While fraud alleged on recent government officials
Insurance Village event in Blountstown, Florida, November 15, 2019. Courtesy OIR
Property insurance companies that do most of their business in Florida are taking care of business when it comes to handling Hurricane Michael claims efficiently. A new study by Demotech shows our domestic companies are closing those claims at the same consistent rate they’ve done for the past decade. Meanwhile, five people, including current and former Lynn Haven officials stand accused of receiving unauthorized debris removal at their homes after the hurricane.
Demotech, an insurance ratings and financial analysis firm, used data from S&P Global to compile information from the annual statements of 91 insurance companies writing 80% or more of their homeowners direct premium written in Florida. Despite named storms in 2016, 2017, and 2018, the closure rates for all accident years 2009 through 2018 were fairly steady.
The average percentage of outstanding claims at 12 months for years 2009 through 2018 was 14.3%. For the recent hurricane years, the percentage was 12.8% for 2016, 14.0% for 2017, and 15.5% for 2018. The Florida Office of Insurance Regulation (OIR), looking just at Hurricane Michael claims across all carriers, put the 12 month outstanding claims at 11.6% from the October 10, 2018 Category 5 storm.
“It is often difficult to separate a consumer’s frustration with the vendor providing repairs from the frustration with the claim settlement process,” said Joe Petrelli, Demotech’s President. “The consistency of claim closure rates over a ten year period implies that carriers are consistently resolving open claims.”
The Demotech study did not include Surplus or Excess Lines companies or admitted carriers who do less than 80% of their business in Florida. Some of the public complaints from Hurricane Michael have involved surplus lines companies or those with a small Florida market share.
OIR is also out with results from another data call showing the percentage of open claims has dropped from 11.6% to 10.6% as of October 25, with the rate of decrease doubling in the prior month. Survey results list insurance companies’ top 5 reasons for open claims:
- Awaiting documentation from insured or involved parties;
- Waiting for repairs to be made or completed;
- Engineer and contractor issues in agreed pricing, rates or shortage;
- Public Adjuster and attorney solicitations coaching consumers to increase the claim settlement or to stall final adjustments; and
- Supplemental claims handling and payment issues.
OIR is now evaluating responses from a subsequent data call to help better determine why these claims remain open, with specific focus on the role of plaintiff attorneys and public adjusters.
Ongoing Hurricane Michael debris removal in Bay County, November 2019
Meanwhile, a federal grand jury has indicted 5 people, including two former Lynn Haven officials with scamming FEMA out of $5 million in Hurricane Michael cleanup money. Former City Manager Michael White and former community services director David Horton are charged with approving false invoices by two private contracting firms for work they never performed and to repair their own properties.
According to the indictment, Lynn Haven Mayor Margo Anderson, City Attorney Adam Albritton, White, Horton and an unnamed city commissioner allegedly received unauthorized debris removal services that were then billed to the city. All have denied the accusations. Anderson and Albritton have not been charged.
LMA Newsletter of 12-2-19
