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Monday, December 21, 2015
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| ‘Tis The Season |
| We love all the special seasons of the year, but like most of you, this is our very favorite time of the year. Even with the extra busyness of scurrying around to find just the right gifts for the special folks in our lives, we seem to be in a constant state of love, joy, giving, and sharing everything wonderful and beautiful that life has to offer. The holiday music starts it all and then comes what everyone looks forward to: the fabulous bounty of delicious food. It is truly a joyful time for family, friends and the LMA team. The old adage “it’s more blessed to give than receive” rings so true for me as I am always so grateful to have the opportunity to contribute to the joy of others. The truth is I LOVE cooking for others and in return for my cooking and sharing, I get so much love and joy. Like you, I cherish those special moments of this season, so here’s a thought for the new year. Let’s hold on to that joy as we move into 2016 by keeping our eyes and hearts open to any opportunity that comes before us to provide a good meal to anyone! The blessing always comes back to us when we bless others. And speaking of 2016……we are soon closing the door on 2015 and welcoming in the new year. With that new year comes the 2016 Legislative Session. We already have been busily walking and talking in the halls of our state capitol. It will be a grand session–this we can already tell you. As is the case each year, once the session begins, we will start our weekly publications of the LMA Newsletter. Our first publication of 2016, to be released on January 4, will be our Welcome to the 2016 Legislative Session edition. In that newsletter, we will provide you a wealth of information that will enable you to navigate through session, including links to the important portals and websites. We will also give you an overview of many of the bills that have already been filed and the topics we plan to cover for you. Not only is it our job to keep you well informed, it is our pleasure. So be sure and take the time to read the January 4 newsletter and maybe even keep it near for a good resource. |
| AOB – The Conversations Continue |
| Because our readers are fully engaged in the Assignment of Benefits reform legislative debate, we thought it fitting to provide the links and markers to the conversations Citizens had about AOB and its effect on “pocketbooks, people and planning.” At this link is the transcript of the rate/premium conversation Citizens President Barry Gilway gave in response to Citizens Board Member Henderson’s query. On that video, the exchange begins around the 51 minute mark. http://thefloridachannel.org/videos/12915-citizens-property-insurance-corporation-board-governors-meeting-part-2/.
In addition, please listen to the discussion at the 16:39 mark of the Citizens December 9 Board meeting, but really at 21:32 is where Citizen’s Chief Risk Office John Rollins brilliantly quotes statistics about AOB and discussion of the Citizens product changes to try to address the issue. Further, there is a deeper presentation of the rate impact of accelerated water claims that occurred December 8 at the Actuarial and Underwriting Committee. See this link for the recording at about 1:15minutes, extending through the slides that were presented: In a nutshell, here is what I heard at the Citizens meeting: Of all HO-3 water claims reported in 2014, roughly 1 in 10 claims (9.3%) has had an assignment of benefits as of 9-30-2015. For claims reported in 2015, the percentage is 6.5% as of 9-30-2015. However, prior to the most recent manual data pull where Citizens had humans pulling files and manually picking through each one, Citizens only knew that a claim had an assignment of benefit if the claim was already litigated. 43.3% HO-3 water claims reported in 2015 as of 9-30-2015 have had an assignment of benefits. The alarming thing Citizens says they are seeing is that these non-litigated claims with an AOB are moving into litigation at a high rate. Based on a random sample of about 100 files, 18 of the 100 claims had moved into litigation between 9-30-2015 and 11-30-2015. An additional (no less than) 22 of these 100 claims were in appraisal. We all know that a claim moving into appraisal is a precursor for it moving into litigation. Please let me know your thoughts. The Legislature convenes January 12. Thank you! |
| Citizens Letter to Florida’s Insurance Consumer Advocate |
| Please take a quick read of the letter from Barry Gilway to Sha’Ron Jones. Page 2 of this letter says it all:
We (Citizens) also conducted a new manual claim review of a random sample of approximately 1,400 non-litigated files and augmented the data set with those results. This is important because the incidence of AOB on not (yet) litigated claims may indicate a pipeline to future litigation and increased claims costs. In fact, initial conclusions from only this sample were discussed publicly at the December 9, 2015 Board of Governors meeting, and these conclusions are extremely worrisome. Over 43% of the sampled claims had an AOB in place, comprising 46% of the South Florida claims and 36% of those in the rest of the state. LMA will keep you posted as we all anxiously wait to see what the data presented to OIR by the top 25 carriers reveals. Thank you for all of your suggestions! |
| CPIC Attempts Policy Language Changes to Address Troubling Water Loss Claims |
| During its December 9 meeting, the Citizens Property Insurance Corporation’s Board of Governors moved to adopt a series of policy language changes to strengthen the state-run insurer’s position over an ever-increasing number of questionable water loss claims, while continuing to protect policyholders who need immediate emergency repairs. By unanimous vote, Citizens’ board agreed to have staff seek modification of its approved policy language in response to a surge of questionable water loss claims by limiting initial payouts for emergency services and clarifying ambiguous policy language relating to coverages typically affected by water loss claims. The proposed changes will be submitted to the Office of Insurance Regulation for approval. The recommended changes are first steps, board members were told, to better control of costs without jeopardizing customer service, following a spike in the frequency, severity and litigation of water claims particularly in South Florida. Last year that area accounted for 72 percent of all water loss claims. Recent data shows that this troubling claim activity is spreading to other regions of the state. The board action comes as lawmakers continue discussions to create a framework governing the use of post-loss assignment of benefits to ensure that customers remain in control of their own claims. Citizens’ contract changes would complement these critical legislative initiatives. “The bottom line is these policy changes and clarifications are necessary first steps to keep premiums as low as possible while protecting our policyholders who have legitimate claims,” said Barry Gilway, Citizens President, CEO and Executive Director.
Water loss claims now account for more than half of every premium dollar collected in Miami-Dade County. The issue, though concentrated in South Florida, appears to be spreading throughout the state. One result of ambiguous language has been an increase in litigated water claims. In 2014, 38.4 percent of water loss claims in South Florida (Palm Beach, Broward and Miami-Dade) were litigated, which was more than double the frequency of litigated claims originating in the region in 2010. During its recent meeting, the board approved changes to: * Limit initial payouts for emergency services and temporary repairs prior to a report of loss to Citizens. Additional coverage for emergency services will be available following Citizens approval. * Exclude coverage of permanent repairs completed prior to a Citizens inspection of the damage. * Require that claims be reported within 72 hours of when policyholder knew or should have known that a loss had occurred. * Set a limit for additional coverage to restore uniformity of appearance by matching repairs with adjacent undamaged areas. * Clarify language relating to the replacement of plumbing systems following collapse, blockage or deterioration. In 2014, 39.2 percent of policyholders filing water loss claims in Palm Beach, Broward and Miami-Dade counties hired attorneys or public adjusters before filing an initial claim with Citizens. Elsewhere in the state, 4.2 percent of policyholders were retaining attorneys or public adjusters before reporting claims to Citizens. More than 98 percent of all litigated water claims initiate in the three county South Florida region. Costs of litigated claims are nearly three times higher than non-litigated claims. In 2014, the average litigated claims cost $27,631 compared to $9,028 for non-litigated claims. Those costs must be paid by premiums collected by all policyholders within the territory where the loss occurs. “With these changes, Citizens is attempting a surgical approach to protect policyholders and contain costs,” Gilway said. If approved by OIR, the policy language changes would take effect in mid-2016 for new policies and existing Citizens policyholders when they come up for renewal. We will let you know as soon as the OIR responds to Citizens’ request. |
| Senator Jeff Brandes Hosts Autonomous Vehicle Summit |
| I was more than fascinated to hear all about the world of autonomous motor vehicle capabilities from Senator Jeff Brandes following the December 1 and 2 Autonomous Automobile Summit in Jacksonville. Senator Brandes teamed up with the Florida Department of Transportation for this two-day event that featured renowned speakers in the field of automated vehicles from universities, private industry and government. In addition to the presentations, attendees experienced exciting demonstrations of unmanned aerial systems and vessels, autonomous and connected vehicles, as well as advanced driver assistance systems and alternative fuel vehicles. Florida’s express lanes can play an integral role in the future of automated vehicles. In fact, our great state of Florida has already enacted laws authorizing the testing of autonomous vehicles. At the summit, industry leaders predicted autonomous vehicles will be in the market within 3 – 5 years. We all know the autonomous vehicle revolution is upon us and the LMA Team is watching this exciting new technology very closely. You can find more at the FDOT site: http://www.automatedfl.com/. We’ll keep you up to date as we find out more. |
| Attorney’s Fees Over $750,000 Reversed by Florida’s 4th DCA |
| Our readers are continuously sharing stories of the continuing trend of plaintiff lawsuit disputes involving matters averaging $10,000 or less, yet attorneys’ fee demands of twice or more of that amount. Recently, WFOR-TV CBS 4 (Miami, FL) reported on an early December decision where the state’s 4th District Court of Appeal (DCA) sided with State Farm in a condo owners’ dispute stemming from 2004’s Hurricane Jeanne. The Court rejected arguments that the condo owners sustained tornado damage – not hurricane damage, and the most intriguing news is that included within the DCA’s decision was language requiring the trial court to also reverse the outrageous attorney’s fees awarded.
Condominiums owned by Richard and Roberta Moody and Robert Denney were uninhabitable because of heavy damage and State Farm paid full coverage amounts for property damage including additional living expenses. However, the condo owners filed lawsuits related to part of the hurricane coverage that placed a limit on payments for additional living expenses. They contended that the amount of additional living expenses should be determined under general policy provisions that did not include the hurricane limit. They alleged that the losses were caused by a tornado or microburst instead of a hurricane, with the Moodys requesting $11,245 in additional living expenses and Denney seeking $10,059, according to the 4th District Court of Appeal ruling. The condo owners won in circuit court, and a judgment of $755,465 was later entered for attorneys’ fees. State Farm argued the damage was caused by a storm system that had been declared a hurricane and, as a result, the limit on additional living expenses should apply. A three-judge panel of the appeals court agreed. “Here, the National Hurricane Center named the storm system ‘Hurricane Jeanne’ and issued the policy-required hurricane warnings and watches,” said the ruling, written by Judge Melanie May and joined by judges Robert Gross and Burton Conner. “On September 26 (2004), Hurricane Jeanne passed over the insureds’ condominiums and the storm system caused their condominiums to become uninhabitable. Therefore, the hurricane coverage endorsement (part of the policies) unambiguously applied.” The appeals court sent the case back for a judgment in favor of State Farm and said the judgment for attorneys’ fees should also be reversed. News Service of Florida contributed to this report. For complete story, see http://miami.cbslocal.com/2015/12/09/appeals-court-sides-with-insurer-in-hurricane-claim/. |
| Employee Performance Evaluations – Telling It Like It REALLY Is |
| Before I left state government in 2007, it was fascinating to watch how front-line supervisors and agency executives “froze up” when it came to evaluating the performance of their peers via a 360 type exercise. And even more challenging was the process of evaluating the performance of subordinates using an old fashioned appraisal process. In each case, the evaluators either didn’t want to spend the time writing down their evaluation thoughts or were very uncomfortable sitting down with the employee who was evaluated, honestly speaking with that person about their shortcomings or even a great performance during the evaluation period. Well, times have certainly changed. In fact, recent trends are telling us that more and more companies are abolishing annual performance reviews and replacing them with systems that give constant feedback from managers. Gap, Adobe, General Electric and Accenture are among those moving away from the old annual review. General Electric’s move may be the one that motivates other companies to choose a better process. One of the changes is the creation of an app to help managers and employees share constant feedback and thereby eliminating the performance review entirely. While only 10 per cent of Fortune 500 companies have abolished the annual performance review, seeing Medtronic and Adobe, followed by Microsoft and Gap, we feel this is the direction of performance reviews for the future. We like it and wanted to share this with you just in case you’re interested too, as December is typically annual review time of the year. |
| Independent Agents Still Vitally Important |
| The article regarding changes in the business structures regarding performance evaluations reminds us that our corporate world is constantly changing/evolving, especially in today’s rapidly advancing world of technology. In the insurance industry we see that constantly, but even with the use of direct-to-consumer channels to market/sell insurance products, the independent agent continues to be a big player for property & casualty insurers. This tells us that personal service and relationships are still very important to consumers of insurance products. Most folks want to be able to pick up the phone and talk to someone they trust when faced with the initial purchase or the renewal of an insurance product; and most certainly that is the case when it’s time to file a claim. Yes, the millennial generation prefers the convenience, speed, and ease of e-commerce that today’s technology provides, while the parents and grandparents still rely heavily on the local business community. But, the times “they are a ‘changing'” and the independent agent must change to survive. For example, the need to provide faster quote/binding, especially as an insurance purchaser prepares to close on a mortgage, is still a critical need in our economy and with the e-commerce platform, the speed will only increase. The insurance industry and affiliate businesses, are hard at work creating comparative rating platforms, valuation processes, and pre-fill property/building cost data that can be electronically transmitted between parties, making time sensitive policy binding possible. As we understand the important part the independent agent plays in the prosperity of the insurance industry, we are constantly looking ahead for the most efficient and effective manner to deliver the insurance products to satisfied customers, always with a personal touch. |
| Five Questions Insurance Agents Should Ask |
While we are on the topic of insurance agents, we know from the many years in this biz that good communication between the agent and insured is so very important. Even during a claim event where many insureds are dealing directly with claims adjusters (and claim-time communication is just as, if not more, important) the lines of communication between the insured and the agent is of utmost importance. A recent article we read shared a few sample questions that agents/field underwriters often forget or fail to ask. It seems common sense to us that these questions would be asked, and we wanted to share them with you as you train or talk through insurance issues with customers (purchasers and claimants).
Commercial coverage can be very complicated as our commercial insurers and agents all know too well, but believe it or not, asking a few simple questions can make the difference between a satisfied insurance customer or a lawsuit that the agent can only hope that his/her E&O policy will cover. |
| Closing Out 2015 |
| Can it be true? Another year behind us. As we write this last newsletter for the year, my mind goes back to the many newsletters we have put together for our faithful readers. We love doing this work for you. We love researching the topics that we think you might be interested in. We love to open and close our newsletters with the humanity of life…the things that speak to the core of who we are as human beings, charged with doing our very best to make this world the a better place. We sure hope you have enjoyed the journey with us thus far and are looking forward to riding into the future together. We are excited about what is ahead.
So, from the folks at LMA who work for and think of you all the time, we wish you the most wonderful Christmas season filled with holiday love. Time to take that break and enjoy all the good friends, family and FOOD. See ya in 2016! Our best always, Lisa and the Team |
