Takeaways:
- Citizens Property Insurance wins 90% of arbitrations
- Administrative hearing judges funded by last-resort insurer
- Plaintiff attorney calls process unfair to claimants
Citizens Property Insurance, Florida's homeowners insurance of last resort, wins over 90% of unpaid claims cases that go to arbitration, according to an analysis by ProPublica.
The high rate of arbitration wins is because Citizens policies require arbitrations by Florida Office of Administrative Hearings (FOAH) judges, whose salaries are funded by the insurer,
Hugh Lumpkin, a partner in the Miami office of Reed Smith, a law firm specializing in insurance recoveries for claimants, confirmed that this is the structure governing claims arbitration.
"There's going to be some claims that require a third party, an arbiter, to say you're right about this part of it, but you're not right about this part," he said. "That person has to be unbiased, and that person has to be willing to listen, and in this case, be willing to bite the hand that feeds it, because these are people that are paid by the same government that established Citizens."
Lumpkin acknowledged that making arbitration faster and less costly is a valid goal, but added that Citizens' arbitration arrangement is unfair.
"What makes this unappealing, unpalatable and wrong is the idea that an administrative law judge is going to make the decision, who is not schooled in what we do for a living and appears, the numbers show, to be heavily biased in favor of Citizens," he said.
Policyholders' claims in these cases are correct about the extent of losses most of the time, according to Lumpkin. "If you take that experience and those results, which are not uncommon, and measure them against the results in these arbitrations that are being managed by Citizens through its appointed representatives, something is not right," he said. "We can't be wrong 97% the time."
