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Sha'Ron James


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Florida CFO: We arrest 4 a day, but few referred on water claims

 

Date: February 02, 2017
Source: Palm Beach Post
Author:  Charles Elmore & Susan Salisbury

 

Florida Chief Financial Officer Jeff Atwater told insurers gathered in Miami Thursday he oversees an average of four arrests a day, though he has seen relatively few referrals on an issue insurers say represents a crisis driving up rates — abusive claims for water damage, such as from a broken pipe.

“As of today, we have arrested 7,905 bad actors,” Atwater told attendees at the Florida Chamber of Commerce Insurance Summit, having served in his office a little more than 2,000 days. “That’s four per day including holidays — 85 percent conviction rate.”

Still, Atwater said he is not seeing a high volume of referrals for water-damage claims — at least, not at a level comparable with the spike in claims insurers say are causing rates to go up, particularly in South Florida. He invited companies to provide more if they have them.

That may hint at difficulties facing state legislators in the session that starts next month. After years of stalemate, lawmakers will be asked to grapple again with problems insurers often characterize as the work of bad actors, though it has not proved a simple matter to find a consensus on how to rewrite the lawso as to block problematic players without harming others.

Splits within the industry hurt 2016 efforts to pass a bill, Citizens Property Insurance Corp. CEO Barry Gilway told The Palm Beach Post editorial board Wednesday.

“The industry didn’t do itself any favors in last year,” Gilway said.

Such legislation already faced a tough fight from attorneys and contractors who argued the industry wanted to limit consumer rights to representation or wiggle out of paying full and fair claims.Several insurers took the position if they did not get everything they wanted, they would not support it, Gilway said. This year’s campaign aims for greater unity and includes input from Florida’s insurance commissioner, the state-paid consumer advocate, a range of industry associations and others, he said.

The scheduled legislative session runs March 7 through May 5.

State-run Citizens projects rate increases around 10 percent annually for many years in South Florida. Company officials say “assignment of benefits” — when a consumer signs over control of a claim to a contractor or other third party, who may be represented by an attorney as well — is making problems worse.

Legislation that Citizens supports, still in the drafting stage, would require vendors accepting an assignment of benefits to adhere to the same policy requirements a policyholder would, such as rules about when they have to notify the insurer, officials said.

The legislation provides what Citizens characterizes as consumer protections, such as giving the homeowner the right to revoke the assignment. Also, a vendor would have to agree to seek payment from the insurer and not come after the consumer, such as by placing a lien on the property

In Palm Beach County, the average premium for a home valued between $100,000 and $200,000 would rise from $2,210 to $3,236 by 2021, but Citizens says if were not subject to a state cap on annual rate increases of 10 percent, it would charging an average of $3,514 in 2017.

Company officials acknowledged not all of the increase is because of water claims. Citizens shed about 1 million of its 1.5 million customers over five years, and customers who were left often tended to be those whose rates were considered lower than their risk because of the state rate cap — in older homes, those near the coast, and mobile homes, for example.

Also, expenses such as multi-year contracts for optional offshore reinsurance have sometimes loomed especially large compared to lower revenues coming in from fewer customer premiums.

Citizens officials have maintained a focus on abusive water claims.

“It is a real threat to the affordability of insurance,” said Citizens board chairman Chris Gardner.

Paul Jess, interim executive director of the Florida Justice Association, told The Post his organization supports several “reasonable” requirements insurers want, such as notification to the insurer in three to five days after a contractor has agreed to work on a claim.

But FJA opposes other proposals, such as blocking a party that has been assigned insurance benefits from seeking certain attorney’s fees allowed under state law.

Jess also questions why reforms do not seem to include regulating and licensing “water remediation” companies — the people who do the clean-up work when a pipe bursts in the middle of the night.

If may be true there are bad apples among contractors or attorneys or others who work on water claims, Jess said, but “those abusive situations are the ones that need to be addressed — don’t take away rights from homeowners and contractors.”