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Get Ready to Have Your Property Insurance Rates Increased by at least 15% while Insurance Companies Make it Harder to Bring a Claim to Recover for Damages to Your Property

6a00d8341c64d253ef00e54f69334b8834-800wi.jpgThe legislative session in Tallahassee has ended. During this past legislative session lawmakers in Tallahassee had an objective of reforming Florida’s property insurance system. Consequently, property insurance was a big priority during the legislative session. Unfortunately, insurance companies, and not policyholders, are the big winners.

Our lawmakers passed Senate Bill 408 and now its up to Governor Rick Scott to decide whether the bill should become law.

Senate Bill 408, virtually guarantees a 15 percent premium “reinsurance” increase for Florida policyholders who have no choice but to buy property insurance on their homes if they have an outstanding mortgage. This is a backdoor tax and fee increase that will hurt most homeowners, consumers and small business owners at a time with very high foreclosure and unemployment rates, and a fragile economic recovery under way.

Moreover, homeowners who have no choice but to buy property insurance from Citizens Property Insurance Corp. will likely get the annual 10 percent increase, which continues to be authorized by law.

This premium increase comes after six years of no hurricanes and when the property and casualty insurance industry has record profits. Profits for U.S. property and casualty insurers rose 63 percent to $27 billion for the first nine months of 2010.

Senate Bill 408 also contains many other provisions that are anti-consumer as well. The reason being is that, for instance, the insurance lobby was able to convince our lawmakers that they needed to shorten the time in which hurricane and sinkhole claims could be brought. Insurers have been dealing with a large amount of claims that date back as far as 2005 in the aftermath of Wilma and also a recent rise in sinkhole claims. Instead of five years to file a windstorm claim, the bill proposes a 3 year limitation.

If this bill becomes law, policyholders are certainly going to be affected. Not only will their insurance rates go up, but many legitimate claims are going to be denied because of this restrictive time period. Water and mold damage often take a few years to present itself. Under the new law, someone who notices mold damage 3.5 years after the date of loss is out of luck. This provision does not take into account the fact that it can some time for damages to become evident. According to insurers, this provision is needed to curb fraud.

The bill also allows insurers to provide “additional or supplementary” information to the state without requiring top officers to certify that the data backing up their claim for a rate increase is truthful. Basically, this provision enables insurance companies to freely commit a fraud while they argue that time periods need to be shortened because of fraud. This is certainly a double standard.

Another troublesome provision of this bill is the fact that for people who pay for replacement cost insurance, in cases of hurricane repairs, homeowners will have to pay for some repairs in advance and hope to be reimbursed by the insurance companies. Many families simply can’t afford this burden, or wait for the insurance companies to “drag their feet” to pay these claims.

Times are tough enough as it is for many in Florida. This bill only makes it tougher on all hard working Floridians and helps insurance companies raise are rates without any oversight and with reckless abandon to Florida as a whole.

At Alvarez & Barbara, LLP, we have considerable experience dealing with insurance companies and claims. If you’re having difficulty with an insurance claim, contact Alvarez & Barbara, LLP to discuss your claim in greater detail today.

State Farm’s Request for a Rate Increase Does Not Add Up for Hard Working Floridians

state farm-thumb-225x357-13776.jpgAs we have discussed previously on this blog, State Farm Florida Insurance, the state’s largest private property insurer, wants to raise rates by a statewide average of 28 percent.

Although Florida has dodged a direct hit by hurricanes the past five years, State Farm claims that the increase is required to cover rising losses for claims unrelated to storms such as sinkholes. The increase comes after the company received approval in 2009 to raise average statewide rates by 28 percent and approval in November to raise them again by 6.6 percent.

State Farm had 678,849 residential property insurance policies in the state as of late last year, including 128,506 in Broward, Palm Beach and Miami-Dade counties and 175,084 in the Orlando area.

Some perspective based on the numbers….

Let’s say that the average homeowner’s insurance policy premium each month in Florida is $128/month.

State Farm has 678,849 residential property insurance policies.

That equals about $86,892,672.00 that State Farm collects each month in Florida from homeowners.

That is $1,042,712,064.00 that State Farm collects for the year.

Rather than pumping that money out of the country to overseas reinsurers to help them pay for opulent conferences in Monte Carlo, let’s say State Farm opted invest that money. And with that investment let’s say State Farm secures a modest average return of 10% per year (the stock market average return is 12% in the long run). This means that State Farm makes $104,271,206.40.

Keep in mind that insurance companies are required to keep reserves which they invest. These reserves are in the BILLIONS of dollars. However, forget about that now and focus solely on what State Farm receives in premiums from homeowners.

State Farm claims that they need to increase rates because of an increase in sinkhole hole claims over the past few years that are related to the recent rise in housing starts and the real estate meltdown. The recent rise 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.

Nonetheless, let’s do some math. State Farm’s spokesman claims that sinkholes were responsible for State Farm spending $351 million over the last three years. That is $117 million for one year.

If State Farm gets a 10% return from the investment of the money it receives from homeowners insurance premiums, then they will only be short $12,728,794.00 for the year. Now, remember the BILLIONS of dollars that State Farm is required to hold in reserves and think about the money received on the investment of those reserves. $12 million is pocket change to State Farm, and they aren’t really losing anything. Especially if you consider all the money that is shipped overseas by State Farm and others.

However, if State Farm increases rates by 28%, then the average premium in Florida goes from $128/month to $163.84/month. That’s an extra $291,959,377.92 that State Farm will receive when they claim only “need” an extra $12,728,794.00.

It sure sounds, and looks, like State Farm is trying to take many hard working Floridians for granted.
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EXTENDED BODY:
Consider Your Options. Contact Us Today.

Before opening our law firm in 2006, our attorneys worked for some of the state’s, and nation’s, largest law firms, and worked representing the insurance companies for years. Our attorneys are now uniquely positioned to use that experience to assist individuals and businesses alike throughout Florida with their insurance claims. As a result, our attorneys are well versed in the impact insurance has on businesses, condominiums, and individuals alike. Our insurance litigation practice group is prepared to tackle your insurance claim.

Given our extensive experience litigating for, and against, insurance companies, our insurance litigation practice group is prepared to provide aggressive, efficient and effective representation on a broad spectrum of insurance claims in Florida for local, national, and international clients. We are prepared to advocate insurance claims at the pre-suit stage, trial, appellate and arbitration levels.

If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP for a free and confidential consultation to discuss your rights.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

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

3198716696_6a1fdb1acd.jpgOne 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.
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EXTENDED BODY:
Consider Your Options. Contact Us Today.

Before opening our law firm in 2006, our attorneys worked for some of the state’s, and nation’s, largest law firms, and worked representing the insurance companies for years. Our attorneys are now uniquely positioned to use that experience to assist individuals and businesses alike throughout Florida with their insurance claims. As a result, our attorneys are well versed in the impact insurance has on businesses, condominiums, and individuals alike. Our insurance litigation practice group is prepared to tackle your insurance claim.

Given our extensive experience litigating for, and against, insurance companies, our insurance litigation practice group is prepared to provide aggressive, efficient and effective representation on a broad spectrum of insurance claims in Florida for local, national, and international clients. We are prepared to advocate insurance claims at the pre-suit stage, trial, appellate and arbitration levels.

If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP for a free and confidential consultation to discuss your rights.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

Computer Models May Be to Blame for Higher Insurance Rates

HurricaneAndrew1.jpgWe’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.


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EXTENDED BODY:
Consider Your Options. Contact Us Today.

Before opening our law firm in 2006, our attorneys worked for some of the state’s, and nation’s, largest law firms, and worked representing the insurance companies for years. Our attorneys are now uniquely positioned to use that experience to assist individuals and businesses alike throughout Florida with their insurance claims. As a result, our attorneys are well versed in the impact insurance has on businesses, condominiums, and individuals alike. Our insurance litigation practice group is prepared to tackle your insurance claim.

Given our extensive experience litigating for, and against, insurance companies, our insurance litigation practice group is prepared to provide aggressive, efficient and effective representation on a broad spectrum of insurance claims in Florida for local, national, and international clients. We are prepared to advocate insurance claims at the pre-suit stage, trial, appellate and arbitration levels.

If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP for a free and confidential consultation to discuss your rights.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

Insurance Companies are Gearing Up to Push Through Legislation That Will Result in Insurance Companies Paying Florida Homeowners Less Money on Sinkhole Claims and Making it Harder for Homeowners to Bring a Claim Against Their Insurance Company

sinkhole-2.jpgIn an effort to reduce costs for insurance companies, the State senate is pushing forward a bill which addresses sinkhole damage claims, as well as other claims.

The new bill is expected to contain many of the provisions found in a bill which was vetoed by Governor Charlie Crist. One of these provisions includes a time limit on filing claims after a hurricane and one which will make the rate approval process easier to navigate. It is also expected to address other cost drivers such as fraud.

The new bill will include provisions targeted at reducing what insurance companies are paying out for sinkhole claims. The insurance industry claims that many sinkhole claims are not legitimate. However, 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, 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 never been over developed, according to many leading geologists.

The state Senate’s Banking and Insurance Committee is expected to release an interim study on the state’s sinkhole insurance climate. Between 2006 and 2010, $2 billion in claims have been paid out. This payout amount nears the amount paid out in a small hurricane.

Insurance companies are concerned about these costs due to the large number of claims for foundation cracks that are attributed to sinkholes. However, the insurance industry states that these claims may not be sinkhole related. Because insurance companies contend that they cannot often rule out that the damage was caused by a sinkhole, especially in light of all the over development that has taken place over the past few years, tens of thousands of dollars are being paid out by the insurance companies to resolve these claims.

Our Miami insurance dispute lawyers handle sinkhole claims for homeowners. Our attorneys represented insurance companies before 2006, when we opened a firm dedicated to fighting for the rights of consumers. We understand how insurance companies work. And we have the knowledge and experience necessary to represent homeowners in disputes over an insurance claim.

The new bill is expected to contain language which will define structural damage from a sinkhole. It is also expected to contain language on what is and what is not covered by insurance policies. Governor-elect Rick Scott is expected to support this bill which may further regulate public adjusters.
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EXTENDED BODY:
If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP toll free at 866-518-2913 for a free and confidential consultation to discuss your rights.

Florida Hurricane Damages Costs Millions of Dollars to Insurance Companies

hurricane damage.jpgThe USA TODAY reports that if a major hurricane were to hit coastal communities, its devastating financial effects could reach far beyond those who actually incur damages.

After Hurricane Katrina, private insurers fled coastal areas, including Florida, which caused many states to expand their own insurance companies. For instance, in Florida we have seen the recent expansion of Citizens Insurance despite the legislative’s mandate that it be the insurer of last resort. Nonetheless, much of the legislation that either created or expanded these state-owned insurance companies, such as Citizens herein Florida, contain provisions allowing states to enforce large surcharges on other insurance companies and on other policyholders.

But why would the State of Florida need to enforce such a surcharge? Here are some facts: Citizens, Florida’s insurance plan, currently insures property worth $433 billion. However, Citizens only has $10.5 billion in cash reserves and reinsurance, which in simple terms is insurance for insurance companies whenever they have to make a big payout.

Simple math tells us Florida’s insurance plan is vastly underfunded. If a large hurricane were to hit Florida, surcharges are almost a certainty. Plus, these surcharges can be levied on almost any insurance policy, including auto, property, and liability insurance.

According to FEMA Administrator, Craig Fugate, “If [Florida] [has] a major hurricane such as Andrew, they’re going to be in a lot of trouble.”

Therefore, it is important that you check the financial strength of your insurance companies, especially now during the height of hurricane season.
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If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP toll free at 866-518-2913 for a free and confidential consultation to discuss your rights.

Miami Homeowner’s Insurance Premiums Could Rise Dramatically if Lawmakers Pass Deregulation

432689_palm_tree.jpg
The insurance industry hopes to gain enough support to pass a new law that will make it easier to hike property insurance rates, according to media reports.

Last week, our Florida Insurance Lawyer Blog reported a request by Citizens Property Insurance for a double-digit rate increase. And Allstate is requesting regulators to permit rate hikes by an average of 18 to 33 percent, the Sun-Sentinel reported.

But the real goal is to do away with the regulatory process that requires the companies to go through the Office of Insurance Regulation when requesting rate hikes. Gov. Charlie Crist vetoed a bill that would have permitted property insurance companies to raise rates up to a certain percentage without a full review by the Office of Insurance Regulation.

With Crist running for the U.S. Senate, Florida will have a new governor in January.

“The governor that vetoed the measure won’t be here next year, so I think that we have a good shot,” Sen. Garrett Richter, R-Naples, said Tuesday. He sponsored the bill last session and will likely again carry the proposal.

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.

Only the governor’s veto prevented the measure from becoming law; it actually had the support of Insurance Commissioner Kevin McCarty. Of the current candidates for governor, only Alex Sink is on the record as likely opposing the idea. “We should not have deregulation in the insurance market, the role of the insurance commissioner is critical,” Sink has said.

Neither Rick Scott nor Bill McCollum has addressed the issue.

Perhaps you are thinking that our representatives would no more pass such a law than they would limit the number of hours of care nursing homes are required to provide. Or limit the ability of customers to collect damages when injured by negligent conditions at big box stores and other accidents on business property.

In fact lawmakers passed both those measures during the last legislative session.

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EXTENDED BODY:
If you are facing a dispute over an insurance claim in South Florida, contact Alvarez & Barbara, LLP toll free at 866-518-2913 for a free and confidential consultation to discuss your rights.

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