October 13, 2015
Florida's new insurance consumer advocate wants property insurance companies to produce data to back up their statements about rising water damage claims in South Florida.
Sha'Ron James, who took over the statewide position in August, told participants at a public workshop Tuesday that she has asked the top 15 insurers to document their assertions that non-weather-related water damage claims from South Florida are spiraling out of control.
"My hope is within 30 days, we'll have data to find out whether what the insurance companies are saying about water loss claims is actually happening," James told a group of residents at the Fort Lauderdale Commission Chambers.
Citizens Property Insurance Corp. this fall blamed inflated damage claims and lawsuits over the claims for the company's decision to raise premiums in the tri-county area in 2016 while most policyholders in the rest of state will see decreases.
Complaints from insurers have been growing over the past three years and have become a contentious issue in the state legislature.
Insurers say attorneys, repair companies and public adjustors, mostly from Miami-Dade County, are encouraging homeowners to submit water damage claims and sign over the benefits of their insurance policies. The attorneys and companies then inflate the damage claims and sue insurers for thousands of dollars more than the claims are worth, insurers say.
Some damage repair companies, attorneys and public adjusters counter that insurance companies too often delay investigating claims, then offer to pay much less than the cost to make proper repairs.
Legislative bills have been introduced over the past three years to restrict homeowners' rights to sign over their property insurance benefits, but died in committees as trial attorneys and their allies questioned whether the restrictions would stand up in court.
James and state Sen. Maria Sachs, who hosted the workshop, predicted that more bills would be introduced on the issue at next spring's legislative session.
Officials of Citizens this month said they're developing a campaign to encourage policyholders to call Citizens first — and not a third party — when reporting a claim. Citizens might also ask the state legislature to pass a law requiring policyholders to choose from a list of pre-approved repair firms. Spokesmen for statewide associations of trial attorneys and public adjusters said they opposed such a law, arguing that policyholders should have the right to hire anyone they choose to repair their properties.
Citizens, the state's largest property insurance company with 573,000 policies in September, received a letter from James' office on Oct. 6 seeking total number of claims and non-weather water damage claims for each of the past five years as first reported by policyholders, attorneys, public adjusters and contractors. The letter also asks how many claims resulted in lawsuits and how many were reported to the company's fraud investigators.
In an interview last week, James said she didn't know why insurers haven't already produced their own analyses to support their contentions, adding, "It's impossible for us to craft a policy to fix the problems without having the data to support it."
At the workshop, Claude Hanuschak, a member of the Florida Association for Insurance Reform, said he believes some water damage repair companies are abusing the system, rather than committing fraud.
He called for repair companies to be licensed by the state and he proposed setting specific fees for cleanup-related tasks that the companies would have to accept.
But Mike Prempin, a Fort Lauderdale public adjuster, said fee schedules are common in the industry but are often manipulated by both sides. In addition, an increasing number of insurance companies try to save money on claims by forming their own repair companies staffed by $10-an-hour employees "who don't necessarily do the best work," Prempin said.
Charles Stephens, a marine insurance adjuster, said insurance companies could save money and guarantee quality work by posting detailed descriptions of damages online and solicit repair companies to bid on the work.
James, who spent three years overseeing liquidation of failed insurance companies for the state Department of Financial Services, was in South Florida to meet with insurance customers prior to conducting a public forum in Tallahassee on Thursday on the issue of excessive medical billing.
She also attended a reception in Palm Beach Gardens on Monday night and was scheduled to convene another workshop Tuesday afternoon in Delray Beach.