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Warnings on Deductible Fraud

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Market responding with greater rate hikes & Citizens migration

With the tropics heating up as we head into the heart of hurricane season next month, Florida’s Insurance Consumer Advocate has issued a timely reminder to consumers and the industry about contractor fraud.  It came out in the same week as another insurance company appeared at a public hearing asking for a double-digit rate hike, in part because of such fraudulent and questionable claims, and the release of an updated policy count from Citizens Insurance.

Insurance Consumer Advocate Tasha Carter’s message included a section on deductibles, highlighting part of Florida’s new property insurance reform law in SB 76.   “Waiving an insurance deductible or offering services at no charge for filing an insurance claim is illegal in Florida. You are responsible for the deductible amount listed on your insurance policy, as this is a contract between you and the insurance company. If a contractor states that they can repair your home without you paying a deductible, beware! Find another professional,” Carter wrote.  We would hasten to add previous advice from the Department of Financial Services (DFS): Anyone (homeowners, insurance professionals, attorneys, etc.) who sees violations of the law to report them, using its Insurance Fraud Portal.  This includes unlicensed activity & other violations of SB 76 and SB 1598.

Speaking of contractor fraud, the Florida Office of Insurance Regulation (OIR) held a public rate hearing this past Friday where they discussed the almost 36% rate increase that Southern Fidelity Insurance Company is seeking.  The company attributes the increase to questionable claim activity.  The hour-long hearing (which you can watch here) included back and forth with OIR regulators and the Insurance Consumer Advocate who had great questions ranging from the need for the increase and why, when some decreases were indicated, the company didn’t feel like they were warranted.  Carter shared some specific policyholder feedback: “A 35.7% rate increase is outrageous and this increase is beyond the pale.  I am retired on a fixed income and I am guessing I am not alone in this sentiment.”

Another policyholder remarked they would take their policy elsewhere.  However, that’s become a diminishing option as fewer companies are willing to take on additional policies in Florida.  Most, like Southern Fidelity, are either raising rates, shrinking their footprint, or increasing underwriting requirements (or all three).  So what’s happening is those private market policies are migrating to the state-backed Citizens Property Insurance Corporation.  Citizens is adding about 5,000 policies on average each week and had more than 661,000 policies at the end of July.   Compare that to the nearly 487,000 polices it had on July 31, 2020.  Citizens expects to add another 105,000 policies by year’s end.

OIR is taking public comments on the Southern Fidelity rate request through September 3 via email at [email protected].

LMA Newsletter of 8-23-21

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Tags: Citizens Property Insurance Corporation, Contractor Fraud, Contractor Services, Florida Homeowners Insurance Market, Florida Insurance Consumer Advocate, Florida Office of Insurance Regulation, Insurance Litigation, Southern Fidelity Insurance Company

“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.

“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

“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

“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

“Just wanted to say that I thoroughly love your newsletter. It’s is always informative and insightful to the ins and outs of our industry.  You are an inspiration and an important asset in the insurance world.  Keep up the great work!” 

Cynthia Scott, President
University Insurance Group
Davie, FL

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Jeffrey Karam, CPCU
Bradenton, 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

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Zywave
Milwaukee, WI

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

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