The Citizens Property Insurance claims management provided a number of reports to the Citizens Board of Governors yesterday. For readers of this blog and policyholders who want to know what Citizens thinks of its claims handling, I suggest that you read the various reports which I have attached to this post.1

At the end of the meeting, I made a public comment, limited to three minutes, after reading these reports and listening carefully to the discussion. Here were my primary takeaways:

  1. Citizens Claims management is much more sophisticated than a decade ago when I served on the Citizens Property Insurance Reform Task Force.
  2. Citizens new claims in litigation have significantly dropped over the past year. It appears a lot of that is related to AOB lawsuits not being filed.
  3. Citizens drop in new lawsuits has occurred at a greater rate than other private Florida insurance companies per the statistics provided.
  4. Citizens has doubled its success in zero litigation payouts in four years indicating it is more successful at defending lawsuits and paying nothing.
  5. While Citizens has reduced new lawsuits, it litigates far more claims per premium revenue dollars than other private carriers. This suggests that Citizens takes a much harder line on claims payments than other insurers.
  6. Most property and casualty companies pay no more than 5% of their earned premium dollar to defend lawsuits. Citizens spends a lot more than this benchmark suggesting that it takes a much harder line on claims which then end up in litigation. While I commend the initiatives to reduce the cost of defending the lawsuits, the harder the line of not paying and paying as little as possible usually results in higher defense costs. It also makes policyholder attorneys work harder and spend more hours to win.
  7. The insurance industry in Florida is acting somewhat as an oligopoly and sharing information far in excess of the limited anti-trust exemption provided in Florida and federal law. One Governor of Citizens noted the anti-trust implications of a request for Citizens to share how its managed repair program works with other insurance companies. The insurance industry needs to follow anti-trust law and not just pay lip service to it. Sharing of forms and underwriting results is allowed. Perhaps the executives and managers with Citizens and those working as competitors in the Florida insurance industry should read a blog post I wrote 12 years ago, Antitrust Implications for Insurance Trade Organizations that Promote Inter-Company Networking.
  8. Why do we have governing board members on Citizens who are executives from other Florida insurance companies? These other companies are not taking policies that then end up with Citizens.
  9. The claims survey needs more transparency about the methodology used to arrive at these numbers. Any survey can be tweaked to give a result. For example, was the survey sent to the more than 7,000 Citizens policyholders who filed lawsuits last year?
  10. The awarding of an attorney fee multiplier is statistically rare. The insurance industry and their lobbyists undermine confidence in judges—who should be allowed to make these decisions—and the justice system in general when they suggest otherwise.

Again, there is a wealth of information in the attached claims reports. Please read them if you want to understand why Citizens may be giving you a hard time on paying your claim.

Thought for The Day

The amount of meetings I’ve been in – people would be shocked. But that’s how you gain experience, how you can gain knowledge, being in meetings and participating. You learn and grow.
—Tiger Woods
1 Citizens Property Ins. Corp. Claims Committee Meeting, February 23, 2021. Meeting Minute Notes; Cost of Defending Claims; Non-Weather Water Claims, Managed Repair Program, and AOB Update; Claims Executive Summary; Water & Mold Services Vendor Contract.