The largest residential property insurer in Florida plans to conduct an independent audit of hurricane-related claims made this year in the wake of reports critical of the company's rate of denials.
Tim Cerio, CEO of the state-backed Citizens Property Insurance Corp., announced the audit at a board meeting while he and other officials addressed the company's claims denials following hurricanes Debby, Helene and Milton in 2024.
The audit follows recent criticism of the insurance industry, including a speech last month by newly elected Florida Senate President Ben Albritton. He strongly challenged insurance companies not to deny legitimate claims, especially following reforms lawmakers made to help the insurance industry.
“Floridians have been faithfully paying insurance premiums for years, sometimes decades, and now they expect their insurance company to keep up its end of the bargain," Albritton said. "I want to make sure that impacted Floridians and insurance companies hear me loudly and clearly. We are watching."
Citizens is the Florida insurer of last resort for homeowners who can't find coverage elsewhere. Despite offloading more than 428,000 policies to private insurers since January, Citizens has roughly 988,000 policyholders statewide as of Nov. 29.
The company said it's the first time in more than two years that its policy count fell below 1 million. Citizens attributed the reduction to "renewed interest" from private companies to enter Florida or expand their policy counts statewide.
Proposed rate increase
Meanwhile, Citizens is still waiting for permission from state regulators to raise rates in 2025 by an average of 13.5%. The request is meant to make Citizens' rates actuarially sound to cover the costs of potential claims, according to the company.
Citizens said it has denied 13.2% of all hurricane claims filed so far in 2024 after determining there was no coverage under the terms of the policies, and that includes claims that were for flood damage. Citizens and other insurers do not cover flood damage under windstorm policies.
Media reports of much higher denial rates "failed to account for claims that were accepted but did not reach deductible levels, claims that were withdrawn, duplicated, invalid or filed by policyholders who were no longer Citizens customers," the company said in a statement.
Citizens said Weiss Ratings, an independent rating agency for insurance companies, made a similar mistake in analyzing claims denials for all of 2023. Using Citizens' own data, Weiss reported that Citizens denied nearly 17,000 claims, or just more than 50%, last year.
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Citizens doesn't classify as denials claims that are accepted but "closed without payment," such as those where the damage didn't rise to the policyholder's deductible. As the insurer of last resort covering high-risk properties, the company said it typically has a rate of denial "somewhat higher" than private insurers.
But as a regulated company, Citizens could be fined by the state if it improperly denies claims, according to Jay Adams, chief insurance officer for Citizens.
'Pretty good grades'
Even so, "we come out with pretty good grades all the time on those claim handlings," Adams said at the recent board meeting.
Critics, though, insisted the company and other insurers rely on technicalities and creative language to avoid more negative reactions from the press and public.
While Citizens' audit of hurricane claims is a welcome development, it won't help policyholders who have to cover the cost of storm-related repairs themselves, according to Gavin Magor, director of ratings and research for Weiss Ratings.
"The policyholder is being treated callously," he said in an interview.
With property insurance rates rising across Florida and insurers canceling policies to mitigate risk or pulling out of the state altogether, Gov. Rick DeSantis called a three-day special legislative session in 2022. That resulted in reforms that included making it illegal for contractors to file insurance claims on behalf of homeowners, also known as assignment of benefits, and eliminating one-way attorney fees that forced insurance companies to cover the legal costs of plaintiffs suing them.
But Weiss Ratings noted that the reforms also make it harder for Florida policyholders to sue insurers. The changes were necessary to stabilize the state's insurance market and bring down costs for policyholders, proponents say.
"The proof will be in the results," Albritton said in his speech. "I’m not going to sit idly by if legitimate claims get denied while rates continue to rise. Period."