Florida Insurance Claim Lawyer Blog

This past week Florida state legislators turned their attention to a problem that is becoming increasingly more expensive: questionable sinkhole claims. These claims are purportedly driving up the costs of insurance premiums for Florida homeowners.

The Senate Banking and Insurance Committee heard testimony, but did not take action on the bill which is similar to one that was vetoed by Charlie Crist last year. The bill is aimed at making homeowners' policies more affordable by establishing a more competitive private insurance market.

Senator Garret Richter of Naples stated that all he was trying to do was let the marketplace work and proposes that the bill would allow consumers to choose the product and insurer they want. Sen. Richter was the legislator who steered the previous insurance bill through the halls of the Florida legislature. Former Gov. Charlie Crist stated he vetoed that bill because it was "not consumer-friendly enough".

The last major hurricane to hit Florida was in 2005. Since then, sinkhole claims have exponentially increased. In the past three years sinkhole claims have totaled $2 billion. Also, premiums for sinkhole claims have tripled in the last three years for homeowners across the state. However, two-thirds of claims arise from Hernando, Hillsborough, and Pasco Counties.

Some amendments to the bill were challenged because legislators felt they were too favorable to the insurance industry. Senator Mike Fasano of New Port Richey believes that if the reins are loosened too much, insurers will have the ability to refuse to provide sinkhole coverage.

Although the committee adjourned before finishing work on the bill, they plan on starting back up again.

Continue reading "Sinkhole Claims are Driving Property Insurance Reform" »

One of the main objectives of the newly elected Governor, and many legislators, is to re-visit a property insurance bill that was vetoed by Governor Crist last year. The vetoed bill was supported by the insurance industry, but Governor Crist vetoed the bill and called it "anti-consumer" and stated that it was wrong to allow the insurance companies to raise insurance rates during these very tough economic times.

Newly elected Florida legislators are intent on re-visiting this issue as soon as possible. Indeed, an ambitious re-write of the bill that was vetoed by Governor Crist will get its first public hearing this week as many lawmakers grapple with again trying to reduce costs for the industry.

This new bill (SB 408), sponsored by Sen. Garrett Richter, R-Naples, will make it harder for public adjusters to re-open old claims to holdbacks of payouts pending proof of repairs.

Among other provisions found in the bill include the following:

• Allowing insurance companies to hold back a portion of claims payments until the policyholder shows proof that repairs and replacements are indeed taking place. Insurers have argued that Florida is one of the few states that requires insurers to pay claims up front and does not require proof that claims are not simply being pocketed.

• Reducing to three years the length of time a policyholder can re-file a claim, down from the five year window now on the books.

• Shifting the burden of proof in contested sinkhole cases from an insurance company burden to prove damage wasn't caused by a sinkhole to a policyholder burden to prove it was. It also would require sinkhole work to be under contract before full payment is made.

• Placing restrictions on public adjuster advertising and capping commissions public adjusters can take on re-opened claims.

• Allowing an insurer to cancel a policy within 45 days if state regulators determine the cancellation serves the public or policyholder's interest.

This legislation would be a major win for insurance companies and a major slap in the face for homeowners. As our Miami insurance dispute attorneys have reported, property insurance companies are already pushing double-digit increases past regulators, despite no major storm damage in the last five years and plummeting property values. Still, companies are claiming rates are not high enough to match risk and pay claims.

Continue reading "Florida Legislators Begin to Tackle Property Insurance Legislation that Will Hurt Florida Consumers and May Lead to Higher Insurance Rates and Fewer Payouts to Floridians" »

We've been discussing the coming insurance rate hikes the past few weeks on this blog. The news tells us that the hikes are due to legislative changes and increased scrutiny over sinkhole claims. Also, insurers would like to make coastal property owners take on more of a financial burden due to their increased risks. Now, we may also thank a computer for the coming hikes as well.

A new computer model showing the possible risks of a hurricane demonstrates that the storms may cause more damage than previously expected, especially further inland. The model was created by Risk Management Solutions, a producer of hurricane computer models used by insurers to set rates.

The belief is that hurricanes break up after reaching land. However, the model shows it could take longer for that to happen. This has the effect of increasing damage projections inland. This is the company's first update of the model since 2003 and that there have been significant improvements in research since then. Hurricane Charley was closely examined and used to justify the model's findings. In 2005, Hurricane Charley caused damage as far inland as Orlando.

The Florida Consumer Action Network (FCAN) believes insurance companies will use the model to justify property rate hikes. An executive from Standard and Poors agreed with this assessment. FCAN does not trust the findings and believes the model's data does not have to be justified publicly because the data is allowed to remain confidential.

Despite FCAN's position, its reported that the Florida Commission on Hurricane Loss Projection Methodology has access to that data. Further, this panel is supposed to review the model before it is approved for use by insurers.

Continue reading "Computer Models May Be to Blame for Higher Insurance Rates" »

Between 2006 and 2010 sinkhole claims in Florida have nearly quadrupled. Because of these figures, the Florida Senate Banking and Insurance Committee stated something must be done to curb insurance companies' sinkhole costs.

Although we haven't been directly hit by a hurricane in five years, insurance companies have repeatedly asked the state for rate hikes due, in part, to an increase in claims for sinkholes and other damage.

The Office of Insurance Regulation recently conducted a survey of 211 private insurers. It found that in 2006 there were 2,360 sinkhole claims. In 2010, there were 6,694. These claims totaled $1.4 billion.

The Committee has made a few proposals for legislators to consider this coming term. They proposed that a state-run sinkhole repair program should be created. This means homeowners wouldn't receive checks to repair sinkhole damage, but would have their houses fixed.

It recommends to define what kinds of damage a sinkhole could cause because many of the claims filed have been for damages that are difficult to link directly to a sinkhole. They also suggested limiting coverage to homes and excluding driveways, pools, decks, and other structures.

The Florida Association of Public Insurance Adjusters took issue with many of the recommendations. The Association's president made the following comments: "While the recommendations for changes in the Florida Building Code have merit, the report as a whole lends great weight to insurance company interests at the expense of Florida homeowners." He went on to state that "the report appears to be based heavily on unproven allegations by some insurers that the increase in sinkhole claims is somehow fraudulent."

Continue reading "Florida Sinkhole Claims Are Under Attack by the Insurance Companies" »

State Farm is in the process of finalizing which policies it will drop in the State of Florida. State Farm is the largest private-sector property insurer in the State.

Homeowners with State Farm policies will find out in coming weeks if they've made the cut. Currently, the insurer is in the final stages of notifying 125,000 homeowners that they're being dropped. This process began about a year ago and has forced many Floridians to run to the state's insurer of last resort, Citizens Property Insurance.

The purge of policies was part of a deal that State Farm cut with Florida Insurance Commissioner in 2009. The deal was made so that State Farm wouldn't completely leave the Florida market. As part of the deal, State Farm could keep about 700,000 homeowners policies. In return, the Insurance Commission allowed State Farm to institute a 15 percent rate increase.

The purge has targeted homes within 5 miles of water. A State Farm spokesman confirmed that most of the dropped policies are close to the coast and in places where the company has a high concentration of loss exposure.

According to the spokesman, non-renewal letters have been going out for the past 11 months. One month remains in this process. State Farm is providing its customers with at least six months notice of the non-renewal. Even with these cutbacks State Farm will remain the largest private-sector property insurer in Florida.

More troubelsome yet is the fact that many homeowners, including those dropped by State Farm, could end paying higher insurance premiums but with less coverage.

It is believed that more than 4 million Florida homeowners are about to get hit by rate hikes and shrinking coverage. Even though we have not been hit by a hurricane in five years, the State's insurance regulators have already approved $718 million in rate increases, as well as allowed State Farm to abandon many homeowners forcing many of them to get insurance coverage from Citiznes - Florida's insurer of last resort.

Continue reading "State Farm Insurance Continues its Purge of Florida Homeowners" »

We've already discussed the possibility of insurance rate hikes, but more recent news reports make it seem much more like a certainty. According to industry experts, homeowners could be receiving higher home insurance premiums with less coverage.

It is believed that more than 4 million Florida homeowners are about to get hit by rate hikes and shrinking coverage. Even though we have not been hit by a hurricane in five years, the State's insurance regulators have already approved $718 million in rate increases.

It is interesting to note that profits for U.S. property and casualty insurers rose 63 percent to $27 billion for the first nine months of 2010 from $16 billion for the same period in 2009. At that same time, insurers' claims-paying reserves grew by 7 percent to $545 billion as of Sept. 30 from $511 billion at the end of 2009. Yet despite this news, Florida's insurance companies are seeking rate increases, and Florida's policy makers are considering passing laws that will make it harder for homeowners to bring claims against their insurance companies.

A spokesperson for the Insurance Information Institute (III) states several factors have led to the come rate hikes. These include an increase in reports and payouts for sinkhole repairs. Also, changes in hurricane mitigation discounts have contributed to the coming hikes. According to the III, Florida is exposed to more catastrophic loss than any other state.

"Our population has grown and the building boom of the past few years put more people and more property in areas of the state that are most vulnerable to hurricane damage and storm surge." The spokesperson also stated that a single major catastrophe in Florida could lead to losses as high as $10 billion. As a result, insurance companies basically need the hikes in order to account for this possibility.

In respect to sinkholes, Florida law obliges insurers to pay for full replacement cost upfront for sinkholes. Part of the reason for the surge in sinkhole claims is due in large part to the recent explosion in real estate development throughout Florida, and especially in South Florida. Over development has left the ground susceptible to sinkholes. Plus, while sinkholes occur in other U.S. states, Florida is more prone to sinkhole related problems because of underground limestone that dissolves under certain conditions, especially in areas that have been over developed, according to many leading geologists.

According to the Florida Office of Insurance Regulation, the state-backed Citizens Property Insurance won approval for rate hikes. Citizens justified the rate hikes by stating it needed to become more actuarially sound.

Continue reading "If the Insurance Companies Have Their Way, Florida Homeowners Can Expect to Pay Higher Property Insurance Premiums in 2011" »