The senior officials of Citizen Property Insurancewhich is supposed to be the carrier of last resort for homeowners in Florida, sets out the steps they want to see taken in the next special session or in the near future to help the company strengthen its finances.
Some of these steps could be to make it harder for customers to maintain coverage with citizens. The company is also set to embark on a plan to redirect disputes over certain claims to the Division of Administrative Hearings (DOAH) instead of through the circuit courts.
Citizens, with 1.11 million policies overall, exploded in size amid turmoil in the Florida property insurance market that saw private companies forfeit their policies or collapse altogether. The situation only got worse after Hurricane Ian hit the state in late September.
“Florida’s National Businesses Are Bleeding,” Citizens CEO Barry Gilway said to the panelists present at the Florida Chamber of Commerce Annual Insurance Summit in Orlando. “And they’re losing money and the reality is they can’t afford to write additional businesses.”
Florida has established Citizens as a backstop for property insurance, but in some places it dominates the market. Gilway said Tuesday that Citizens had 38% market share in Miami-Dade County and 32% market share in neighboring Broward County.
That means a direct hit from a hurricane in southeast Florida could spell huge losses for the state-backed company.
With Citizens currently posting a surplus, insurance professionals are keeping a close eye on its financial health. Because it is established by the state, Citizens has the power to impose premiums on both its policyholders and those with other insurance policies – including auto insurance – if the carrier is forced to borrow money to pay the claims.
During discussions on what needs to be done to help citizens reduce their exposure, Gilway and other company officials expressed optimism that lawmakers, in their special session scheduled for next week, will impose additional limits on lawsuits against insurers.
A top priority is to eliminate Florida’s longstanding one-way attorney’s fee law that requires insurance companies to bear the cost of plaintiff’s attorney fees when there is a settlement or decision against them. The law was designed to help consumers take on big companies, but insurance industry players say it has allowed a proliferation of lawsuits. Insurance companies have been trying to eliminate the law for at least 20 years.
“Based on all the conversations we’ve had, we’re very optimistic that we’re going to have a great special session,” he said.
Meanwhile, the Citizens’ current legal budget is around $100 million a year and they currently have 20,000 open lawsuits pending. He said the number of cases had continued to rise in recent years.
“It’s just completely and utterly insane what’s going on in the market,” Gilway said.
Christine Ashburn, chief of citizen communications for legislative and external affairs, said Hurricane Ian heightened the need for changes to laws regarding suits against insurers and lawmakers in Southwest Florida were “disgusted” by what they witnessed afterwards. She called the head of law firm Morgan & Morgan by name and said he had come with a bus and had a barbecue in southwest Florida to get people to sign up at his office. “It’s despicable,” she said.
But another major change that citizen representatives would like to see are revisions that would make it easier to remove current policyholders from its policies if they receive offers of coverage from private carriers. Ashburn said she “jokingly calls us Hotel California” because once someone is signed up to Citizens, they can usually stay with the carrier.
General Council of Citizens The Cerio team said the Citizens Council is expected to approve on Wednesday the expenditure of $2 million for a contract with DOAH to provide an alternative dispute resolution process for disgruntled policyholders.
He said the program should start in February. Citizens expect up to 1,200 cases to end up before the state’s administrative judges by the end of next year. He predicted that cases in DOAH will be settled within 100 days and reduce the amount of attorney’s expenses. DOAH judges are appointed by the governors.
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