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An exodus of national insurance companies from Florida, combined with local private insurers canceling plans, has left many homeowners there with only one option: Citizens Property Insurance Corp.
The state-backed nonprofit home insurance company was set up to be an insurer of last resort for those who can’t find coverage in the private market. With 1.3 million policies in force as of last month, three times as many compared to five years ago, Citizens is by far the largest provider in the state.
But now, with Hurricane Helene and Hurricane Milton both making landfall and devastating homes in Florida within just days of each other, the insurer will almost certainly have to pay out billions of dollars in claims.
Can Citizens stay afloat?
The answer lies in the insurer’s structure – which might be reassuring to policyholders, even if it ultimately leads to higher premiums.
Staying solvent
Florida Gov. Ron DeSantis warned earlier this year that Citizens was “not solvent” and that it can’t function with “millions of people on that because if a storm hits, it’s going to cause problems for the state.”
The only way someone qualifies for insurance from Citizens is if the lowest quote they get from a private insurer is more than 20% greater than the Citizens’ quote. Their property also has to be valued at $700,000 or less unless they are located in Miami-Dade or Monroe counties, where the cap is $1 million.
Flood waters inundated a neighborhood after Hurricane Milton came ashore on October 10 in Punta Gorda, Florida. The storm made landfall as a Category 3 hurricane in the Siesta Key area of Florida, causing damage and flooding throughout Central Florida.
Joe Raedle/Getty Images
But while Milton and Helene will undoubtedly squeeze Floridians and the state-backed home insurance provider, the storms won’t cause it to go under.
“Citizens cannot go insolvent like a private insurer,” Mark Friedlander, a spokesperson for the Insurance Information Institute, an industry trade group, told CNN in a statement. Because of the way it is structured, “in a worst-case scenario where its reserves would dwindle due to a high volume of storms claims, Citizens is allowed by state regulations to implement a premium surcharge to its policyholders and other Florida consumers to ensure all claims are paid,” he said.
An aerial picture taken on September 30, 2022 shows the only access to the Matlacha neighborhood destroyed in the aftermath of Hurricane Ian in Fort Myers, Florida.
Ricardo Arduengo/AFP/Getty Images/FILE
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Those “other” customers include people who have other kinds of policies — including auto, boat, pet and renters— living in Florida who could see their premiums go up to cover Citizens’ claims even if they don’t have a Citizens policy.
Representatives for DeSantis and Citizens did not respond to CNN’s request for comment. The Republican governor said Thursday in a CNBC interview that since Hurricane Ian two years ago, more private home insurance companies “are coming into Florida.” The state has sought to offload some of Citizens’ policies to them. And at the end of last year, it was able to transfer 300,000 policies to private insurers.
A man cleans debris inside a gas station in Lakewood Park, Florida, on Thursday, October 10. A tornado caused by Hurricane Milton hit the area.
Giorgio Viera/AFP/Getty Images
A tree toppled by the storm lies atop a home in Siesta Key, Florida, on Thursday,
Rebecca Blackwell/AP
Boats are piled up on a pier after they were washed ashore when Hurricane Milton passed through Punta Gorda, Florida, on Thursday.
Ricardo Arduengo/Reuters
Liz Kelly and her son Matt salvage items from their destroyed home in North Fort Myers, Florida, on Thursday. A tornado associated with Hurricane Milton ripped through their neighborhood. Matt dove on top of his mother as the roof was peeling off the home. She says he saved her life.
Andrew West/The News-Press/USA Today Network/Imagn Images
A vehicle drives though a flooded street after Hurricane Milton in Siesta Key on Thursday.
Chandan Khanna/AFP/Getty Images
Members of the Volusia Sheriff's Office rescue residents from a flooded area of South Daytona, Florida, on Thursday.
Nadia Zomorodian/Daytona Beach News-Journal/USA Today Network/Reuters
A house lies toppled off its stilts after Milton passed through Florida's Bradenton Beach.
Rebecca Blackwell/AP
The roof of Tropicana Field, destroyed by Hurricane Milton, is seen in St. Petersburg on Thursday. Tropicana Field is the home of Major League Baseball’s Tampa Bay Rays.
Julio Cortez/AP
Austin Stolpe clears mud from the floor of the Celtic Ray Public House after it was inundated with floodwaters in Punta Gorda.
Joe Raedle/Getty Images
People look at an uprooted tree in Odessa, Florida, on Thursday.
Julio Cortez/AP
A man cleans sand off a beach-side condominium unit in Venice, Florida, on Thursday.
Sean Rayford/Getty Images
Cars move slowly through Matlacha, Florida, on Thursday after Hurricane Milton damaged power lines.
Marta Lavandier/AP
A person rides a bicycle past a damaged building in the Palmetto Beach neighborhood of Tampa on Thursday.
Jefferee Woo/Tampa Bay Times via AP
A boat and debris are seen along a road in Bradenton, Florida, on Thursday.
Cristobal Herrera-Ulashkevich/EPA-EFE/Shutterstock
People walk near damaged beachside property in Venice on Thursday.
Sean Rayford/Getty Images
The building that houses the Tampa Bay Times newspaper was damaged when a construction crane fell during the storm in St. Petersburg, Florida.
Tampa Bay Times/AP
People are rescued from an apartment complex in Clearwater on Thursday.
Bryan R. Smith/AFP/Getty Images
Debris clogs a roadway in Siesta Key on Thursday.
Chris Urso/Tampa Bay Times/AP
A satellite image captures Hurricane Milton reaching the coast of Florida on Wednesday, October 9.
NOAA
A man in Sarasota, Florida, records the storm as it makes landfall on Wednesday.
Marco Bello/Reuters
The Segundo family, who evacuated from nearby Davis Island, plays a board game at a hotel in Tampa on Wednesday.
Rebecca Blackwell/AP
Brandon Marlow walks through a flooded street in Fort Myers, Florida, on Wednesday.
Joe Raedle/Getty Images
Marie Cook reacts to her damaged home after a tornado formed by Milton touched down in Wellington, Florida, on Wednesday.
Bill Ingram/Palm Beach Post/USA Today Network via Reuters
Stephen Lundgren lies on the floor of the Vanguard High School cafeteria as he tries to get some sleep at the Ocala, Florida, shelter on Wednesday.
Doug Engle/Ocala Star-Banner/USA Today Network/Imagn Images
Ron Rook, who said he was looking for people in need of help or debris to clear, walks down a deserted street in downtown Tampa on Wednesday.
Rebecca Blackwell/AP
Check-in kiosks are covered in protective plastic at Orlando International Airport on Wednesday. The airport ceased operations at 8 a.m. Wednesday.
Paul Hennessy/Anadolu/Getty Images
Palm Beach County Sheriff's deputies attend to residents affected by a reported tornado in Wellington on Wednesday.
Bill Ingram/The Palm Beach Post/USA Today Network/Imagn Images
People walk through the Disney Springs shopping complex in Orlando ahead of the hurricane's arrival on Wednesday.
Saul Martinez/Getty Images
Payton Wyse and Andrew Goncharsky pack what they can as they evacuate their Fort Myers apartment on Wednesday.
Joe Raedle/Getty Images
Christian Burke stands at the door of his home in Gulfport, Florida, on Wednesday. Outside, a boat sits on its side due to Hurricane Helene.
Rebecca Blackwell/AP
A Lee County deputy sheriff talks to a driver near the Fort Myers Beach bridge, which was closed on Wednesday.
Ricardo Arduengo/Reuters
Connor Ferran surveys what is left of his Fort Myers home after what appeared to be a tornado tore the roof off on Wednesday. Milton spawned several tornadoes as it neared landfall.
Joe Raedle/Getty Images
Nicolette Mariano, CEO and aquaculture biologist for her oyster farm, Treasure Coast Shellfish, secures oysters from the farm's dockside nursery in Sebastian, Florida, on Wednesday.
Kaila Jones/TC Palm/USA Today Network/Imagn Images
An employee of Roofs Done Right attaches metal shutters to a building in Palm Beach, Florida, on Wednesday.
Damon Higgins/Palm Beach Daily News/USA Today Network via Imagn Images
Ted Carlson puts McKenzie, a cat belonging to his friend Evan Purcell, into a pickup truck as they evacuate Purcell's home on Florida's Anna Maria Island on Tuesday, October 8. "This place couldn't handle Helene," Carlson said. "It's all going to be gone."
Rebecca Blackwell/AP
Members of the Florida Army National Guard check for any remaining residents in nearly deserted Bradenton Beach on Tuesday. Around them, piles of debris from Hurricane Helene still sit outside damaged homes.
Rebecca Blackwell/AP
A man wades through a street in Havana, Cuba, that was flooded on Wednesday.
Yamil Lage/AFP/Getty Images
A hospital worker walks by as an AquaFence flood wall is put into place around Tampa General Hospital on Tuesday.
Bryan R. Smith/AFP/Getty Images
NASA astronaut Matthew Dominick shared this photo from the International Space Station on Tuesday. "We flew over Hurricane Milton about 90 minutes ago," he said. "Here is the view out the Dragon Endeavour window."
NASA
Aurelio Ortiz sits in his flooded home in Celestún, Mexico, on Tuesday.
Lorenzo Hernandez/Reuters
Debris from homes flooded by Hurricane Helene is piled up on curbs in Port Richey, Florida, on Tuesday.
Mike Carlson/AP
People prepare sandbags in Orlando on Tuesday.
Jose Luis Gonzalez/Reuters
John Fedor waits for transportation to a shelter after his flight was canceled at the Tampa International Airport on Tuesday.
Chris O'Meara/AP
David Jalving throws outdoor furniture into his father's pool in Fort Myers to prepare for Hurricane Milton.
Marta Lavandier/AP
Heavy traffic flows northbound on Interstate 75 as people evacuate the Tampa Bay area late on Monday, October 7.
Julio Cortez/AP
A man clears debris left by Hurricane Helene from his home in Treasure Island, Florida, on Monday.
Bryan R. Smith/AFP/Getty Images
A dock is damaged in St. Pete Beach, Florida, on Monday.
Octavio Jones/Reuters
Piles of debris from Hurricane Helene remain uncollected in Treasure Island on Monday.
Tristan Wheelock/Bloomberg/Getty Images
Domenic Gerald takes a break to watch the latest forecast while packing up his father's vacation home in Fort Myers Beach on Monday.
Marta Lavandier/AP
A man in Progreso boards up an apartment building to protect it from Hurricane Milton on Monday.
Martin Zetina/AP
Contractors in New Port Richey help clean debris left by Hurricane Helene.
Mike Carlson/AP
Tropicana Field opened Monday as a staging site for workers and operations. Part of its roof was later torn off during the storm.
Octavio Jones/Reuters
Customers check mostly empty bread shelves at a shopping warehouse in Kissimmee, Florida, on Sunday, October 6.
Gregg Newton/AFP/Getty Images
In pictures: Hurricane Milton unleashes its fury
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As for any claims it may have to pay due to Milton, Citizens has about $15 billion it can tap into, according to financial filings. Because of that and the insurance it takes out on the policies it is responsible for, what’s known as reinsurance, it’s unlikely it will have to make serious immediate changes to pay out Floridians’ claims, said Denise Rappmund, a senior analyst at Moody’s Investors Service.
BARTOW, FLORIDA - SEPTEMBER 29: Talukder Mahtab surveys the roof of his business after it was hit by the winds and rain from Hurricane Ian on September 29, 2022 in Bartow, Florida. The hurricane brought high winds, storm surge,s and rain to the area causing severe damage. (Photo by Gerardo Mora/Getty Images)
Gerardo Mora/Getty Images
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But it is possible that more private insurers in Florida, who have to adhere to state guidelines for how much they can raise premiums, will cancel policies after this year’s hurricanes, leading more people to turn to Citizens, she said. “When you don’t allow the price to be matched to the risk, then the private companies can’t make a business there and they retreat.”
Still, if fewer private insurers want to do business in Florida, Citizens would likely need to push for higher rates on its customers more and potentially even reworking what its policies cover, Rappmund told CNN.
Bobby Atwood, a 29-year-old product manager who recently moved to Orlando but rents out a home he owns in the Tampa Bay area, was kicked off a private home insurance policy three years ago as his property value jumped due to the influx of new residents moving there. Like many other Floridians, he was forced to turn to Citizens for coverage.
Despite knowing his insurance costs are likely going to go up, Atwood said he found it “reassuring” to know that his policy won’t get canceled.
“It’s nice to know that Citizens isn’t just going to file bankruptcy,” he said.
