May 24, 2016
With property insurance companies blaming a rising tide of water loss claims for rate increases this year, Florida's insurance consumer advocate has scheduled a public forum next month in Boca Raton to look for a solution.
Sha'Ron James hopes to find answers that have eluded the state legislature over the past four years. Based on claims and loss data, "it's very apparent we are in a crisis," she said in an interview Tuesday.
"I think a legislative fix will be needed," she said.
In an invitation sent by her office last week, James said she is reaching out to insurers, regulators, consumers, contractors and trade groups "to collaborate in an effort to find a mutually sound and consumer-focused solution."
The forum is scheduled from 9 a.m. to 4 p.m. June 14 in the Recruiting Room of Florida Atlantic University Stadium, 777 Glades Road.
State-run Citizens Property Insurance Corp. has been warning for several years that increased water losses, fueled by a contract clause called an assignment of benefits, would lead to rate increases for policyholders if the state legislature failed to act.
This year, private insurance companies followed suit, saying their losses have increased too. Several are requesting rate hikes that would hit hardest in South Florida.
The insurers say that in non-storm-related water emergencies — such as a plumbing leak or water heater rupture — repair contractors coerce policyholders to sign over benefits of their insurance claims, then submit inflated claims and sue if the insurers won't pay up.
Water restoration contractors and attorneys counter that insurers routinely offer to pay too little to repair damages. Some say insurers respond too slowly or stop communications after claims are assigned.
After legislation that would have restricted assignments failed this year, Citizens tried a different approach. State regulators agreed to let Citizens limit coverage for emergency repairs to $3,000, and to require a 72-hour wait after insurers are told of a claim before permanent repairs may commence. Policy language limiting replacement coverage to only the broken section of a pipe or other system, and not the entire system, also was approved.
Other insurers quickly asked the state to approve identical policy revisions. Many of their requests are still pending and would go into effect this year for new and renewing coverage.
James said she's particularly interested in hearing from consumers about their experiences with water loss claims. "That's the perspective I think has been missing from this discussion," she said.
Anyone from the public is encouraged to attend, James said, and to share their views during a public discussion period in the afternoon. Organizations invited to send representatives include the Florida Association of Insurance Agents, the Florida Association of Public Insurance Adjusters and the Florida Association for Insurance Reform, according to James.
Citizens Property Insurance Corp. and the Florida Property & Casualty Association were also invited, spokesmen for those groups said.
William Stander, executive director of the property and casualty association, said his organization looks forward to working with James to find solutions and supports "fundamental reforms" backed by insurers during the past legislative session.
Imran Malik, a plaintiff's attorney, said he looks forward to sharing with James examples of insurers "lowballing" or denying insurance claims by policyholders and contractors.
He said the forum could be useful "provided it is neutral and unbiased."