State backed Citizens Insurance Corporation has gained national attention over the past years, although the bad seems to outweigh the good in most instances. Citizens was known as one of the most aggressive carriers after the 04-05 hurricanes, constantly refusing to honor the appraisal provision in its policy and forcing policyholders to file suit to recover amounts they were owed. Even then it often drug policyholders through lengthy appeals when a judge or jury found in their favor.

With the number of remaining hurricane claims being almost non-existent, many thought Citizens’ willingness to pay valid claims would increase. Many also believed that premiums would stabilize or drop with the reduction in large claims being submitted. As it turns out, however, we were wrong. While Citizens is reducing the coverage it offers, slashing the number of policies it issues, and limiting the types of properties it will insure (condo owners that rent their units may soon be gone altogether), Citizens will be raising its rates again next year for the third time.

In response to a request by Representative Frank Artilles, R-Miami, Citizens recently compiled data explaining why, despite collecting $2.2 billion in annual premiums, it is increasing rates. Interestingly, although Florida has not been hit by a hurricane in almost 7 years, Citizens is still paying an average of $2 million in attorney fees each month to battle policyholders seeking payment under their policy. These claims range from water losses to sinkhole claims, all of which Citizens is continuing to take a hard-lined position, evidencing again that the carrier would rather pay its attorneys than fully indemnify its policyholders.

Consumers can expect to see the amount of litigation and associated expenses continue to rise. While Citizens policies previously contained an appraisal provision that enabled disputes to be resolved without the need for litigation, Citizens has now limited the applicability of the appraisal process or removed it altogether. Citizens attempts to explain this change by alleging that the appraisal process is flawed and can be abused by third parties, however, the process has been a standard in property insurance contracts throughout the country for over 100 years. In reality, Citizens did not like the results coming out of the appraisal process and would rather put its customers through the time and expense of litigation to resolve even the simplest disputes.

Despite cutbacks, Citizens operates as the state’s largest insurer responsible for 1/4 of the issued policies. As a quasi governmental entity, Citizens should be held to a higher standard than other insurers, not lower. Unfortunately for the time being it appears that any sense of accountability is simply not there.