Show Them Some Love!
The tragedy at Fort Lauderdale-Hollywood International Airport last week was a grim reminder of the dangers faced by our citizens and this country. But whether it is gun violence or a natural disaster, Florida has men and women trained to react first to the chaos and danger that threaten our way of life.Governor Scott declared last week (Jan. 9-13) as “Florida First Responder Appreciation Week” to recognize and salute all the great work done by first responders throughout the Sunshine State. In the last year alone, first responders have helped save lives with their bravery and selfless actions during the Pulse nightclub shooting, the evacuations for hurricanes Hermine and Matthew, and the airport attack in Fort Lauderdale, as well as countless others.

Just last week in Orlando, another member of law enforcement lost her life in the service of her community. Every day, these men and women are ready to put their lives on the line to help protect and our citizens. Our men and women in uniform – whether they are law enforcement, firefighters or emergency medical technicians, (and in fact, our insurance adjusters) – need your support and kind words as they continue their training and their duty.

Their service and sacrifice is worthy of honor year round, but I hope you each take time this week to recognize those that see danger — and choose to run toward it.   And with that here are some tidbits for you …

“Significant Deterioration” in Florida Insurance Marketplace Due to Water Loss Claims & AOB 
Florida Insurance Commissioner David Altmaier says profitability of the Florida insurance marketplace has “deteriorated significantly” due to increases in the frequency and severity of water loss claims.  Altmaier told the Florida Senate Banking & Insurance Committee and the House Insurance & Banking Subcommittee last week that such claims are hurting insurers’ ability to build surpluses, hurting claims paying ability during major storms, and hurting consumer affordability due to resulting higher rates. Altmaier said he “expects some insurers will choose not to write in certain parts of the state, if the trend, centering on Assignment of Benefits, doesn’t reverse itself.”The commissioner’s comments came during the committees’ general pre-session presentations as the legislature attempt for the third year in a row to pass AOB reform.  In what he called “one of the more troubling slides” of his presentation (see below chart), Altmaier noted an upward trend of property insurance rate increases over the past three years.  He said the percentage of approved rate increases went from 37.6% in 2014 to 73.9% in 2016 “due to water losses.”  (The Commissioner provided some other interesting trend statistics, available on pages 12-19  here.)

Meanwhile, the pro-AOB lobby showed up in the committee rooms in force, including individual contractors, defended AOB as pro-consumer.  They blamed insurance companies and ineptness on the part of appraisers unfamiliar with ICRC standards on current issues, even boldly calling-out a specific insurer during testimony.

Florida Insurance Consumer Advocate Sha’Ron James told the committees that “when abused, AOB is wreaking havoc on Florida consumers” who lose control of the claim, the repair process, and sometimes have to shell out extra money, including paying for liens placed on their home by a contractor when the homeowner’s insurance company didn’t pay the full claim.

James shared the following from the OIR 2015 AOB Data Call that she says stand out for her:

  • Frequency up – 15.9% of claims have an AOB.
  • Now a statewide impact – not just a tri-county issue anymore.
  • First Notice of Losses – over 40% of water loss claims are reported after 3 days, which diminishes adequate claims accountability.
  • Cost up – there’s been a 28% increase in average loss and loss adjustment expense (LAE) on water loss claims since 2010.  “This is not just a Citizens problem but one facing other insurance companies as well,” she said.
  • Severity up – on average, claims with AOB are more severe than non-AOB claims.

James said the solution involves transparency, collaboration, and a focus on consumers.  Her office is readying a consumer education program this spring.

Florida is Among Top States in Insurance Fraud
Florida is among the top five states in questionable insurance claims according to the National Information Crime Bureau (NICB).  Florida, along with Georgia, Texas, California, and New York were in the top fraud tier, with a range of 3,786 to 23,280 claims in 2015.  Florida also was among the top five states in questionable medical claims (along with Texas, California, New York, and New Jersey) and in organized crime groups involved in questionable claims (along with Texas, California, New York, and Michigan).The insurance fraud crime fighters report that FBI estimates show non-health care fraud costs $40 billion annually, which raises the average family’s insurance premiums by $400-$700 across various lines.   Health care fraud – both public and private – amounted to another $77-$259 billion or 3%-10% of total health care expenditures.  At a recent presentation, NICB said advancing technology is a double-edged sword: it has proven to be a valuable crime-fighting tool but also a valuable aid in abetting criminals.  Among the latest trickery:  a mystery device that opens and starts vehicles.

The most common schemes, according to the FBI are premium diversion usually by insurance agents, fee churning by intermediaries taking numerous commissions through reinsurance agreements, and asset diversion during mergers or acquisitions of insurance companies.

Traditionally tackling suspicious auto insurance claims and especially thefts, NICB’s priorities now are medical fraud, commercial fraud, and vehicle crime.  The nonprofit organization’s members include 1,100 P&C insurance companies, rental car companies, and self-insureds.  Its 105 year old operation boasts 380 employees, including former federal, state, and local law enforcement investigators.  Its Florida staff includes 10 special agents and four supervisory special agents.

Fugate Proposes Disaster Deductibles for State Governments
Outgoing FEMA Administrator and former Florida Disaster Management Craig Fugate is floating the idea of a disaster deductible that states would pay to help with the growing costs of federal disaster assistance.  Writing in an opinion piece in the Tampa Bay Times earlier this month, Fugate takes a lesson from the insurance model and proposes that states pay a deductible to apply toward recovery costs for specific types of assistance after each disaster in order to receive federal funds.Fugate cites the growing number and severity of events across the country over the last few years that have qualified for federal disaster assistance to conclude that the “way we fund federal disaster recovery in this country is not sustainable over the long term.”  The Heritage Foundation reports FEMA responds to a disaster every 2.8 days on average.  The GAO reports FEMA has spent more than $95 billion in federal disaster aid from 2004-2013.

Rather than simply making the criteria tougher to qualify for federal aid – and shifting more of the recovery burden on the states, Fugate argues the fairer approach is to shift some of the burden onto the states slowly.  To mitigate the costs of the deductibles, Fugate further suggests that states could earn credits by making investments ahead of time to mitigate risk and reduce future disaster costs.  He points out that insurance companies routinely do the same for their policyholders across many different lines, by using deductibles to change human behavior for the better – and save money all around.

This year, the federal government will be considering “reauthorizing” the National Flood Insurance Program (NFIP) meaning Congress must decide to continue the program or not.  Stakeholders such as cities, counties, policyholder groups, insurance companies and many others are closely following signals coming from Congress.  The reauthorization debate spans from completely halting the federal government’s role in flood insurance with the hope that would engage the private flood insurance companies would take over to expanding the program to offer better benefits with fewer restrictions on coverage.  Florida has taken flood insurance seriously with Senator Jeff Brandes leading the effort in passing legislation to encourage the private industry’s entrance into the marketplace and he and his team are doing all they can to encourage other states to move in this manner.  We will keep you apprised of the NFIP reauthorization hearings.

Drug Overdose Deaths in Florida Once Again On The Rise
Drug overdose deaths, including those from opioids, continue to rise nationwide, including now in Florida, which had enjoyed a hiatus up until 2015.  A CDC Report says that in 2015, more than 52,000 people died from a drug overdose; of those, 63% involved a prescription or illicit opioid.  In Florida, there was a decrease from 2010 to 2013, followed by a 22.7% increase from 2014 to 2015.Since 2000, more than 300,000 Americans have lost their lives to an opioid overdose.  The CDC’s latest analysis says ODs are driven mostly by illegal opioids such as heroin and fentanyl.  But what’s legally prescribed or leftover in your medicine cabinet from surgery could kill you or a loved one who gets hold of it.

Trends don’t look good in what the CDC describes as a national epidemic.  From 2014 to 2015, synthetic opioid deaths rose 72%, heroin deaths rose nearly 21%, and natural and semi-synthetic opioid deaths rose nearly 3% – a smaller increase than the previous year.  Synthetic opioids include the illegally manufactured fentanyl; natural opioids include morphine and codeine; and semi-synthetic opioids include oxycodone and hydrocodone – usually prescribed after operations or serious bone breaks and wounds.  The report’s only positive statistic: methadone death rates fell by 9.1%.

“Too many Americans are feeling the devastation of the opioid crisis either from misuse of prescription opioids or use of illicit opioids,” said CDC Director Tom Frieden, in a release.

These epidemic levels of overdose are driven in part by high opioid prescribing rates.  A CDC report last October outlined how prescription policy changes by insurance companies can impact potential opioid abuse and dependence.  The report focuses on how Blue Cross Blue Shield of Massachusetts, that state’s largest insurer, instituted changes that made a significant difference in the number of opioids prescribed.  The CDC last March issued its Guidelines for Prescribing Opioids for Chronic Pain.  Numerous insurance industry studies have shown the high cost to employers and insurance companies from opioid abuse.

For a personal look at the Florida opioid problem, check out the Palm Beach Post Generation Heroin series this past fall, which chronicles the 216 deaths in Palm Beach County in 2015, more than the number killed in automobile accidents that same year.

Florida Real Estate Market Heating Up!
This is indeed an exciting time in the Florida real estate market as the economic recovery takes a stronger hold in the Sunshine State.  According to online marketplace Ten-X, Florida now has 4 of the top 5 hottest single-family markets among the 50 largest metro areas in the country.  (Drum roll please).  The top five in order are Orlando, Palm Beach County, Ft. Lauderdale, Tampa, and Dallas.The report says each area showed consistently strong demand, home price appreciation, and economic as well as demographic growth.  As those of us who deal in real estate know, the hardest hit markets during a recession are often the last to come out of it during recovery. The report bears this out, noting many of the top cities were devastated by the foreclosure crisis of a few years ago and today still represent terrific buying opportunities, as a result.

Number one Orlando saw year over year home price growth of 11.2%, Palm Beach County 12.1%, Ft. Lauderdale 8.8%, Tampa 10.7%, and Dallas 9.9%.   For details on what makes these four Florida markets so great, click here to view the story from Florida Realtors.

Speaking of Appreciation
We wanted to close by saying how much we appreciate your loyalty and readership! After each edition of our newsletter, we receive kudos, congratulations and compliments about the variety of our articles and the quality content. If you like to write and take a notion, we would welcome your articles of interest. Please let us know when you are ready to get creative!Take care!
Lisa and the team