Some critics argue at least some of the blame falls on the
“We’re not seeing any regulatory action, no fines,” said
“It’s in the name … They’re not regulating the insurance companies,” Kidwell said. “They might as well be the
Kidwell has several active lawsuits against the OIR in state and federal court over what he calls “the shell game that’s been going around
Ten property and casualty companies are in liquidation, four of which filed for bankruptcy this year, leaving thousands of Floridians scrambling to find new insurance. Some insurance companies are jacking up rates by 100% or more.
“All of a sudden they started raising rates and dropping clients, creating a crisis requiring a special session to bail them out,” said
Industry representatives and their allies in the Legislature argue that it’s largely a problem caused by greedy policyholders who want free roofs, egged on by contractors and lawyers looking for a payday.
Insurance companies have donated more than
“They created a boogie man, talking about fraud and talking about attorneys,” said Rep.
Critics, a group largely made up of
“For consumers, this was a big nothing burger,” said Grieco, who offered an amendment to lock in rate reductions immediately. “They’re not going to see rates go down, maybe never, or two years from now at the soonest.”
They also eliminated the automatic replacement rule if 25% or more of a roof was damaged and set a 2% deductible on roofing repair costs.
Most reforms were a continuation of last year’s legislative efforts to slow down the number of lawsuits filed against insurers over claims disputes, but they didn’t address what critics see as a major contributor to all those lawsuits being filed: delaying, denying and underpaying claims.
“Companies … don’t like to talk about their bad faith behavior on claims management or the fact they are under-capitalized and reliant on reinsurance,” said
“They haven’t done anything to help the homeowner and deter the insurance companies,” Tolley said.
More recently he filed a lawsuit against United Property and Casualty, one of the largest insurers in
The danger is that when a Category 5 hurricane does make landfall in
The property insurance market is constructed like a house of cards, with policyholders on the bottom, several insurance experts said. All policyholders already have been hit with a 2% assessment to cover the losses of two failed insurance companies this year.
Regulation and enforcement
After the Legislature failed to pass any insurance reforms during its regular session,
“No,” he said, placing the blame on an “excessive amount of litigation.”
Yet, Altmaier’s predecessor and former boss
“One of the challenges of being insurance commissioner is you wear many hats, either distributing benefit or regulating entities to protect consumers,” McCarty said. “But you also have the job of building the markets and still be vigilant to protect consumers from the vagaries of that market.”
He said the legislation just approved is a good first step because you’ve got to “stop the bleeding.”
A search of OIR’s market reports and consent orders shows only one instance where Altmaier has issued a fine against a company over failure to pay claims or meet its other obligations to policyholders. It was a
Universal failed to indicate specific reasons for canceling policies, did not give 20 days notice prior to canceling policies within the first 90 days, failed to file underwriting guidelines or rules for homeowners insurance, and violated rules regarding complaints, including not responding in a timely manner.
Meanwhile, some of the same companies struggling with solvency in
Two views about lawsuits
Nobody is disputing there is an increase in litigation, but there are two views on how legitimate those lawsuits are. The insurance industry and their allies say lawyers are exploiting a legal loophole to sue and lawmakers are trying to shut those loopholes down.
But the trial lawyers and contractors dispute that, saying while there are some bad characters, most lawsuits are based on legitimate grievances that aren’t addressed by the OIR, so policyholders have no other option than to go to court.
“Contrary to popular belief, insurance companies continue to avoid their contractual and statutory obligations despite their incessant concerns about defending ‘rampant’ lawsuits,” said
There have been 82,883 complaints filed against insurance companies since
Lawsuits have dropped since the passage last year of a law that requires policyholders to file a notice of intent to litigate and shortened the deadline for filing claims.
“If they paid in the first place … you’d have fewer lawsuits,” McCarty said. “Companies should want to promptly respond to claims.”
30 years of trouble
It was created by a perfect storm of circumstances, causes born by Mother Nature and human bureaucracy going all the way back to Hurricane Andrew in 1992.
After two really bad hurricane seasons in 2004 and 2005, the industry was reeling from all the claims it had to pay, as
“It is the Florida Ponzi Scheme,” said
Several insurance experts established benchmarks of financial weakness for the
Forty-two of the more than 70 companies reviewed by the paper failed at least one of those benchmarks.
In a 2010 report published by
In 2013, Born and a co-researcher noted that insurers have a hard time providing stable coverage following major hurricanes and that regulations may act to block “an insurer’s willingness to provide coverage following such events.”
For 10 years, from 2006 to 2015, no hurricane made landfall in
But then hurricanes walloped the state three years in a row, causing nearly
If anything, Lyons said, the market has gotten worse since then.
“The market has dried up. Ten years back there was a lot of investment dollars out there and people thinking they could start up an insurance company.”
Monitoring and enforcement
The OIR “closely and consistently monitors the financial condition and operational results of insurers to protect consumers,” said
OIR is charged with examining the companies’ financial books “to determine the quality of assets and liabilities,” Bequer said. The agency is supposed to examine each new domestic insurer each of the first three years they are in business in
But a search of financial examination reports shows that several companies that have recently been dissolved or have asked for a huge reduction in policies have not been examined in years, including:
The agency also is supposed to conduct postmortems on companies that become insolvent but so far only one has been made available to the public a 2015 audit on Sunshine State going out of business the year before.
Not all insurers are meant to succeed, McCarty said. Companies don’t have enough reserves, they make mistakes or concentrate their risk in one place.
Regulators can’t have “zero tolerance for failure,” McCarty said.
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