversees 1.2 million active policies, a huge increase from the 520,000 policies it was in charge of just five years ago.
Efforts to Reduce Policy Numbers
This growth has caused Citizens to start the process of depopulating hundreds of thousands of policies and sending them to other insurance companies. The goal of this move is to ease the strain on the state-backed insurer.
The Citizens website says, “Citizens is dedicated to supporting its policyholders in locating coverage in the private market.” Florida law says that Citizens’ Depopulation Program has to connect policyholders with insurance companies that want to take their policy off of Citizens and cover it on the private market.
- 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, Florida insurance companies had received a total of 55,392 claims for damage to homes caused by Hurricane Helene. It is thought that these claims are worth about $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.
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