For the first time in over two years, Citizens Property Insurance Corporation announced a significant milestone: their policy count has fallen below 1 million. This development signals a positive shift in the Florida property insurance market, indicating a recovery after a period of challenges.
As of November 29, 2024, Citizens reported 987,650 policies, a decrease largely attributed to the success of its depopulation efforts. Since January 2024, the Depopulation Program facilitated the transfer of over 428,000 policies to private insurers approved by Florida’s Office of Insurance Regulation. This trend indicates not only the program’s effectiveness, but also a renewed interest from private insurers in Florida’s market.
“These are encouraging signs as we continue our efforts to return to our role as Florida’s insurer of last resort,” said Tim Cerio, Citizens’ president, CEO, and executive director. He highlighted that as Citizens’ policy count shrinks, the risk of assessments on non-Citizens policyholders is reduced, benefiting all Florida residents. These assessments are a way to cover unexpected losses and prevent the insurer from going into negative territory.
The reduction in policy count represents a 19.5% decrease from January 2024, reducing Citizens’ exposure by nearly $200 billion. Projections suggest that following the December depopulation assumption, the policy count could potentially drop to around 900,000 by year-end. Furthermore, the slowdown in new policy influx into Citizens demonstrates the growing presence of and increased competition from private insurers in Florida. The entry of new market participants and the re-engagement of existing private insurers contribute to a wider range of coverage options for homeowners.
Claims Denial Rates and Storm Recovery
During a recent quarterly meeting of the Citizens board of governors, Cerio addressed the insurer’s claims denial rate following hurricanes Debby, Helene, and Milton. He noted the figures have been misrepresented in some previously published reports.
Currently, Citizens has denied 13.2% of all claims related to the storms, primarily due to lack of coverage under the policy terms, including flood damage. Like the majority of private insurers, Citizens does not offer flood coverage, a separate peril typically addressed by federal programs. Cerio emphasized that media accounts suggesting higher denial rates failed to consider several crucial factors.
These factors include claims that were accepted but did not exceed deductible thresholds, withdrawn claims, duplicate filings, invalid claims, or those filed by individuals who were no longer Citizens policyholders at the time of the storm. Such factors often skew the numbers when not appropriately analyzed. The overall picture of the insurance market can be affected by misleading data.
A 2023 analysis by Weiss Ratings, which Cerio said misinterpreted claims data, didn’t account for specific procedural differences unique to Citizens. Citizens, as Florida’s insurer of last resort, frequently ensures properties in flood-prone regions. The company also encourages policyholders to file claims, even if they are below deductible levels, so they can potentially qualify for assistance from the Federal Emergency Management Agency (FEMA).
These practices, along with exclusions common to Citizens’ policies, contribute to denial rates that are higher-than-average compared to private market figures. For instance, pool enclosures are not usually covered under Citizens policies, which often leads to denials for damages that fall outside of the policy terms. According to Cerio, understanding these distinctions is essential for grasping the nuances of Citizens’ claims process, and the company’s unique role in the broader market.
