Citizens Property Insurance Corporation, Florida’s largest insurer, has reportedly denied over three-quarters of the claims filed after Hurricane Debby struck the state’s Big Bend region in early August. This has raised concerns that a similar pattern could emerge for claims related to the more recent hurricanes, Helene and Milton.
According to a report by NOTUS, Citizens has denied 77% of the claims it received for damage caused by Hurricane Debby. The storm, which primarily affected the Big Bend area, brought significant flooding and surge damage, but only minimal wind damage. As of September 27, 51% of all residential claims statewide related to Debby were closed without payment. Citizens, which serves as Florida’s state-backed insurer of last resort, handled a large proportion of these claims due to its extensive policyholder base in the region.
Why Claims Are Being Denied
Michael Peltier, a spokesperson for Citizens, explained that the majority of claims in the impacted region involved flood and surge damage, which are not covered by standard homeowners' policies. These types of claims have either been closed with no payment or outright denied. "Since surge and flood damage are excluded from most property policies, most of the claims have been denied or closed without payment," Peltier said.
In addition to flood-related claims, some were denied because they fell below the policy's deductible or involved properties that had been transferred to other insurers through Citizens' Depopulation Program. This program, designed to offload policies to private insurers, has seen hundreds of thousands of policies transferred over the past year.
"Because Citizens insures high-risk properties, especially those prone to flooding, it is not surprising that our denial rate would be higher compared to private insurers," Peltier added. "These properties are often the most vulnerable to extreme weather events."
Flood Claims and FEMA Grants
The high rate of claims denied by Citizens is particularly concerning for homeowners who are unable to obtain flood insurance. According to Mark Friedlander, the director of communications at the Insurance Information Institute, many homeowners are submitting flood claims to their property insurers in the hopes of qualifying for a Federal Emergency Management Agency (FEMA) emergency grant.
“Consumers who don’t have flood insurance and whose claims are denied by their property insurer must submit those denied claims to FEMA to be eligible for disaster assistance,” Friedlander explained. He anticipates a similar outcome for flood-related claims from Hurricanes Helene and Milton, both of which caused widespread flooding in parts of Florida.
Citizens’ Financial Stability Under Scrutiny
The scale of claims denials following Hurricane Debby has prompted concern about the future financial stability of Citizens Property Insurance. The insurer has experienced significant growth in recent years, with more than 1.2 million active policies as of October 2024—up from around 520,000 five years ago. The rise in Citizens’ policy count is largely due to private insurers leaving the market and raising premiums, which has forced many homeowners to turn to the state-backed insurer.
U.S. Senator Sheldon Whitehouse, Chairman of the Senate Budget Committee, has raised concerns about Citizens' ability to remain solvent, especially in light of climate-related weather events. Whitehouse pointed out that Citizens is one catastrophic storm away from facing losses that could exceed its capacity to pay claims.
"According to Citizens' own documents, the insurer is potentially one severe storm away from financial insolvency," Whitehouse told NOTUS. "It’s becoming increasingly unlikely that Floridians, already paying the highest property insurance premiums in the nation, will be able to bear the costs if Citizens faces significant losses."
Florida Governor Ron DeSantis has echoed these concerns, stating earlier this year that Citizens is “not solvent” and warning that if a major storm were to hit, it could create widespread financial problems for the state.
Rising Premiums and the Role of Citizens
Citizens Property Insurance was initially established to serve as a safety net for Floridians struggling to obtain coverage from private insurers. However, its rapid growth into the state's largest insurer has raised questions about its long-term sustainability.
As the state’s insurer of last resort, Citizens is meant to provide coverage to homeowners who are unable to secure insurance in the private market, particularly those with properties in high-risk areas. Despite its role, the large number of policies it holds has sparked concerns about the insurer’s ability to handle claims during major storms.
In response to these challenges, Citizens has been working to reduce its exposure by offloading policies through its Depopulation Program. This program aims to shift policies to private insurers, easing the financial burden on the state-backed insurer. According to Citizens’ website, the insurer is committed to helping policyholders find coverage in the private market, which is seen as a step toward stabilizing Florida’s insurance market.
Claims and Losses from Hurricanes Helene and Milton
The denial rates observed with Hurricane Debby have raised alarms for future claims, particularly for Hurricanes Helene and Milton, which caused extensive damage across the state. As of October 18, 2024, Florida insurers had received 55,392 residential claims related to Hurricane Helene, totaling an estimated $570 million in losses. Of these, more than 38% have already been closed, with nearly 14,000 claims denied.
For Hurricane Milton, a larger storm that impacted more areas, a total of 178,374 residential claims had been filed by October 18, with losses estimated at $2.2 billion. Approximately 11% of these claims have been settled, with many still awaiting resolution.
As more claims are processed, concerns continue to grow that a significant portion will be denied, particularly for damage from flooding—an ongoing issue in Florida’s storm-prone regions.
Conclusion
As Florida faces increasing risks from severe weather events and rising premiums, the ability of Citizens Property Insurance to manage claims, stay solvent, and provide timely payouts remains under intense scrutiny. The high denial rate for Hurricane Debby claims, especially those related to flooding, is likely to be a precursor to similar outcomes for future storms, raising concerns for homeowners and policymakers alike. With Florida's vulnerability to hurricanes and flooding expected to continue, finding a sustainable solution to the state’s insurance crisis will be critical in the coming years.
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