Increased property inspections increase citizens’ profits

It’s annoying for those trying to get or maintain insurance coverage, but more frequent snooping around homes and properties is paying off financially for the state’s largest property insurer.

Since 2022, policyholder inspections have increased by more than 166%, with up to 400,000 inspections planned for this year. The cost of inspections proves to be a worthwhile expense – for every $45 million the company spends on inspections, $100 million is donated to Citizens Property Insurance Corp. will be refunded, Jay Adams, the insurer’s chief insurance officer, told a committee of Citizens’ board of directors on Sept. 24.

Why? The company insists the increased scrutiny identifies potential problem areas that property owners need to address to reduce damages and claims over time. It’s an issue that’s currently on the radar as thousands of Florida property owners struggle with the aftermath of Hurricane Helene.

“This inspection program provides a pretty good ROI (return on investment),” Adams said. “We reduce the frequency of losses so that we see fewer losses on the policies we review. We estimated a return on investment of about $70 million.”

But the inspections and demands have drawn objections and angry reactions across Florida. The chatter on social media focuses on what people call the Orwellian “Big Brother” complex, which leads to additional and unnecessary costs.

The preventative approach hasn’t gone over well with customers like Denise Lapp, 63, of Deerfield Beach, who recently received news that her Citizens insurance had been canceled. Shortly after her inspection last month, she said she received a call from her insurance agent informing her that Citizens was canceling her coverage for a trampoline she had recently purchased.

“This is the biggest nonsense story I’ve ever heard,” said Lapp, who works as a real estate agent.

A changing liability model

As the profit margins of property insurance companies in Florida and nationally shrink or cease to exist, Citizens supports the company with government support, and private insurers say they seek repairs and compensation before they incur costs. They say they try to prevent losses by checking for leaks, hanging branches and outdated electrical equipment, to name a few.

Adams also told the Citizens Committee that more inspections, which provide a more complete record of a property’s condition, increases the likelihood that private insurers will take out a policy and exclude it from Citizens, which is also a long-held goal of the Citizens Committee.

Citizens is Florida’s insurer of last resort and has sought to reduce the number of policies on its books to reduce its own financial risk.

More: Insurance companies are increasingly checking the condition of your home’s interior

Because the nonprofit organization has the authority to impose tax assessments on all property policyholders if their losses exceed their means, the nonprofit organization’s procedures are subject to the state’s open government policy.

The Citizens Board of Governors met last week in Lake Mary, one of 61 counties under an emergency declaration as Helene, a “severe hurricane,” prepared to hit the upper Gulf Coast.

The Citizens’ Actuarial and Underwriting Committee, charged with reviewing the company’s risk levels and underwriting policies, unanimously agreed Sept. 24 to add $41.5 million to cover inspections through September 2029. The full board approved the spending on Wednesday.

The Citizens Committees also learned that the number of policies Citizens carries has fallen from the previous year’s high of 1.412 million to currently around 1.25 million. The board heard that the number of policyholders is expected to fall to 891,184 by the end of the year, a new low since May 2022, before Hurricane Ian devastated the southwest coast.

Lapp said she couldn’t believe her trampoline was putting too much strain on Citizens.

“It has netting all around it” to catch anyone who falls, she said.

Anne Geggis is an insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. YYou can reach her at [email protected]. Support our journalism. Subscribe today.

This article originally appeared in the Palm Beach Post: Property inspections pay off for insurance companies in Florida