Maxwell Frost demands answers on high loss rate of for homeowners entering Citizens arbitration

U.S. Rep. Maxwell Frost is pushing for a federal investigation of Florida’s mishandling of the insurance crisis.

The Orlando Democrat says an alarming number of policyholders with Citizens Property Insurance^[1], the state-run property insurer of last resort, have been forced into arbitration over claims. Moreover, consumers appear to be on the losing end of litigation far more than when bringing claims to private insurers, he said.

Frost, the ranking Democrat on the U.S. House Economic Growth, Energy Policy, and Regulatory Affairs Subcommittee^[2], sent a letter to Gov. Ron DeSantis and GOP legislative leaders demanding to know why.

“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 wrote. “Yet, unlike holders of private insurance policies who can seek to redress such disputes in court in front of juries of their peers, policyholders appealing Citizens’ denial of claims are forced to resolve their dispute using arbitration.”

Frost pointed to provisions of an insurance law (HB 799^[3]) passed by the Legislature in May 2023, which revised rate change limitations for specified policies through Citizens.

DeSantis signed the bill alongside^[4] other legislation intended to impose larger fines on insurers who mishandle claims.

But the result of changes protecting Citizens has led to a near 100% loss rate for consumers engaged in arbitration, Frost said. His Office looked at the 29 cases brought before Florida’s Division of Administrative Hearings, and found in 20 cases that the arbitrators ruled against the petitioners, while the rest of the cases were all withdrawn.

Since Citizens can collect attorneys fees when it wins cases, that adds extra burden on policyholders to even pursue claims to conclusion, Frost’s Office said.

“Due to the way that House Bill 799 is significantly and disproportionately impacting Citizens policyholders, I request documentation and a briefing related to the passage and enactment of this law,” he wrote.

Frost sent copies of the letter to DeSantis, Senate President Ben Albritton and House Speaker Daniel Perez. Florida Politics has reached out to all for comment. He also copied Florida Insurance Commissioner Mike Yaworsky and to Division of Administrative Hearings President David Schwartz.

Frost demanded to know the reason insurance reforms were passed that added burdens on homeowners, particularly those already financially distressed due to disasters impacting their properties.

“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,” he wrote. “Such a disparity could have been prevented and should have been discussed in the legislative process.”

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