Florida Review of Citizens Property Insurance Arbitration Intensifies Over Policyholder Disputes

Florida Representative Maxwell Frost has requested transparency from state officials regarding House Bill 799 and the mandatory arbitration process for Citizens Property Insurance, the state-backed insurer serving over 700,000 homeowners. The bill requires Citizens policyholders to resolve insurance disputes exclusively through arbitration, unlike private insurers whose policyholders retain the right to take disputes to court. Frost highlighted concerns about the fairness of this process especially since Citizens policyholders are reportedly losing most arbitration cases, primarily involving claims such as storm damage.

A recent investigative report indicated Citizens wins over 90% of arbitration hearings, compared to just over half in court cases, raising questions about the impartiality of the arbitration forum. Arbitration is currently suspended following a Hillsborough County judge’s injunction citing constitutional issues related to access to courts and potential procedural bias in the Division of Administrative Hearings (DOAH) process.

Citizens defends the arbitration framework as fair and efficient, with the company appealing the injunction decision. Officials emphasize that the process was legislatively authorized and aim to continue using it pending appeal outcomes. Meanwhile, Frost has set a deadline for state officials to provide documents and communications on the arbitration policy by September 25 to aid in transparency and oversight.

Citizens Property Insurance was established as an insurer of last resort but expanded rapidly amid private market challenges, reaching 1.4 million policies in 2023. Efforts such as depopulation programs, which transfer policies to private insurers, have reduced this number to approximately 771,637. State leaders remain focused on managing the financial risks tied to Citizens due to Florida’s exposure to significant hurricane damage.

The situation underscores ongoing challenges in balancing consumer protection, regulatory frameworks, and market stability within Florida's property insurance sector. It also reflects broader issues with mandatory arbitration and access to judicial recourse in insurance claim disputes. As legal proceedings advance, insurance professionals should monitor developments closely given potential impacts on claims handling, policyholder rights, and regulatory compliance in the state.