The number of property owners covered by the state’s insurer of last resort has dropped dramatically — but options for resolving disputes between Citizens Property Insurance Corp.’s and its customers over what’s owed when a claim occurs recently got a boost.

The state-backed insurer expects to have slightly more than half a million policyholders by the end of the year. The policy roster has plunged 63% from the 1.4 million-policy peak in September 2023, when the state’s insurance market wobbled in the aftermath of 10 private insurers going insolvent between 2019 and 2023.

That means that it's less likely that all Florida insurance policyholders will be tapped to shore up Citizens in the event of a catastrophic hurricane, as happened after a conga line of storms pounded the state during the 2004 and 2005 seasons.

But hidden in the bullish picture is a battle over an unresolved byproduct of Florida's tort reform efforts this decade.

Namely, how to create a healthy property insurance market and still provide a channel for customers to challenge claims settlements they feel do not reflect the cost of the damage they have suffered, either by a broken pipe or a hurricane. As Florida enters the most active portion of the 2025 hurricane season, it is no small controversy.

And Citizens and its remaining 500,000-plus customers are only the latest to face this vexing, and potentially costly, challenge.

How tort reform boosted insurance market, raised legal challenge issue
Fears of a property insurance meltdown that could have paralyzed Florida's real estate industry — and the potentially crushing liability that Citizens was carrying — spurred special legislative sessions to prevent a crisis.

During those sessions in 2022 and 2023, specifically, lawmakers enacted judicial system changes they believed necessary to curtail excessive — and some even say fraudulent — lawsuits they and insurance industry voices said were taking a toll on the private market in addition to the state’s climatological and geographical vulnerability to hurricanes.

Today, state officials say those reforms are doing the job. But lawyers and consumer advocates remain concerned that customers will ultimately get fleeced twice — first by still nation-leading pricey insurance premiums and then by claims checks that will leave them paying more than they should have to in repairing damage.

The changes hobbled policyholders' ability to sue over claims disputes with their insurer. That is because attorney fees are no longer automatically added to a settlement as they formerly were, decreasing attorney incentive to take the cases. It is especially the case when the disputed amount is on the smaller side but a big expense for a household: $10,000 or so.

Years later, Citizens has depopulated — the term for shifting policies from its books to private insurers — to the tune of 1 million customers.

A major reason this has been possible, the company, state officials and insurance industry representatives have said, is because the legal reforms have lured new private insurers into Florida. On Sept. 18, the Office of Insurance Regulation announced two new property insurers have stepped into the market — the 15th and 16th new insurers since the legal changes were made.

“This is all great news,” Jeremy Pope, Citizens’ chief administrative officer, told a Citizens’ committee Sept. 17.

But one of those legal changes that Citizens wanted — and sees as crucial in reducing its litigation costs — is facing its undoing.

Part of the effort to tamp down costs

In 2023, the Florida Legislature granted Citizens the right to send claims disputes to a special court run by the state Division of Administrative Hearings, often referred to as DOAH.

There, judges, paid by salaries that Citizens funds, act as arbitrators in Citizens’ disputes. The insurer's board of governors approved a $19.3 million contract with DOAH to pay the administrative costs of these claims hearings through 2027.

In those proceedings, however, policyholders who get in front of the judge almost always lose — 90% of the policyholder claims against Citizens that reached the arbitration judge were denied, giving Citizens the right to legal fees from the claimant.

Now, though, the procedure is on hold, as a Hillsborough County judge has found that a Hurricane Ian victim has a substantial chance of success on the merits of his case. The judge's ruling found that the DOAH arbitration procedure should not go forward in the case of Martin Alvarez, or any other Citizens' policyholder, because of the violation of constitutional rights it presents.

Judge Melissa M. Polo issued an injunction against the administrative court hearings in these cases. The plaintiff's attorney argues that this quasi-judicial procedure unfairly violates a policyholder’s right to a fair trial. More lawsuits seeking to void the arbitration have followed.

Citizens, however, has appealed the injunction against the DOAH arbitration hearings and continues to refer cases to the administrative procedure since that Aug. 2 injunction. It plans to increase the number cases going to the arbitration hearings to 3,800 a year, according to public documents first reported by the Sun Sentinel and ProPublica.

Faster, cheaper, but is it fair?

The DOAH arbitration hearings allow disputes to be resolved much faster, said Michael Peltier, spokesperson for Citizens. It usually takes less than 90 days, compared to an average of two years in civil court, he said.

“The DOAH process, which has been operating for 50 years, offers a fair and efficient venue for settling disputed claims and the statute that specifically authorizes Citizens to use DOAH is constitutional,” Peltier said. “For policyholders, the process allows disputed claims to be resolved in a matter of months instead of waiting nearly two years under the state court system.”

The Hillsborough judge's injunction, however, is seen as a victory by plaintiff attorneys who see Citizens’ 90% success rate in the administrative hearings as evidence of a deck stacked against the policyholder with a legitimate claim.

“It’s shocking,” Harold Levy, founder and managing partner of HL Law Group in Fort Lauderdale, said of the one case he's seen where a policyholder was able to get a favorable decision in the administrative court, compared to the number he's seen withdrawn or settled.

“When you look at it, practically speaking, you have a very, very advanced timeframe. Things have to happen very quickly," Levy added. "You're spending a lot of money up front and timeframes that are very onerous, and you're going in front of judges who we feel are very strongly on the side of Citizens.”

The chances and the odds

About 1,500 Citizens' policyholder cases have gone to the administrative procedure since the practice was started in 2024, as of a count dated July 2025. Citizens can invoke the procedure after the insurer receives notice of a policyholder's intent to sue.

Peltier says that 90% of that initial group sent to the administrative procedure settle before it gets to the judge. And 1-in-4 are settled for an average of $30,000, he said.

“When we see evidence that supports a finding that the claim is covered, we give the policyholder the benefit of the doubt and pay the claim,” Peltier said. “I would argue that that is a major reason our success rate is so high when those last few cases make their way to final hearing.”

Another 50% of the cases are settled by Citizens with a $250 to $300 payment. And another 11% of the cases have been withdrawn, Peltier said.

In the Tampa case, however, paperwork from another administrative claim hearing illustrates the high stakes even when a jury trial is not involved. In one West Palm Beach case, a CItizens' policyholder withdrew her claim on the hearing date. Still, the policyholder was ordered to pay Citizens’ court costs: $45,000.

Arguments for injunction are due in the District Court of Appeal next month.

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