Residents evacuate following Hurricane Ian in Matlacha Isles, Florida, US, on Saturday, Oct. 1, 2022. (Credit: Eva Marie Uzcategui/Bloomberg)

Citizens Property Insurance Corp. is reporting a new fraud trend hitting Florida after hurricanes Ian and Nicole: Uncontracted drone vendors are moving across neighborhoods, offering to fly above policyholders’ homes and photograph damage.

However, Citizens covers the costs to contract directly with drone vendors at no charge to policyholders. Florida’s insurer of last resort reported that uncontracted drone vendors typically overcharge for their services, while providing images that are of little value to claims adjusters.

In addition to the issue with uncontracted drone vendors, Citizens also reported that policyholders are being incorrectly told they must pay boat rental costs incurred by the company’s adjusters. The insurer noted that it pays for all adjusting costs.

Citizens updates Hurricane Ian losses

Citizens also updated its Hurricane Ian loss estimates, and now anticipates direct losses and loss adjustment costs from the Category 4 storm to total $3.8 billion. The insurer reported this is a significant increase compared with early estimates of $2.3 billion-$2.6 billion.

While initial projections were based on just one hurricane model, the updated numbers include input from a second hurricane model, actual claims activity seen so far and additional provisions for litigation costs and inflation, according to Citizens.

The insurer noted that these are still early projections, and losses will take years to be fully revealed. As it stands, Citizens plans to reevaluate the projections at year’s end when it will have three full months of claims activity to review.

FEMA reported on Nov. 10, 2022, it received 44,000 Hurricane Ian flood claims and has paid nearly $437 million to policyholders due to the hurricane.

While Hurricane Nicole is still in the early stages of loss projections, Citizens does not anticipate a major finical impact from the late-season hurricane.

In early modeling, CoreLogic projected that Hurricane Nicole would cause around $750 million in privately insured losses. The modeled losses include damage from hurricane winds and storm surge, but exclude increased losses due to assignment-of-benefits.

As of Nov. 11, 2022, Citizens had more than 1.1 million policies on its books. The company reported its policy count has grown 47% since the start of this year as Florida’s private property market has continued to face major challenges.

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