JACKSONVILLE, Fla. – In an effort to help what he calls “distressed” Citizens Property Insurance policyholders in Florida, Rep. Maxwell Frost last week sent a letter to Gov. Ron DeSantis and other state officials pressing them to release information on House Bill 799 and the mandatory arbitration process involving the state-backed property insurance company.
Frost, who is a ranking member of the subcommittee on economic growth, energy policy and regulatory affairs, said more than 700,000 homeowners are forced to appeal claim denials to resolve their disputes through arbitration before the Florida Division of Administrative Hearings (DOAH).
“Citizens plays a critical role in helping Florida homeowners obtain homeowners insurance by providing coverage to those who otherwise could not get it,” Frost said in the letter. “Although it is important that Citizens’ solvency be maintained, it is also important that Citizens policyholders are able to dispute incorrect or unfair claims decisions.”
Frost’s letter is also a response to House Bill 799, which was passed in May 2023.
Policyholders with private property insurance companies still have the right to take disputes to court, which Frost pointed out as unfair.
“The 2023 requirement that Citizens policyholders resolve all claims disputes through arbitration harms Citizens policyholders by depriving them of the opportunities that private policyholders have to litigate their claims and appeal if they lose,” the letter read. “Florida’s decision to force Citizens policyholders into arbitration takes advantage of working-class Floridians using public insurance, at the same time when Florida’s affordable housing crisis is pricing people out of their homes and forcing many Floridians who can’t afford to buy homes to rent instead.”
Frost is now calling on DeSantis and other state leaders to provide documents and communications related to House Bill 799 and mandatory arbitration for Citizens policyholders no later than Sept. 25.
Frost warned that Citizens policyholders did not stand a chance as they were losing almost all arbitration cases, which can include disputes over covering things like storm damage.
On Monday, ProPublica, an independent, non-profit investigative newsroom, published a report that found Citizens has taken more than 1,500 insurance disputes to mandatory arbitration, where it wins more than 90% of final hearings. In court, it wins just over half the time, according to ProPublica.
Lisa Miller, who is a former Florida Deputy Insurance Commissioner and current insurance consultant, spoke with News4JAX by phone today about Representative Frost’s request for more information from the governor’s office.
“And arbitration is a little more formal, and it’s sometimes called binding arbitration, meaning when you agree to arbitration, whatever the decision is from the arbitration proceeding, you don’t go to court to try to overturn it,” Miller said. “I believe that he, Representative Frost, is on a fact-finding mission. And I think if he were to actually look, you can actually look at all of the cases, I don’t see anything untoward about these decisions that are coming out of DOAH, but you know Representative Frost is representing his constituency and he’s curious.”
Right now, the arbitration process is on hold after a Florida judge found it violates part of the Florida Constitution designed to ensure access to courts.
News Service of Florida reported that a Hillsborough County judge issued a temporary injunction on Aug. 1, blocking the arbitration process to resolve claims while a legal challenge proceeds.
“Plaintiff has made a preliminary showing that the DOAH (Division of Administrative Hearings) forum is structurally biased and deprives policyholders of neutral discovery, motion practice and judicial review,” Judge Melissa M. Polo wrote.
Citizens is appealing.
In a statement, Citizens spokesman Michael Peltier defended the process, which was approved by the Legislature.
”We will certainly adhere to the (judge’s) order while it remains in effect,” Peltier said. “The DOAH process offers a fair and efficient venue for settling disputed claims and the statute that specifically authorizes Citizens to use DOAH is constitutional. We look forward to making our case on appeal.”
Frost said he expected a response to his demands no later than Sept. 25.
News4JAX did not receive an immediate response from the governor’s office, and Frost wasn’t available for further comment.
Citizens had 771,637 policies as of last week.
Citizens was created as an insurer of last resort but became Florida’s largest carrier in recent years amid problems in the private market. State leaders have long sought to hold down the number of policies in Citizens, at least in part because of financial risks if Florida gets hit by a major hurricane or multiple hurricanes. Citizens reached as many as 1.4 million policies in 2023, but what is known as a “depopulation” program and other changes in the market have helped shrink it. The depopulation program involves shifting policies to private insurers.