Consumer eViews

Volume 1, Number 42, October 18, 2004     

In less than 40 days, Floridians experienced the wrath of Mother Nature’s destructive force.  For the first time in our state’s history, four named hurricanes have come ashore, causing billions of dollars in damage and leaving millions of Floridians devastated. 

We at the Florida Department of Financial Services understand residents are struggling during this trying time and we are responding in a variety of ways.   

From an insurance perspective, our state was prepared.  The Hurricane Catastrophe Fund and Citizens Property Insurance Corporation are two unique programs in Florida that will prevent a crisis in insurance coverage despite four back-to-back hurricanes.  

In addition to these two programs, we have taken decisive steps to assist consumers in the wake of the hurricanes, including: 

  • Instituting a moratorium on insurance companies canceling or non-renewing homeowners during hurricane season or because they have filed a storm claim.
  • Working with insurance companies and policyholders to resolve cases involving multiple deductibles.
  • Placing a 10 percent cap on what public adjusters can collect on a homeowner’s insurance claim and prohibiting them from charging fees up front.
  • Requiring Florida’s health insurers and HMOs to waive restrictions on prescription refills to enable citizens to fill prescriptions in advance. 
  • Urging banks and credit unions to expedite loan applications, eliminate late fees on loans and waive ATM and check-cashing fees for storm victims.
  • Setting up a mediation program to ensure consumers have a program in place, at no charge to them, to quickly and fairly resolve claim disputes.

Since the first storm made landfall on August 13, we have received more than 58,000 calls from consumers.  We have more than 150 department employees in the field assisting consumers with their insurance needs and concerns. 

As we navigate through this recovery process, other issues will emerge that will need to be addressed.  As CFO, I am committed to helping consumers get back on their feet and start rebuilding their lives.  And one of the best ways to provide that help is to make sure that residents are treated fairly by their insurance companies and get their claims paid as quickly as possible.

My best,

                        -- Tom Gallagher



If you have to borrow money to repair your home in the aftermath of the storms, protect yourself by being aware of your rights as a consumer.

Unfortunately, this is a time when some homeowners make decisions out of despair and fall prey to unscrupulous operators who seem to offer just what is needed in the way of a loan. These wolves in sheep's clothing are known in the industry as predatory lenders.

Predatory lenders offer easy access to money, but use high-pressure salespersons and unfair techniques such as inflated interest rates, outrageous fees, unaffordable repayment terms, and harassing collection tactics. Homeowners can be tricked into taking out a loan that they cannot afford to repay and, therefore, risk losing their home to foreclosure.

To combat predatory lending, the Florida Fair Lending Act prohibits predatory tactics on home loans. Some of the tactics used by predatory lenders include charging prepayment penalties for longer than three years; refinancing a loan during the first 18 months unless there is a benefit to the borrower; balloon payments on loans that mature in less than 10 years; increased interest on loans that are going into default; extending credit regardless of borrower's ability to pay or calling the loan due even though the borrower has complied with the terms of the loan.

Additionally, late fees should not exceed five percent of the monthly payment.

The potential borrower should also be cautious when the loan involves making payments directly to the home improvement contractors or if a lender offers to originate a loan at the borrower's home without a prearranged appointment. The law also requires lenders to disclose certain facts about the loan at least three days prior to closing the deal. These disclosures encompass claus­es that stipulate that a mortgage will be placed on the borrower's home, and that the home could be lost in the event of foreclosure. If you need to borrow money for home repairs, medical expenses, or bill consolidation, shop around. Compare interest rates and total costs. A lower monthly payment is not always the better deal.

Never act immediately. Avoid lenders who call and promise guar­anteed, low-interest loans, take applications over the phone, or offer next-day approval if you pay them some money today. Read everything carefully and ask ques­tions. You have a legal right to know the total cost of the loan, the annual percentage rate, the monthly payments, and how long you have to pay back the loan. Ask to have all fees explained.

Avoid "balloon" payments. One way lenders can make loans sound very attractive is to make the monthly payment small but require a big "balloon" payment at the end of the loan period. Some may even have you wait to repay all of the principal amount at the end of the loan and promise to help you refi­nance when it comes time to pay it off. This promise may just an opportunity for the lender to charge you more high fees and closing costs.

Research the total cost of the loan before making a decision. Request and follow-up with refer­ence checks. Check with your local Better Business Bureau or call the Department of Financial Services at (800) 342-2762 to ask if there have been complaints against any company you are considering.     



Investigators suspect hundreds of residents in South Florida were victimized

Florida’s Chief Financial Officer Tom Gallagher has announced the arrest of a man, formerly banned from the insurance industry, who allegedly sold a fraudulent medical discount plan to several hundred customers throughout South Florida. Americ Health Plan, which cost almost $200 a month, included a supplemental insurance policy that consumers said confused them into thinking they were buying health insurance.

Reynaldo Gonzalez-Duenas, 48, surrendered today to investigators with the Department of Financial Services, Division of Insurance Fraud, and was arrested on one count of organized fraud and seven counts of third-degree grand theft. He was booked into the Miami-Dade County Jail. If convicted, he could face a maximum statutory penalty of 40 years in prison.

“Before purchasing these discount plans, consumers should know that these plans are not health insurance,” said Gallagher, who oversees the Department of Financial Services. “Some discount card sellers are careful to say their plans are not insurance, but others are not so clear. Some intentionally give the impression that they are offering benefits usually associated with insurance.”

The Office of Insurance Regulation is currently working on rules to enforce a law that Gallagher proposed requiring medical discount plans to be registered. The law goes into effect in January. The department has responded to more than 1,100 complaints about medical discount plans.

Investigators with the department’s Division of Insurance Fraud, operating on a tip from the Division of Agent and Agency Services, found that Gonzalez-Duenas orchestrated several unlicensed individuals in the selling of the discount health care plan and the supplemental insurance portion of it. They told customers the plan included a network of physicians and hospitals, but no provider network existed and Gonzalez-Duenas pocketed the profits.

The investigation is continuing, and anyone with information is asked to call the department’s Fraud Buster hotline at 1-800-378-0445.

Gonzalez-Duenas lost his agent license and was issued a lifetime ban from the insurance industry after his arrest for grand theft in April 2000. At the time, he was the director and owner of Durey Insurance Group, Inc., formerly located at 7575 W. Flagler St. in Miami.

From September 1998 through April 1999, Gonzalez-Duenas accepted enrollment forms for Humana health coverage for approximately 132 consumers. After having sold the coverage by saying he could get pre-existing conditions covered, he submitted falsified enrollment forms to Humana.

Investigators said Gonzalez-Duenas began operating Americ Health Plan approximately six months after his 2000 arrest.

Gallagher reminds customers to “verify before you buy. If it sounds too good to be true, it probably is.”


A Pennsylvania man working in the Fort Myers area was arrested by investigators with the Department of Financial Services on a charge of operating as a public adjuster without a license.

Albert E. McBride III, 36, of Prospect Park, Pa., is the fifth unlicensed public adjuster arrested in hurricane-hit areas and the second arrest of an individual working for Young Adjustment Company, Inc. out of Blue Bell, Pa. His arrest followed an investigation and undercover operation by the Department of Financial Services’ Division of Insurance Fraud and Bureau of Agent and Agency Investigations. The investigators worked closely with Nationwide Catastrophic Claims Adjusters.

Florida’s Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services, urges residents to verify that the adjuster they are dealing with is licensed before signing any contract.

“Many storm victims are struggling to rebuild and eager to get their lives back together. We encourage them to know who they are dealing with so they are not victimized a second time,” said Gallagher, who served as Florida’s Insurance Commissioner when Hurricane Andrew hit in 1992. He has set up a toll-free number for storm victims to call for any storm-related assistance. Floridians needing help with filing an insurance claim, getting an adjuster, verifying licensure, or settling a claim with their insurance company can call 1-800-22-STORM (1-800-227-8676) every day from 8 a.m. to 8 p.m.

In August, Gallagher issued an emergency rule allowing claimants 14 days to back out of any contract with a public adjuster. He also ordered that public adjusters cannot require any up-front payment and capped public adjuster fees at 10 percent of any claim payment.

Investigators obtained an insurance claim settlement contract that McBride allegedly presented to a consumer, and the contract form had no percentage rate to be paid to the adjuster, information required by law to be included.

McBride was booked in to the Lee County Jail and, if convicted on the third-degree charge, faces up to five years in prison.

Consumer Services HelpLine