TALLAHASSEE — Floridians filing a homeowners insurance claim had the lowest chance in the 50 states of getting a check from their insurer in 2022, with more than a third of claims going unpaid.
And last year, those filing claims with two of the state’s largest, healthiest companies — subsidiaries of State Farm and Allstate — had the lowest chance of all.
Nearly half of all claims closed by those companies last year went unpaid.
That’s according to data released this week by Weiss Ratings, a Palm Beach Gardens-based ratings agency with a history of critiquing the insurance industry.
“The big picture conclusion is that the insurers in Florida are stiffing their customers,” company founder Martin D. Weiss told the Tampa Bay Times/Miami Herald Tallahassee bureau.
Why the larger insurers have the highest rate is not clear. One former Texas regulator said it could be because homeowners believe their policies cover more damage than they really do. After years of legislative and regulatory changes, many policies today cover less than they did five years ago.
The information on payments comes from reports filed by the companies with state regulators and a national association — data that is not released to the public.
Regulators across the country collect troves of data about the performance of companies. It is assembled by the National Association of Insurance Commissioners. Companies have claimed some of the data is a trade secret, and the association has resisted efforts at more transparency.
Weiss says his company posts the information it purchased from the National Association of Insurance Commissioners on its website for Florida-specific insurers.
“A consumer, before buying a policy from a company, should know right up front what percentage of claims are being denied,” Weiss said. “We’ll be glad to make that number public, but we’d much prefer either the authorities or the company do that job.”
Allstate, State Farm lead pack
Weiss Ratings released data to the Times/Herald on 40 companies that primarily or exclusively write homeowners insurance policies in Florida. It does not include state-run Citizens Property Insurance, the state’s largest insurer, which does not report its data.
Castle Key Indemnity Co., a subsidiary of Allstate, last year closed 47% of its claims without making a payment, the highest rate in the state. Its sister company, Castle Key Insurance Co., was third, paying nothing on 46% of the claims it closed.
State Farm Florida, a subsidiary of the national company, was second, with 46.4% of its claims being closed with no payment.
Among the 40 companies in Florida last year, half did not pay on at least 30% of claims.
The two companies have been historically at the top of the pack the last few years. In 2021, and 2022, State Farm closed more than half of its claims without making a payment. Two years ago, so did both Castle Key companies.
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Explore all your optionsA separate set of national data from two years ago, the most recent year available, shows that 35% of all Florida claimants received nothing. Only insurers in Washington, D.C., and Puerto Rico had a higher rejection rate.
Many of those who did get paid had to wait a long time. In 2022, Florida had the second-highest rate of claims paid after 60 days. Only Louisiana had a higher rate.
The fact that two of the state’s largest companies topped the list surprised Weiss. He expected the small, Florida-based companies that dominate the market and insure the state’s riskiest areas to have the worst rate of paying out claims.
Several of the smaller companies have been cited for poor claims-handling practices, such as Tampa-based Heritage Insurance, which was issued a near-record $1 million fine by the Office of Insurance Regulation in May for how it handled Hurricane Ian claims. (Heritage’s rate of claims closed without payment was 31% last year.)
State Farm Florida, by comparison, is known to insure safer inland homes built after the enhanced Hurricane Andrew building codes took effect.
With the backing of national companies, State Farm Florida and Castle Key are critical to the stability of Florida’s shaky insurance market. State Farm Florida is the second-largest insurer in Florida with about 650,000 homeowners policies. Castle Key Indemnity Co. is ninth, with about 230,000 policies.
A spokesperson for State Farm said Weiss’ data is not accurate. By focusing only on closed claims, a spokesperson said, it doesn’t include a smaller subset of claims left open at the end of the year. The company had about 3,100 open claims last year.
State Farm spokesperson Roszell Gadson would not say what the accurate figure is.
“As an organization, we take pride in our customer service and are committed to paying what we owe, promptly, courteously, and efficiently,” Gadson said.
Allstate said the data did not match their own internal figures for the percentage of claims closed without a payment. For Castle Key Indemnity Co., the rate was 34% last year, and 23% for Castle Key Insurance Co, according to their numbers.
“We protect our customers, and our claims processes help them recover by quickly providing fair payments based on their selected coverages, like deductibles and coverage amounts,” the company said in a statement.
What’s behind closed claims?
There are many reasons why a claim might be closed without payment, said Florida Office of Insurance Information spokesperson Samantha Bequer.
The damage could be below the policy deductible or not be covered by the policy, such as situations in which flooding caused the damage. The policyholder could also have withdrawn the claim, or it could be a duplicate.
The data reported by the companies and provided by Weiss Ratings doesn’t give any reasons.
“We caution against using the data to draw conclusions or make analyses regarding Florida’s insurance market,” Bequer said in a statement.
Florida’s insurance companies and state lawmakers have long blamed frivolous claims and lawsuits for causing the state’s insurance crisis, but neither Bequer nor the insurance companies blamed those issues for rate of claim denials.
Weiss said he believes the high rate of denying claims could be a business strategy.
“I have yet to find any other explanation for it,” he said.
There could be several reasons, but it’s more likely that policyholders are filing claims believing they have coverage when they don’t, said Birny Birnbaum, executive director of the Center for Economic Justice and a former chief economist at the Texas Department of Insurance.
He said that’s an issue that regulators could address by rejecting policy forms that might be “misleading or obtuse or deceptive.” They should also be looking at policy provisions that are unfair, such as requiring mandatory arbitration or exorbitant deductibles that hollow out coverage.
Birnbaum said regulators years ago should have been analyzing claim denials and proposing remedies. (Florida regulators last year pushed for legislation giving them more oversight over how companies handle claims.)
“These are extraordinarily high numbers of claim denials,” Birnbaum said.
Data remains a secret
Bequer, the Office of Insurance Regulation spokesperson, said the office couldn’t comment on the data because the information was a trade secret that had to be protected under state law.
Regulators across the country and insurance companies have repeatedly fought the release of detailed information about how insurers handle claims, Birnbaum said. Even simple but important information, such as the average homeowners premium in every state, isn’t released until three years later, when it’s no longer useful.
Birnbaum said the office’s secrecy was hypocritical. When former Florida insurance commissioner David Altmaier was president of the National Association of Insurance Commissioners, he used “secret” data on insurers’ rates of litigation and released a report claiming that Florida made up 8% of all homeowners claims and 76% of all litigation against insurers.
That report became the basis for Gov. Ron DeSantis and the Legislature to pass sweeping reforms making it harder and more expensive to sue insurance companies.
Altmaier never publicly released the underlying data supporting the study, however. He now lobbies on behalf of insurance and financial services companies.
Birnbaum, who was a consumer advocate at the association for 25 years, said consumers need more information.
“People buy insurance for a promise of the future,” Birnbaum said. “And if company X denies 20% and company Y denies 50% of claims, you can bet consumers are going to go to company X.”
