A Florida court decision has cleared the way for more than 400 Citizens Property Insurance Corp. disputes to return to the state's Division of Administrative Hearings (DOAH), reinforcing the insurer's authority to resolve claims outside the traditional court system.
The 2nd Circuit Court for Leon County ruled that Citizens is permitted under state law to use DOAH to adjudicate disputes and that the earlier injunction issued by the 13th Circuit Court was overly broad.
According to a report from BestWire, the decision is significant for the Florida property insurance market, where claims disputes have become increasingly common due to rising litigation costs, higher premiums, and continued pressure on carriers following several years of severe weather losses.
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The case originated when policyholder Elmer Lombana challenged Citizens’ arbitration clause, arguing it limited access to the courts and due process rights. A separate constitutional challenge led to the temporary injunction in August, halting arbitration proceedings statewide. Citizens then petitioned the 2nd Circuit in October to compel DOAH to restart the process, and the court agreed, citing legislative changes enacted in 2023 that explicitly allow Citizens to use DOAH “proceedings” for resolving policy disputes.
The ruling aligns with most recent Florida court decisions, which have upheld DOAH arbitration as consistent with state law. The court also noted that Florida statutes generally support arbitration as a dispute-resolution mechanism and provide protections for policyholders participating in the process.
For Citizens, the ability to continue using arbitration has operational and financial implications. The insurer said DOAH proceedings typically produce decisions in about 90 days - far faster than the nearly two-year average timeline in state court. Faster resolutions can reduce legal expenses for both the carrier and policyholders, which is a significant consideration in Florida, where claims litigation has been a key driver of rate pressure across the homeowner’s market.
However, the system has drawn criticism. According to the report, US Rep. Maxwell Frost has raised questions about how the arbitration framework was developed and whether it disadvantages consumers. Frost pointed out that Citizens has prevailed in nearly all challenges brought through the DOAH process this year.
Citizens continues to play a major role in Florida’s homeowner insurance landscape as the largest writer of homeowners multiperil coverage in 2024, with 14.84% of direct premiums written. Universal Insurance Holdings Group, State Farm, Florida Peninsula, and Slide Insurance Group round out the top five carriers by market share.
