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.
The answer lies in the insurer’s structure — which might be reassuring to policyholders, even if it ultimately leads to higher premiums.
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.”
“Thankfully, Florida avoided the worst-case scenario forecasted with Milton, but that doesn’t change the fact that Citizens is potentially one catastrophic storm or storm season away from insolvency,” Sen. Sheldon Whitehouse, a Democrat from Rhode Island, told CNN in an emailed statement.
“Should claims exceed the insurer’s ability to pay, Citizens has a mechanism to pass its losses on to Florida families, who are already paying sky-high premiums,” said Whitehouse, who chairs the Senate’s Budget Committee and is leading an investigation into Citizens’ viability. “Recouping billions of dollars in losses from Floridians is unlikely to be feasible economically or politically, let alone in time to pay massive claims — hence the Budget Committee concern about possible requests for a federal bailout.”
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.
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.
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 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.
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A cyclist navigates a damaged road in Manasota Key, Florida, on October 13.
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A vehicle is stuck in beach sand in Manasota Key.
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A man peers into the remains of a home in Englewood, Florida, on October 13.
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A family walks back up a sand-coated street after checking on their storm-damaged home in Manasota Key on October 12.
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A toppled tree lies on a home on Manasota Key on October 12.
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Connie Gore, left, is comforted by her friend and neighbor Cecelia Smith on October 11 after a tornado caused by Hurricane Milton devastated her home in Martin County, Florida.
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Houses sit destroyed in Port St Lucie, Florida, on October 11 after a tornado hit the area and caused severe damage as the hurricane swept through.
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Robert Turick stands in one of his home's bedrooms, where the high water mark from Hurricane Milton can be seen on the wall in Englewood. A small positive, Turick said, is that he hadn't yet begun repairs after Hurricane Helene brought 3-foot floodwaters. He, his daughter and his dog were staying elsewhere when Milton flooded his home around to 5 feet.
Cristobal Herrera-Ulashkevich/EPA-EFE/Shutterstock
A rescue team checks a damaged property in Manasota Key on October 11.
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A person walks through a flooded street in New Port Richey, Florida, on October 11.
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The rails of a pool ladder are all that is visible of a pool that was filled with sand after the passage of Hurricane Milton in Venice, Florida.
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This bridge in Riverview, Florida, was damaged by Milton.
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A man cleans debris inside a gas station in Lakewood Park, Florida, on October 10. A tornado caused by Milton hit the area.
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A tree toppled by the storm lies atop a home in Siesta Key, Florida, on October 10.
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Boats are piled up on a pier after they were washed ashore when Milton passed through Punta Gorda, Florida, on October 10.
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Liz Kelly and her son Matt salvage items from their destroyed home in North Fort Myers, Florida, on October 10. 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.
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A vehicle drives though a flooded street in Siesta Key on October 10.
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Members of the Volusia Sheriff's Office rescue residents from a flooded area of South Daytona, Florida.
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A house lies toppled off its stilts after Milton passed through Florida's Bradenton Beach.
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The roof of Tropicana Field, destroyed by Milton, was shredded in St. Petersburg. Tropicana Field is the home of Major League Baseball’s Tampa Bay Rays.
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Austin Stolpe clears mud from the floor of the Celtic Ray Public House after it was inundated with floodwaters in Punta Gorda.
Julio Cortez/AP
People look at an uprooted tree in Odessa, Florida, on October 10.
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A man cleans sand off a beach-side condominium unit in Venice.
Marta Lavandier/AP
Cars move slowly through Matlacha, Florida, after Hurricane Milton damaged power lines.
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A person rides a bicycle past a damaged building in the Palmetto Beach neighborhood of Tampa on October 10.
Cristobal Herrera-Ulashkevich/EPA-EFE/Shutterstock
A boat and debris are seen along a road in Bradenton, Florida.
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People walk near damaged beachside property in Venice on October 10.
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The building that houses the Tampa Bay Times newspaper was damaged when a construction crane fell during the storm in St. Petersburg, Florida.
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People are rescued from an apartment complex in Clearwater on October 10.
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Debris clogs a roadway in Siesta Key on October 10.
NOAA
A satellite image captures Hurricane Milton reaching the coast of Florida on October 9.
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A man in Sarasota, Florida, records the storm as it makes landfall on October 9.
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The Segundo family, who evacuated from nearby Davis Island, plays a board game at a hotel in Tampa on October 9.
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Brandon Marlow walks through a flooded street in Fort Myers, Florida, on October 9.
Bill Ingram/Palm Beach Post/USA Today Network via Reuters
Marie Cook reacts to her damaged home after a tornado formed by Milton touched down in Wellington, Florida.
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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 October 9.
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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 October 9.
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Check-in kiosks are covered in protective plastic at Orlando International Airport on October 9. The airport ceased operations at 8 a.m.
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Palm Beach County Sheriff's deputies attend to residents affected by a reported tornado in Wellington on October 9.
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People walk through the Disney Springs shopping complex in Orlando ahead of the hurricane's arrival.
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Payton Wyse and Andrew Goncharsky pack what they can as they evacuate their Fort Myers apartment on October 9.
Rebecca Blackwell/AP
Christian Burke stands at the door of his home in Gulfport, Florida, on October 9. Outside, a boat sits on its side due to Hurricane Helene.
Ricardo Arduengo/Reuters
A Lee County deputy sheriff talks to a driver near the Fort Myers Beach bridge, which was closed on October 9.
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Connor Ferran surveys what is left of his Fort Myers home after what appeared to be a tornado tore the roof off on October 9. Milton spawned several tornadoes as it neared landfall.
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Nicolette Mariano, CEO and aquaculture biologist for her oyster farm, Treasure Coast Shellfish, secures oysters from the farm's dockside nursery in Sebastian, Florida.
Damon Higgins/Palm Beach Daily News/USA Today Network via Imagn Images
An employee of Roofs Done Right attaches metal shutters to a building in Palm Beach, Florida, on October 9.
Rebecca Blackwell/AP
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 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. Around them, piles of debris from Hurricane Helene still sit outside damaged homes.
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A man wades through a flooded street in Havana, Cuba.
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A hospital worker walks by as an AquaFence flood wall is put into place around Tampa General Hospital on October 9.
NASA
NASA astronaut Matthew Dominick
shared this photo from the International Space Station on October 9. "We flew over Hurricane Milton about 90 minutes ago," he said. "Here is the view out the Dragon Endeavour window."
Lorenzo Hernandez/Reuters
Aurelio Ortiz sits in his flooded home in Celestún, Mexico, on October 9.
Mike Carlson/AP
Debris from homes flooded by Hurricane Helene is piled up on curbs in Port Richey, Florida, on October 9.
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People prepare sandbags in Orlando on October 9.
Chris O'Meara/AP
John Fedor waits for transportation to a shelter after his flight was canceled at the Tampa International Airport.
Marta Lavandier/AP
David Jalving throws outdoor furniture into his father's pool in Fort Myers to prepare for Hurricane Milton.
Julio Cortez/AP
Heavy traffic flows northbound on Interstate 75 as people evacuate the Tampa Bay area late on October 7.
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A man clears debris left by Hurricane Helene from his home in Treasure Island, Florida.
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A dock is damaged in St. Pete Beach, Florida, on October 7.
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Piles of debris from Hurricane Helene remain uncollected in Treasure Island.
Marta Lavandier/AP
Domenic Gerald takes a break to watch the latest forecast while packing up his father's vacation home in Fort Myers Beach.
Martin Zetina/AP
A man in Progreso boards up an apartment building to protect it from Hurricane Milton.
Mike Carlson/AP
Contractors in New Port Richey help clean debris left by Hurricane Helene.
Octavio Jones/Reuters
Tropicana Field opened as a staging site for workers and operations. Part of its roof was later torn off during the storm.
Gregg Newton/AFP/Getty Images
Customers check mostly empty bread shelves at a shopping warehouse in Kissimmee, Florida, on October 6.
Michael Peltier, a spokesperson for Citizens, said the insurer is expecting to see its policy count drop even further by the end of the year as more private companies assume Citizens’ policies.
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 Ratings.
Peltier also told CNN that Citizens has “the financial resources to handle claims from Hurricanes Milton and Helene without needing to levy any surcharges or assessments.”
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, Rappmund 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.
