A busy hurricane season in Florida has forced the state's largest insurance company to reject a staggering percentage of residential claims.
What's happening?
NOTUS, short for News of the United States, reported that publicly funded Citizens Property Insurance has denied 77% of claims stemming from Hurricane Debby in August, per Newsweek.
Citizens spokesperson Michael Peltier explained that many of its customers who filed a claim related to Hurricane Debby reside in Tampa and the surrounding region.
"That area received minimal wind damage but significant flood/surge damage. Since surge and flood are excluded, most of the claims have been denied or closed with no payment," Peltier told the outlet, adding that "it makes sense that Citizens' denial rate would be higher as we insure the riskiest and most flood-prone properties in Florida."
Why are the denied claims concerning?
Citizens is supposed to function as a contingency plan for residents who can't afford rising premiums or have been dropped by private companies. However, the increasing abundance and severity of storms and other extreme weather events — fueled by anthropogenic activities — have led the government entity to see a 130% spike in its active policies since 2019, jumping from 520,000 to 1.2 million as of October.
This overreliance has caused concern among government officials, including Gov. Ron DeSantis. "We can't have millions of people on [Citizens] because if a storm hits, it's going to cause problems for the state," he said, per Newsweek.
​​"Citizens — according to its own documents — is potentially one catastrophic storm or storm season away from finding itself with losses that exceed its immediate ability to pay by many billions of dollars," Sen. Sheldon Whitehouse of Rhode Island told NOTUS.
"Trying to recover billions of dollars from Floridians, who are already paying more than four times the national average for property insurance, is unlikely to be feasible economically or politically and raises serious questions about Citizens' ability to pay out claims in a timely manner."
Newsweek pulled data from the Florida Office of Insurance Regulation, which found that over 21,000 claims filed with state providers for residential properties damaged by Helene have been closed as of Oct. 18, and 65% were done so without payment. Meanwhile, 64% of the 20,335 settled claims related to Milton were closed without payment.
The combined worth of residential claims from both storms is estimated at nearly $2.8 billion.
What's being done about Florida's insurance crisis?
Mark Friedlander, the director of communications at the Insurance Information Institute, said we can learn from Hurricane Debby and that he expects a "similar scenario" for those affected by hurricanes Helene and Milton. He said residents without flood insurance must prove a denied claim in order to pursue a Federal Emergency Management Agency emergency grant.
"Claims that are being closed without payment following Hurricane Debby are primarily flood claims that were submitted to a property insurer," Friedlander said, via Newsweek. "In order for a consumer to qualify for a FEMA emergency grant, they must submit a flood damage claim to their property insurer and prove that it was denied. This is specifically for consumers that don't have flood insurance."
Officials have tried to address skyrocketing home and auto insurance rates by passing new laws and regulations. The Florida Department of Financial Services recently released a new guideline for insurance adjusters to mitigate "unfair and deceptive acts" and "post-storm fraud."
Others have constructed disaster-proof homes equipped with hydrostatic vents and high-impact windows to limit the physical and financial repercussions caused by hurricanes.
It's also worth noting that, according to the Federal Emergency Management Agency, most homeowners insurance does not include flood damage. If you live in a flood-prone area, it's worth reviewing your policy and checking with the FEMA-operated National Flood Insurance Program to see if you're eligible for coverage.
Editor's note: A previous version of this article mischaracterized Friedlander's statement as a concern that there would be similar denial rates. The article has been updated to provide his comments in full.
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