Report: How Florida's state-run insurer skirts lawsuits
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Citizens Property Insurance Corp. has, for two years, funneled lawsuits brought against it into an arbitration system that it funds, where rulings have overwhelmingly favored the insurer, ProPublica revealed.
Why it matters: While cases heard in arbitration tend to move faster, the process also denies homeowners key rights, including the opportunity to investigate claim denials, according to ProPublica.
- As of July 21, Citizens had won 90% of cases before these judges, compared with 55% in circuit courts, where such lawsuits would normally be heard.
Catch up quick: Florida lawmakers created Citizens in 2002 as an insurer of last resort — a backstop when residents can't find coverage in the private market.
- Citizens had to develop rates based on the state's top insurers to avoid competing with the private market. However, after eight hurricanes tore through Florida between 2004 and 2005, lawmakers removed that rule.
- In 2023, Citizens became the state's largest property insurer. State lawmakers then passed a slate of reforms aimed at shedding some of its policies and making Florida more hospitable to private insurers.
Friction point: Among these reforms was the power for Citizens to route lawsuits filed by policyholders to the Florida Division of Administrative Hearings (DOAH), ProPublica reported.
- Citizens, by contracting with DOAH, covers the salaries of judges who decide its cases.
- Homeowners can't opt out of DOAH, and its judges have also denied motions seeking disclosure of potential conflicts they might have as arbitrators.
The other side: DOAH arbitration "provides a well-established, impartial, and efficient process for policyholders," Citizens spokesperson Michael Peltier told ProPublica.
- Policyholders no longer have to "wait nearly two years, on average, for a resolution of their claim," he added.
What's next: Citizens aims to send more than 3,800 cases a year to DOAH and has sent more than 1,500 since February 2024, per ProPublica.
Yes, but: Legal challenges loom. In August, a circuit judge in Tampa upheld a statewide injunction halting DOAH hearings.