The Miami Herald printed an article on September 21st that was soon followed up by the Tampa Bay Times the next day bashing Citizens for the litigation tactics and for denying claims. I appreciate the articles mostly because it exposes Citizens for what we see everyday in the legal community. Citizens has taken the stance that it will fight every case out there and pay nothing. If you have heard the term that someone cut off their nose to spite their face….this is the perfect example. Citizens issues monthly newsletters and holds frequent meetings where they do nothing more than pat themselves on the back for how much money they have saved by not paying claims. I would encourage readers to look in on some of these meetings, they are public record and will often expose some of the number-fudging they do. Simply put, this is a shell game where people working the claims move money around to make what they are doing look good. Kind of like when you buy a car and they tell you they will offer you more on your trade then just add another dealer fee to the total price. Of course if you haven’t settled any claims you haven’t paid out much money in the past two years. I think that’s obvious to everyone. The question is what happens when all the claims you have avoided settling suddenly come to a head? Citizens has essentially created a traffic jam and the cars keep piling up. Eventually the cars will start moving again and they will run right over Citizens.

The articles discuss that Citizens collects about $2 billion in premiums a year and has an operating budget of about $205 million. The articles also estimate that currently Citizens is spending about $30 million a year in legal fees fighting claims. While this may be surprising to outsiders, not to lawyers on the inside. The articles discusses in large part the rise in water loss claims coming from Miami Dade but also discusses the increase in sinkhole litigation. The article also points out something that gets forgotten sometimes. Citizens used to have a clause in the policy that triggered appraisal. It is a system similar to a binding arbitration and it would avoid litigation when requested.They took that out of their policies around 2010 and since then have dealt with more lawsuits. Again, why is anyone surprised by this? Finally, a bit of good news we hope. The article discusses comments made by the CEO of Citizens wherein he admits that they are looking at the numbers and re-evaluating their strategies. Maybe this is the first sign that the are realizing that the strategy is not working.

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