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Blame Expands in Michael’s Open Claims

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Setting the record straight

Visible damage remains 13 months after Hurricane Michael on Panama City’s main thoroughfare, November 3, 2019. Courtesy, Mike Cazalas, Panama City News Herald

Hurricane Michael insurance claims are still a topic of discussion at the state Capitol.  This past week there were several articles that saw momentum swing from blaming insurance companies to instead blaming public adjusters and plaintiff lawyers as the obstacle to resolving open claims.  New reasons have also come to light.

As we reported in the last newsletter, total claims number just under 150,000 as of the end of September, with 11.6% (17,347) open.  More than half were re-opened claims (which is typical as more damage or greater estimated costs are discovered during repair).  New claims are being filed daily, one year post-storm, in loss creep that should come as no surprise after our similar experience with 2017’s Hurricane Irma claims.  Florida law allows policyholders to file claims up to three years after a hurricane.

Greg Thomas, Director of Consumer Affairs Division for the Florida Department of Financial Services (DFS), listed these reasons why homeowners aren’t getting their claim money, in his testimony before the last House Insurance and Banking subcommittee meeting:

  • Dispute with an AOB (Assignment of Benefits) contractor with the consumer stuck in the middle
  • Dispute between a public adjuster and the insurance company
  • Multiple and changing insurance company adjusters assigned to a case
  • The insurance company has issued the check but the mortgage company won’t release the money.

Thomas’ conclusion: “There’s blame to be had all around in why these claims are still hanging out there.  From the consumer’s standpoint, it’s all a delay and it is.  They’re not getting their house fixed.  But it’s not necessarily the fault of the insurer in those cases, it’s somebody else,” he testified.

Homeowner Claims Bill of Rights (clickable)

Click to view & print full size version

It also bears repeating that existing law in the Florida Homeowner Claims Bill of Rights states carriers have to pay the undisputed part of the claim within 90 days.  All of the recent news reporting has been wrong…for some reason the “90 day” law has been reported by the media incorrectly indicating an insurance company can simply withhold all claim funding when they don’t agree with the estimate.  We will be in touch with reporters to educate them and encourage our elected officials and regulators to do the same.  Companies that testified at recent hearings are following the law, while noting the high cost and delays of litigation keeping claims open.

We made some informal calls this week about the results from the current claims data call that OIR has pending that is due this week.  One Florida domestic company shared that 95% of its Michael claims are closed.  Of the 300 open claims, 176 had an attorney or a public adjuster or both.  The remaining open claims you can bet they are trying to resolve, but note difficulty when policyholders don’t provide all information requested in the process.

It’s also tougher to crack the regulatory whip when you’re dealing with open claims from unregulated surplus lines companies, as noted by Senator Jeff Brandes at a recent Senate Banking and Insurance Committee…calling surplus lines policies the “wild wild west.”

Insured losses from current claims total $7.1 billion, but estimated losses are $10-12 billion, so there’s a lot of road left on this trip folks. In fact, the slowest rates of paid closed claims are in the commercial and business interruption lines, where claims tend to be much larger than residential ones.  We’ll be watching and keeping you informed.

LMA Newsletter of 11-4-19

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Tags: Assignment of Benefits, Florida Homeowner Claims Bill of Rights, Greg Thomas, Hurricane Michael Insurance Claims, Insurance Litigation, Senator Jeff Brandes, Surplus Lines

“Another great Newsletter on Florida industry this week.  Your service and advocacy in Florida is very important to keeping me updated and apprised of the Florida insurance laws, trends and overall environment.  Something similar is very much needed in Louisiana, too.”

Jennifer Tedesco, Esq., Claims Director
Pharos Claims Services
Orlando, FL

“Lisa this is another great newsletter, and we appreciate the time and energy you put into these informative updates – you are on top of these topics!”

Mike Graham, CEO
Smart Vent Products, Floodproofing.com, & Risk Reduction Plus
Juno Beach, FL

“Thank you Lisa for staying on top of, as well as advocating, for Florida residents and legislative reform. Your newsletters are very informative and enjoy reading the points of view.”  

Shawna Miller, Sr. Claims Quality Assurance & Compliance Manager
Florida Peninsula Insurance Company
Jacksonville, FL

“Great article on Risk Rating 2.0!”

Austin Perez, Senior Policy Representative for Federal Housing, Valuation, Insurance and Commercial Issues
National Association of Realtors
Washington, D.C.

“Your newsletter is fabulous!  I greatly appreciate the topics you expose, so that insurance professionals like myself can keep up with the latest events that affect the public we serve and ourselves.”

Cynthia Hoehn, Independent Property & Casualty Personal Lines insurance agent
Clermont, FL

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Gillian Lloyd, Account Executive
Zywave
Milwaukee, WI

“Just a quick note to let you know how much I have appreciated your newsletter over the years and the assistance they offer for those in the field of claims. We depend on the information more than you will ever know!”

Laurie Rasberry, Chief Claims Officer
Acorn Claims
Prosper, Texas

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Bradenton, FL

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Cynthia Scott, President
University Insurance Group
Davie, FL

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