The Florida Insurance Roundup from Lisa Miller & Associates

A new report claims that Florida's property insurance market is full of “low quality insurers,” especially those Florida-based companies that write the bulk of the 7.5 million homeowners and condo insurance policies. It casts aspersions on Demotech, the rating agency that reviews their financial stability. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with Demotech President Joe Petrelli to get the other side of the story that the report didn't. She also learned that it wasn't low capital and surplus that led to seven company insolvencies, as the report claims, but instead targeted technology-enabled claim instigation. Show Notes (For full Show Notes, visit https://lisamillerassociates.com/episode-49-when-insurers-exit/) The report, When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets was written by researchers at Columbia University, Harvard University, and the Federal Reserve Board and published online prior to being peer reviewed. The report’s abstract describes it as a study of how homeowners insurance markets respond to growing climate losses and how this impacts the home mortgage markets. “Using Florida as a case study, we show that traditional insurers are exiting high risk areas, and new lower quality insurers are entering and filling the gap. These new insurers service the riskiest areas, are less diversified, hold less capital, and 20 percent of them become insolvent. We trace their growth to a lax insurance regulatory environment. Yet, despite their low quality, these insurers secure high financial stability ratings, not from traditional rating agencies, but from emerging rating agencies.” The report specifically targets rating agency Demotech, which provides Financial Stability Ratings (FSR) for most of the 50 or so Florida-based property insurance companies, including six of the recent eight carriers to enter the market. The report claims Demotech’s ratings “are high enough to meet the minimum rating requirements” of Fannie Mae and Freddie Mac, which back many home mortgages, but that most of those insurance companies wouldn’t meet government requirements if rated by AM Best, suggesting the companies are financially weak. “I think the thing to keep in mind is the report is based on what are called counterfactual AM Best ratings of Demotech-rated companies,” said Joe Petrelli, President of Demotech, who described counterfactual methods as those based on “what-if” scenarios. “So I think that, in and of itself, should have alerted people that this was not based on anything real or actual. It was based on counterfactual information. It's like rewinding the world, changing a few crucial details, and then hitting play to see what happens. It's essentially a simulation,” said Petrelli. Petrelli is an actuary and a 55-year veteran of the insurance industry. He and wife Sharon co-founded Demotech in 1985 and today the agency reviews and rates 460 insurance companies across America. It is registered with the U.S. Securities and Exchange Commission as a nationally-recognized statistical rating organization for insurance companies. Florida regulators approached Demotech in 1995 to become the very first ratings company to review and rate independent, regional and specialty companies that filled the gap left by.... (For full Show Notes, visit https://lisamillerassociates.com/episode-49-when-insurers-exit/)

How will the insurance bills that passed in the recently completed 2024 Florida legislative session compliment past marketplace reforms? Is a property insurance market marred by carrier insolvencies in recent years and ongoing double-digit rate increases starting to stabilize? Former Florida Deputy Insurance Commissioner Lisa Miller talks with two legislators about the new laws expected to impact Florida’s property insurance and real estate markets, reinsurance prices, condominium affordability, and their joint belief in bipartisanship for finding workable policy solutions. Show Notes Florida State Representative Tom Fabricio (R-Miami Lakes) sits on the House Insurance & Banking Subcommittee and Chairs the House Ethics, Elections & Open Government Subcommittee. He is a former insurance defense attorney whose practice now focuses on commercial and real estate litigation, including real estate transactions. Florida State Senator Nick DiCeglie (R-St. Petersburg) is Vice Chair of the Senate Banking and Insurance Committee, Chair of the Senate Transportation Committee, and a former Chair of the House Insurance & Banking Subcommittee. He is President and CEO of Hope Villages of America, a Tampa Bay area nonprofit organization addressing hunger, homelessness, and domestic violence. Both lawmakers discussed their motivation for entering the Florida Legislature and their vision for Florida’s homeowners insurance marketplace and by extension, the state economy. Topics included the admitted insurance market (those companies whose rates and policy forms are approved by state regulators) and the surplus lines companies (those whose rates and forms are largely unregulated, and who often insure risks admitted companies don’t), along with reinsurance companies, who provide catastrophe insurance for insurance companies. Among the bills and issues discussed on the podcast with host Lisa Miller: HB 1503HB 1029popular My Safe Florida Home homeowners program(For full Show Notes, visit https://lisamillerassociates.com/episode-48-2024-legislative-roundup/ )

Ray Shelton, Ph.D. is a nationally-known expert on stress and the impacts it has on frontline personnel in disasters and other crises. He is a Fellow and the Director of Professional Development for The American Academy of Experts in Traumatic Stress, in Miller Place, New York. He’s seen tragedy first-hand over 35 years serving with the Nassau County, New York Police department, including the Twin Towers Collapse during 9/11. He’s also a former firefighter and paramedic. “The adjusters are no different than fire, police, and EMS, they're front line. They're action-oriented. They take risks. They have tremendous attention to detail. They have a powerful need for control, to help people get their lives back in order,” said Shelton. “But the price that is paid for that, is all of the memories, all of the conversations, all of the sites that they see stays with them. There's absolutely no delete button in the human brain.” Shelton worked with the Liberty Mutual Insurance Catastrophe Response Team during the California Wildfires in 2008 and subsequent tornado outbreaks across the country. That’s where he met Jenny Pye, M.S., whose 35 years with Liberty Mutual included serving as a Property Claims Manager and Director of Quality Improvement for Auto Physical Damage (APD), Property, and Shared Services. “Every time I hear Ray talk, it takes me back to early in my career when I was an adjuster in the field and would go out and have multiple fatality 18-Wheeler accidents, and just the emotions of being on scene and investigating a claim,” said Pye. “Sometimes the bodies were still there and then talking to their families, just all those emotions.” Today, Pye is the Director of Commercial Claims at Pilot Catastrophe Services, based in Mobile, Alabama. She helps adjusters and the firms they serve to not only proficiently manage the technical part of the job, but manage the emotional toll that claims can have. She said adjusters who strive for great customer experience, often ignore or cover-up signs of traumatic stress. “But sometimes you get feedback as a manager and hopefully before you get that feedback from your customer, you're recognizing these issues,” said Pye. “Maybe the adjuster is not as responsive as they normally are. It's not just answering a text or phone call, if you're calling about a claim, it can be on a Zoom call and you will see where these folks that are normally engaged are not engaged.” That, she adds, requires claim managers to “finely tune your senses to be aware of what’s going on.” Shelton, who presents “Fine Tuned Adjuster” webinars for the Property Loss & Research Bureau said there are consequences of not recognizing the signs in adjusters or of claims management not responding to the signs. “If you do nothing, it stops productivity and the bigger danger (is) maybe that you lose that person who has bottled this all up from multiple times that this has occurred and finally says, ‘You know, I've had enough’ and they leave the industry,” Shelton said, noting the current market challenge of recruiting adjusters to replace those that leave the profession. (For full Show Notes, visit https://lisamillerassociates.com/episode-47-stress-strain-of-adjusting/)

Advances in artificial intelligence (AI) and machine learning are getting closer to providing insurance companies with a new underwriting tool to combat fraud: the ability to review meeting minutes and other public documents from homeowners and condominium associations, whose communities are home to nearly half of Florida’s 22.3 million residents. Several Florida associations have been accused of recent wrongdoing, including one where four former board members were arrested, accused of engaging in a multi-million dollar embezzlement of monthly dues from residents. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with an insurance lawyer and an insurance services company executive who uses AI, to find out how often this fraud happens, how it increases property insurance rates, and exactly how the new technology to fight it will work. Show Notes The South Florida Sun Sentinel did a recent exposé of a West Miami development called The Hammocks, a 6,500-unit community of houses, townhouses, and condominiums. Four former association board members were arrested for allegedly engaging in an intricate scheme to embezzle millions of dollars in monthly dues from residents. Authorities say $2.4 million in checks were written to five companies that did little or no work for the homeowners association (HOA) – two of them owned by the husband of the former board president. Andy McGuire, Chief Strategy Officer and Co-Founder of PEAK6 InsurTech, said such fraudulent practices contribute to inflationary pricing and higher insurance rates. He said advances in technology, especially artificial intelligence (AI) and the machine learning process, are providing better insights into risk. His company’s subsidiary, Focus Technologies, is doing this today to serve its customers better. “With enough observations, you can run a model, for example, on the language used in the meeting minutes to potentially pick up on schemes,” said McGuire. “Now that we have this example, for this particular issue, we can build an AI and teach it with these talk paths or words and knowing that it resulted in fraud, you have your first learning. You can get enough positive observations that you now have a model that an underwriter can load the minutes into and get a prediction. Combine that with financial data and a propensity to commit fraud of each individual member of the board, and you have a fully automated decision tree. I don't think we're totally there yet, but we're really close. This is the future,” said McGuire, whose 25 years in the industry include risk management and reinsurance. Tiffany Rothenberg is a Partner at the Kelley Kronenberg law firm’s West Palm Beach office in the heart of Florida’s condominium country. She represents commercial property insurance companies in complex coverage disputes and is an expert in the HOA and condominium association insurance claims arena. “I can't tell you how frequently we end up seeing this kind of a scenario,” Rothenberg told host Lisa Miller. “I just had a case here in Palm Beach County, where the association submitted a $4.5 million dollar Hurricane Irma claim for roof damage. When we started to review their condo records, we discovered that the association actually had five roof replacement proposals that were all under $1 million. And then during depositions, it came out they actually signed a contract with one of those roofing contractors for around... (For full Show Notes, visit https://lisamillerassociates.com/episode-46-insurers-know-the-building-and-the-board/)

Media coverage has intensified over an allegation by three independent insurance adjusters that Florida property insurance companies are cheating their policyholders out of rightful claim payouts. The three accuse the industry of altering their field adjuster reports and reducing claim payouts – all without their knowledge or approval. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with two independent field adjusters and an attorney who represents insurance companies to learn their perspective and just how damage claims – and their payouts – are ultimately decided and by whom. Show Notes The three adjusters and their allegations first appeared in public last December to testify during the Florida Legislature’s special session which resulted in a series of new consumer insurance reforms. The reforms included the end of one-way attorney fees for property insurance lawsuits, the end of Assignment of Benefit contracts, and a further tightening of claim practices, among other things. These were all abusive practices by bad actors against insurance companies and policyholders that were blamed for driving up the cost of insurance and creating market turmoil. (For full Show Notes, visit https://lisamillerassociates.com/13875-2/) Shawn Kelliher of Cape Coral is a 16-year veteran in the insurance adjusting business. His first 13 years were working for Farmers Insurance Company as a desk adjuster and then as a catastrophe field adjuster, including large loss and complex claims across the country. He said “it’s absolutely not the case” that insurance companies are out to get everybody and explained that there are many legitimate reasons why field damage estimate reports change. Field adjusters often don’t know what damage is covered by the insurance policy. “Some policies have actual cash value only coverage, some policies have specific exclusions for certain items and a lot of times we don't know that,” Kelliher said. “So we see and document the damage and that goes in our report and that’s sent up (to the independent adjusting firm or insurance company), only to be later found out that, unfortunately, in those circumstances where they (the policyholders) don't have coverage, those items have to be removed or taken out of the estimate. And it's not a malicious situation,” the Naples, Florida native said. Kelliher said he’s seen it many times over the past three years that he’s been an independent adjuster in Florida. He said he works for a variety of adjusting firms and across a vast array of insurance carriers, doing both residential and commercial work. Vanessa McGonigal, an independent field adjuster from Cooper City agrees. Often times, she said she is not aware of any changes that may take place in the final adjusting report on a claim. “If we're preparing an estimate for all of the damages we see and we submit that and coverage is not afforded for something written on our estimate, where is it that we should give permission to have that removed? If it's not covered, it's not covered,” McGonigal said. She began her career in 2009 as an estimator for a general contractor and then five years ago, became an independent field adjuster. She said she has worked for a couple of independent insurance adjusting firms, doing both residential and commercial claims, including from Hurricane Ian. Both McGonigal and Kelliher said that if there is a change to the estimate, sometimes they make it, sometimes their adjustment firm does it, or the desk adjuster at the insurance company, depending on the change and the situation. “They'll call me and say, ‘Hey, you know, I read your report, I saw your photos, this is what I was thinking. Can you kind of explain your thought process here or justify what it is that you put in your estimate?’ and we’ll have a conversation about it,” said Kelliher, who has worked “several hundred” Hurricane Ian claims. “And ultimately, again, ultimately, it's the carrier's determination of...

An interim report submitted to the Florida Building Commission says that Southwest Florida coastal communities impacted by last September’s Hurricane Ian were “ill-prepared” for the storm surge and flooding, despite lessons on wind mitigation learned from Hurricane Charley 18 years earlier. Ian was the costliest storm in Florida history, killing 156 people and causing an estimated $109.5 billion in damage in Florida. Only an estimated half of that will be covered by insurance. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with the report’s co-author and another extreme events scientist who produced early catastrophic models on Ian for insurance companies. They discussed how this new research shows some of the same patterns of destruction seen in prior storms, that Florida hurricanes are not getting stronger or more frequent, how elderly and poor residents are disproportionately hurt, potential changes to the state building code, and why a new approach to mitigation is needed. Show Notes New lessons are emerging from Hurricane Ian, the high-end Category 4 hurricane that made landfall near Fort Myers Beach on September 28, 2022. An interim report by a team of scientists supported by the Florida Building Commission showed Ian’s tropical storm-force wind field was 2.3 times the diameter of 2004’s Hurricane Charley. The greater resulting storm surge of 13 feet impacted high population areas living in both elevated and on-grade homes along hundreds of miles of canals and coastal frontage. (For full Show Notes, visit https://lisamillerassociates.com/episode-44-dynamic-duo-ian-hit-hard/) Findings: The report evaluates specific building code-related impacts to structural performance, including breakaway walls relative to code provisions, placement of the coastal construction control line, evidence for surge-induced floor slab uplift forces, and performance of common roof cover and wall cladding elements. Dr. David O. Prevatt, one of the report’s co-authors, is a Professor of Civil & Coastal Engineering at the University of Florida’s Herbert Wertheim College of Engineering. He is part of the Structural Extreme Events Reconnaissance (StEER) Network of researchers and product engineers that conducts surveys to assess building performance after each hurricane. Its evaluation was used in the interim report and captured Hurricane Ian’s damage patterns and storm surge. Dr. Prevatt said Ian was not a design level wind-event, meaning its wind speed on land of about 120 mph was below the building code standards of 154-160 mph for Lee County, where it made landfall on September 28, 2022. “The severe damage we saw was really the flooding, in particular the manufactured homes on Fort Myers Beach and mostly older slab-on-grade homes,” said Dr. Prevatt. “The good news, if there is any that we can draw from this, is that recent construction built to the recent Florida Building Code standards performed well, even in areas where they were impacted by the 13-foot high storm surge.” Yet, Ian destroyed or severely damaged about 20,000 homes in a wide path from Lee County on the Gulf Coast and inland across central Florida to Daytona Beach on Florida’s Atlantic Coast. Dr. Prevatt said he saw the same patterns of damage in Ian that he saw in the previous six years from Hurricanes Matthew, Irma, and Michael. “It’s one of the saddest parts for me. If we don't harden our communities or retreat and move them away from these intense events, we will repeat what we've seen here five, 10, 20 years down the road,” said Dr. Prevatt. Dr. Karthik Ramanathan is Vice President of Research at Verisk, the worldwide data analytics and risk assessment firm. He led the catastrophe modeling team that estimated Hurricane Ian’s initial insurance and reinsurance losses at between $42 billion to $57 billion, not including federal flood insurance losses. The firm’s catastrophe or extreme event models not only help insurance companies determine adequate...

The December 2022 property insurance market reforms passed by the Florida Legislature are making a big difference already, with fewer and less severe non-hurricane claims and fewer daily lawsuits, according to a major Florida insurance company. Former Florida Deputy Insurance Commissioner Lisa Miller talks with Stacey Giulianti of Florida Peninsula Insurance Company on how the reforms have leveled the playing field in insurance litigation and together with innovative industry practices, will bring positive results for consumers, carriers, and their reinsurance companies. Show Notes Stacey Giulianti is a Co-Founder and Chief Legal Officer at Florida Peninsula Insurance Company, a Florida-based homeowners property insurance carrier. Together with its sister company Edison Insurance, they have a combined 180,000 polices in Florida. The 2022 reforms were designed to stem high insurance and reinsurance rates, carrier insolvencies, inflated claims, an overly-competitive residual market, and especially excessive litigation. According to the Florida Office of Insurance Regulation, in 2021 Florida had 7% of the nation’s homeowners insurance claims yet 76% of the nation’s homeowners insurance lawsuits. (For full Show Notes, visit https://lisamillerassociates.com/episode-43-future-of-florida-insurance-litigation/) Giulianti, a former plaintiff attorney before representing insurance companies, said the reforms, specifically the elimination of one-way attorney fees, will “level the playing field” between plaintiff and defense attorneys in disputed claims. “The problem was that it really only gave the incentive to the plaintiff lawyers, to people like me back in the day, to file that suit, no matter what, it doesn't matter about mediating, it doesn't matter about coming together and trying to find common ground, it was like, ‘Who cares, I am going to get attorney fees one way or the other,’” he said. He disagrees with critics who argued that eliminating the one-way attorney fees would create a barrier for consumers looking to find an attorney to sue an insurance company on their behalf. He said courts at the end of a case can still award attorney fees if justified and tax costs, such as the hiring of an expert witness, something he said is actually needed in less than 10% of disputes. “That's a little bit of nonsense from plaintiff lawyers trying to say that you need an expert in every case,” said Giulianti, who is also an accredited claims adjuster. “You don't, because most of these cases, we already know what the damage is. And it's really a scope and pricing differential. Do you repair it, do you replace it, is it $5,000 to repair that, or is it $50,000 to repair that?” Giulianti said that hiring an expert would still be less expensive to the consumer than paying 30% to 40% of their court award in attorney fees. Innovative Options: The reforms allow insurance companies to offer mandatory binding arbitration in their policies with a resulting premium discount. “Ultimately what we want is a quick, easy, and inexpensive way to get an answer. What we are really looking for is for someone to tell us either way, what the answer is to the dispute. You get the answer relatively fast and it’s resolved, versus court cases that can last for years.” Giulianti said the vast majority of claims are undisputed and simply get paid by insurance companies. Citizens Property Insurance Corporation, the state-backed residual market carrier in Florida, recently received regulatory approval to handle contested claims outside of court through the state’s Division of Administrative Hearings. These are for claims that were either denied because of a determination of no coverage or contract limitations regarding the coverage amount. “I think those types of judges from the administrative side are every bit as smart as anybody else who's going to be sitting on the bench and making those decisions,” said Giulianti, who is a member of both the Florida and Maine...

Florida property insurance companies, their policyholders, and repair contractors are starting the New Year with a new law designed to reform an out-of-control marketplace. The Florida Legislature in December passed comprehensive measures to stem high insurance and reinsurance rates, carrier insolvencies, inflated claims, excessive litigation, and an overly-competitive residual market. Former Florida Deputy Insurance Commissioner Lisa Miller talks with Citizens Property Insurance President & CEO Barry Gilway, insurance agency executive Andy McGuire, and reinsurance broker Adam Schwebach about the new law and the expectation it will help rebalance Florida’s decimated property insurance market. Show Notes Six Florida insurance companies went insolvent in 2022 and a seventh went into a regulated policy run-off. Host Miller was joined in the podcast by Barry Gilway, President, CEO, and Executive Director of Citizens Property Insurance; Adam Schwebach, Executive Vice President of reinsurance broker Gallagher Re; and Andy McGuire, Co-CEO of PEAK6 InsurTech, which includes an insurance agency representing more than 100,000 policyholders. (For full Show Notes, visit https://lisamillerassociates.com/episode-42-barry-gilway-floridas-new-law-is-a-profound-change/) The major provisions of the new law (SB 2-A) cover: Attorney Fees: Ends one-way attorney fees in residential and commercial property insurance policy lawsuits; Offers of Judgment: Reinstates the civil offer of judgment statute (also known as Proposals for Settlement) and makes attorney fees available for the prevailing party, while also allowing for joint offers of judgment; AOBS: Prohibits Assignment of Benefits (AOB) contracts of residential and commercial property insurance policies issued on or after January 1, 2023; Bad Faith: Prohibits the filing of a bad faith lawsuit until a final judgement is issued against the insurance company in the original claim dispute; Citizens Property Insurance Reforms: Makes many essential improvements to current laws governing the state-backed “insurer of last resort,” Citizens Property Insurance Corporation, including: - Changing the eligibility to remain a Citizens policyholder, by requiring that private insurance company coverage has to be 20% more expensive (up from 15%, to match current rules on new policies) and likewise for commercial residential policies; - Ending capped rates (the so-called “glide-path”) and requiring its rates be actuarially-sound and be “non-competitive” with admitted companies’ market rates; - Defining and allowing higher rates for second (non-homesteaded) homes; and - Requiring personal lines policyholders purchase flood insurance to become or remain a Citizens policyholder. Reinsurance: Establishes a second optional hurricane reinsurance fund (The Florida Optional Reinsurance Assistance Program) for carriers, offering rates of 50% to 65% of the cost of on-line rates, while maintaining the Reinsurance to Assist Policyholders (RAP) program created in the May special session; Arbitration: Allows carriers to offer mandatory binding arbitration in their policies with a resulting premium discount; Claims Handling: Reduces from 90 days to 60 days the time insurance companies have to pay or deny a claim, unless extended by regulators; and reduce from 14 days to 7 days the time a carrier has to review and acknowledge a claim communication and begin an investigation, along with other time requirement changes; Claim Filing: Further tightens deadlines for policyholders to report a claim from 2 years to 1 year for a new or reopened claim, and from 3 years to 18 months for a supplemental claim; and Greater OIR Regulation: Allows the Florida Office of Insurance Regulation (OIR) to withdraw approval of policies with an appraisal clause for companies that routinely invoke it; allows OIR to do market conduct exams after a hurricane on those companies in the top 20% of claims filed or DFS complaints and to...

The Florida Legislature is meeting in special session the week of December 12 to address two issues vital to Florida’s economy: disaster relief for Hurricane Ian victims and further insurance consumer protections for homeowners across the state. Property insurance and reinsurance rates have grown by 100% or more in the past three years, yet insurance companies’ losses continue, with six carriers becoming insolvent this year, and 13 others withdrawing coverage, driven in part by a nearly 400% increase in claims litigation since 2013. Former Florida Deputy Insurance Commissioner Lisa Miller talks with a former legislator and the head of an insurance brokerage for their perspective on the problem and what the legislature should do to help fix the Florida insurance market crisis. Show Notes Host Miller was joined by former state representative Andrew Learned, a Democrat from the Tampa Bay area. During his term, he took a keen interest in the consumer protection side of the property insurance reforms passed by the legislature in 2021 and 2022. Also joining her was Deb Franklin, Co-CEO of PEAK6 InsurTech, part of the PEAK6 family of companies. InsurTech provides the technology behind online insurance shopping and offers property and casualty insurance through its Team Focus Insurance Group and WeInsure. The conversation was part of a webinar hosted by the Florida Housing Coalition on December 2, 2022. (For full Show Notes, visit https://lisamillerassociates.com/episode-41-special-session-preview/) Host Miller set the table for the conversation, identifying four key focus areas of insurance industry discussion going into the Florida Legislature’s December 12 special session: Excessive Litigation – There are renewed calls to eliminate the one-way attorney fees statute altogether, contingency fee multipliers, Assignment of Benefits (AOB) contracts between homeowners and contractors, and reform Bad Faith law under the civil remedy statute. Roof Coverage – The ongoing debate is how carriers can insure roofs, without the coverage being used as a warranty by unscrupulous contractors seeking work or homeowners who fail to perform proper maintenance – and then suing when the claim isn’t fully covered. Citizens Property Insurance Corporation Depopulation – The discussion is on how best to return Citizens to being what the 2002 Legislature created, as the “insurer of last resort.” Those analyzing current numbers say that one of every two policies written by the private market end up at Citizens at renewal because they can’t compete on price with Citizens’ legislatively-capped rates. Reinsurance Availability – Florida’s private insurance market is having difficulty finding adequate capital to purchase reinsurance (insurance for insurance companies) and to write new business. Reinsurance costs have risen by 30%-70% at the same time that major reinsurance companies are limiting their capacity in the Florida market. The Legislature is expected to consider providing assistance to improve the availability of reinsurance. “Consumers don’t get it. They don’t understand why their rates are climbing or why they’re being non-renewed or cancelled,” said Franklin, whose agents are providing extra education and counseling for customers, while finding coverage alternatives. Former representative Learned, who owns a local student tutoring company, said he heard from many constituents with the same questions and confusion. “This kind of skirts around the fact that what we've essentially done is socialize our insurance market, and put all of the risk of all these policies in Citizens Property Insurance, which is essentially the taxpayers and anybody who owns a car,” he said. Franklin pointed out that Citizens is now the largest insurance company in the state, with almost 1.2 million policyholders. She said Florida needs to consider what Louisiana recently did, by allowing Citizens to eliminate its caps and raise rates to actuarially-sound...

Most damage from Hurricane Ian appears to be from flooding, rather than wind, and thus won’t be covered under most Florida homeowners insurance policies. Insurance adjusters face a challenging job now determining whether it was wind or water or both that damaged a home, and in some cases in what order, for hundreds of thousands of properties across Florida. Former Florida Deputy Insurance Commissioner Lisa Miller talks with a seasoned insurance defense lawyer on how coverage is determined, who will pay, and the case law involved for those disputed claims that end up in court. Show Notes Hurricane Ian made landfall in Lee County on Florida’s Southwest coast on September 28, 2022 with winds of up to 115 mph, a storm surge of 10-15 feet, and rainfall amounts of up to 22 inches on its path across Florida before exiting in the Atlantic Ocean the next day. The Category 4 storm was the 5th-strongest on record in the US and killed 114 people, making it the deadliest in Florida since the 1935 Labor Day hurricane. While Ian was both a wind and a flood event, there was massive flooding in Lee County and throughout inland areas in Central and Northeast Florida. While those residents who had mortgages and lived in a flood zone were required to have flood insurance, many of the rest of Ian’s victims likely didn’t. In Lee County, only 31% of residential structures had National Flood Insurance Program (NFIP) policies, and statewide only 15%. Standard homeowners policies do not cover flooding. “It’s pretty clear what’s covered under a flood policy but it is a continued debate, particularly in the HO3 (homeowners policy) form as to which policy covers what,” said Tom Diana, attorney and co-founder of the Zinober Diana & Monteverde law firm in Tampa. He handled a lot of claims cases for insurance companies during the series of eight hurricanes that struck Florida in 2004-2005 and since, including Hurricane Ivan, which like Ian he said, was more of a storm surge and flooding event than a wind event. “The real difficulty with Ian now, and all storms for that matter, is going to be when there is evidence of flood damage and wind damage in the same room at the same property. What is covered by the HO3 and what is not?" New technology, such as before- and after- aerial pictures of individual properties taken right after the storm, will help adjusters and engineers make better damage evaluations, said Diana, who worked previously as a civil engineer. Video and photographs taken by policyholders are also important “as the adjusters I know want to get everything right the first time, so they don’t have to do it a second time.” Diana said ensuring open communication with the policyholder along the way is most helpful in settling the claim correctly without going to court. “Adjusting an insurance loss is not a one-way street. It’s a conversation, a continued dialogue between the insurance company and the policyholder. Just because an adjuster is out there on day 10 doesn't mean that the policyholder can't share with them what's happened to the property between day one and day nine. It should not be an adversarial process,” he said, in this podcast geared for field and desk adjusters and for homeowners. Diana and host Lisa Miller walked through the case law that has evolved since the 2004-2005 storms and Hurricanes Katrina and Irma, establishing legal precedents that will help decide Hurricane Ian cases. Today’s homeowners policies, as a result, include the specific language “whether driven by wind or not” in excluding flood damage. Diana said the main case that will likely be cited in any Ian litigation will be Sebo v. American Home Assurance Company. In it, the Florida Supreme Court ruled that where two or more causes of a loss combine and where at least one of the perils is covered in an insurance policy, then the “concurrent cause doctrine” applies. That doctrine requires that when the sole or proximate cause of the loss cannot be attributed to...

Alternative dispute resolution – including appraisal – is playing an increasingly important role in settling homeowners property insurance claims. Florida’s 2019 Assignment of Benefits (AOB) law requires third party contractors to utilize these alternatives before filing a lawsuit against an insurance company, if required by the policy. Former Florida Deputy Insurance Commissioner Lisa Miller talks with a repair contractor and an insurance appraiser who share how today’s technology and methods can not only reduce lawsuits, but herald the return of good customer service and improve the insurance claims process for everyone. Show Notes John Minor, President of Complete Inc. and Complete General Contractors of Florida said he’s seen a lot of changes in his 30 years in the business. His firm does a lot of work now in alternative dispute resolution (ADR) which includes insurance appraisal and arbitration of claims. He said he laments the diminished trust and relationship between adjusters and contractors, who used to work together on repair projects from start to finish. “We very much feel like some of that is now being picked up through the appraisal process,” said Minor, whose firm does a majority of appraisals on behalf of insurance companies. “The appraisal process is a place for reasonableness. Fully outrageous demands are going to be washed away by the process. A true umpire is going to be writing things in such a way that they can explain it to any person.” What it comes down to, he said, is just being fair, looking at the damages, establishing their true value, and then backing it up with an understandable explanation. “When an insured files a claim, they want to know three things. That you saw me, that you know what my problem is, and you have a plan to fix it,” said Jason Evans, President of EIG Restoration of Texas and Florida. The company provides emergency services, repair, and restoration contracting across the Southeast. “Doing those three things absolutely can take out 40% of the claims that go into litigation,” he said. EIG has developed an “Option to Repair” program for insurance companies that provides seamless service to policyholders, where the insurance company chooses the contractor to execute repairs. “Many do not want the option to repair and so we take it as a challenge really to wow them with customer service,” said Evans. “And I say wow them, we just want to be very present and answer all their questions and no detail is left unturned in their repair. So we do that by taking time and being very attention to detail and providing clear expectations of how the claims process is going to go.” Evans said the option is in most insurance policies and exercised in Florida and other states. “I think you'll get to see more and more of that in Florida and around the United States as time goes on,” he added. Both Evans and Minor also talked about the role that technology is playing in improved customer service and claim settlement. Minor’s team works with the Florida Coastal Monitoring Program in staging measurement equipment prior to a hurricane’s landfall and afterward dispatches drones to the areas that had the highest winds. “We document the worst conditions, identify what properties are obvious total losses early on, so that those people can get paid and get on down the road and get it off of our insurance company's books,” said Minor. Evans’ team uses artificial intelligence and chatbots to communicate with policyholders before and after the storm and receive real time updates from them to help quickly triage the response. “Our intent is to get there within one day to that insured’s house and look at it,” said Evans. “Even if they have evacuated, we're going to go take pictures and provide those pictures to the customer and say ‘hey, your house looks pretty good’ or ‘your house is really not in good shape, we've tarped it, we've got the debris out of here, and your claim has been filed,’” he said,...

The Florida Legislature in a May special session passed a series of reforms to help stabilize a property insurance market that has seen a growing number of carriers stop writing business or becoming insolvent. Homeowners rates keep growing by double-digits and coverage is increasingly difficult to obtain. Former Florida Deputy Insurance Commissioner Lisa Miller talks with a lawmaker who was one of the handful of leaders behind the reforms and the head of a litigation analytics firm on whether the two new laws will help re-right the marketplace and lower homeowners rates - and what further reform is most needed next. Show Notes Florida’s newest property insurance and consumer reforms build on legislation passed in 2019 and 2021. The two new laws (SB 2-D & SB 4-D) target excessive litigation, contractor solicitation abuse, and provide $2 billion in no-cost reinsurance coverage to carriers to improve the affordability and availability of insurance coverage. More than 12 companies have stopped writing new business since January. Another seven companies have become insolvent since 2019 - six in just the past 12 months. “This was a matter of first aid to save a dying patient, which was Florida's property insurance market but there's absolutely still more to do,” said Representative David Smith (R-Winter Springs) who supported the two bills that became law and took effective immediately on May 26, 2022. “There are some homeowners that the legislation is going to help immediately. But longer term, I think homeowners will see lower rates and an impact of the rates going up less because of the stabilization of the market….we’re on the right track.” According to the National Association of Insurance Commissioners’ data, as reported by state Insurance Commissioner David Altmaier, Florida has 9% of all homeowners insurance claims in the US yet has 79% of all homeowners insurance claims lawsuits. The number of property insurance lawsuits in the state has increased 363% in the past nine years. The current excesses are driven by fraudulent roof claims. “A lot of the new measures are litigation related with the intent that either the laws will reduce the lawsuit amounts or reduce the cost of each lawsuit to the insurance industry, which would then translate to lower insurance premiums for Floridians,” said Wesley Todd, CEO of CaseGlide, a Tampa-based litigation analytics and software firm serving the insurance industry. He noted the real question is exactly when rates will come down given the reforms will take time to be reflected in renewal policies over the coming months. Insurance companies and their reinsurers will then want to see “years of data” that suggests litigation costs are under control. “I believe that lawmakers still have one more thing left to do, which is get rid of the attorney fees statute, which is the structure that incentivizes attorneys to sue insurance companies. I think until they do that, we won’t actually start to see rates for Floridians decrease.” Florida’s attorney fees statute (627.428 f.s.) requires an insurance company pay attorney fees when the policyholder prevails in a lawsuit against the company. It has helped in catastrophes such as 1992’s devastating Hurricane Andrew, to encourage representation “so that consumers would have a level playing field,” host Miller said. “What has happened is that there are contractors who use that statute to their own benefit and will have their favorite partner, a plaintiff lawyer, and they become a team, once the consumer is kind of marginalized, if you will.” Rep. Smith said the new reforms prohibit awards of attorney fees to contractors or other assignees of an Assignment of Benefits (AOB) contract. “Again, we've got to do more. And the legislature never wants to deny the consumer, that homeowner the ability to get an attorney and be represented and get their day in court,” he said. While Florida has weather issues to deal with that can impact insurance rates,...

The Florida Legislature will meet in a special session May 23-27 called by Governor Ron DeSantis to “bring some sanity and stabilize” Florida’s property insurance market. Homeowners are suffering big rate increases and some have lost their coverage, while a growing number of insurance companies are going insolvent or reducing or eliminating their policy-writing in the state. Former Florida Deputy Insurance Commissioner Lisa Miller explores the problems in the marketplace with an insurance agency executive and a top real estate agency owner who share their ideas on which reforms would be most effective for lawmakers to achieve. Show Notes The Governor’s proclamation calls for the legislature to address property insurance, reinsurance, civil litigation, and changes to the Florida Building Code to improve the affordability and availability of insurance coverage. The legislature failed to pass any reforms in its regular 60-day session earlier this year. Reforms passed into law in its 2021 session under SB 76 have had key roofing solicitation restrictions temporarily enjoined from enforcement by a federal judge. Ron Assise, Senior Vice President of Horton Personal Insurance, in Estero, Florida, said his clients are experiencing “sticker shock” on their homeowners insurance premiums. “Clients are very disrupted when they get their bill and it's 20% or 25% or 30% more than it was last year,” said Assise, who is part of The Horton Group of Chicago, an insurance, employee benefits and risk advisory firm. Whitney Dutton, owner of The Dutton Group@Re/Max First, a full-service real estate agency in Fort Lauderdale, said with 30% of his clients from out of state, the sticker shock is even greater and comes with greater consequences, too. “When people get a loan, the lender uses a debt to income ratio in order to qualify them for a purchase. When the debt to income gets offset by $1,000 to $4,000 of swings from insurance quotes, that can really put a damper on someone's ability to purchase a home, or to be competitive when trying to bid on property,” Dutton said. He said some home purchasers have faced being dropped by their insurance company following a quality control check 60-90 days after closing, when it’s determined the roof is too old or other changes are required to keep the policy in force. “A third way that it comes is simply just getting dropped without any notice whatsoever from insolvency due to a lot of these companies that are just getting out of the market,” said Dutton, whose group was the top Realtor in Fort Lauderdale in total transactions last year. Rising Litigation: The Governor’s proclamation states upfront that “Florida’s general tort environment related to property insurance has led to thousands of frivolous lawsuits…and according to the Office of Insurance Regulation, Florida accounted for 79% of the nation’s homeowners insurance lawsuits while making up only 9% of the nation’s homeowners insurance claims. Florida citizens are seeing the effects of this higher litigation in their rising premiums.” Assise said litigation reform is a must. “We all know that Florida is far and away the unfortunate leader in litigation when it comes to insurance claims with approximately 116,000 insurance related lawsuits last year versus less than 1,000 for the rest of the country combined,” he said. Roof Claims: Assise suggested the legislature approve what was in last session’s SB 1728, passed by the Senate but not taken up by the House, which would require a roofing deductible or an actual cash value or repayment schedule for older roofs, in place of the current full replacement value. “Doing that will really make it not worth its while to an attorney to go after an insurance company, if they're going to get, let's say 40 cents on the dollar as an example,” Assise said. His other suggestions are to change the state’s 25% Roof Repair/Replacement Rule that requires an entire roof be replaced if 25% or more of it is damaged...

Beside their direct impact on Florida homeowners, multiple double-digit rate increases in property insurance are impacting Florida’s real estate market as well. If rates continue to rise, there’s concern they will affect the availability and affordability of insurance for new homebuyers. Former Florida Deputy Insurance Commissioner Lisa Miller explores the reasons for the increases, including increased insurance litigation, and how they’re now impacting the state’s economy. Show Notes In a recent address to the Pensacola Association of Realtors, host Lisa Miller identified some key drivers behind the past two years of homeowners insurance rate increases in Florida. She noted as rates go up, so do home mortgages for those who escrow their insurance, impacting home affordability. Rising Litigation: In 2021, 76,526 property insurance lawsuits were filed in Florida, an 18% increase from 2020, according to CaseGlide. Claims with lawsuits cost almost five times more than those without. “In testimony last week in the Senate, Barry Gilway, who’s head of Citizens Property Insurance said that when a third party is involved, the average claim is $48,000. When there's no third party involved, anybody want to guess what it is? $10,000,” said Miller. “As claims costs go up, what do you think happens to rates? They go up. It’s pretty simple. You don't have to be an actuary to know that.” She noted that according to industry stakeholders, it is estimated that three of every five insurance claims are inflated, whether the increase is only slightly or obviously suspicious. Contingency fee multipliers, which allow plaintiff attorneys to request attorney fees twice or three times the customary rate, are also contributing to the increased and unnecessary costs of claims. Miller told the Realtors that the DFS Division of Consumer Services has an insurance consumer hotline offering free help to any policyholder who faces challenges dealing with their insurance company and that it has a high rate of success settling disputes. “When the third parties come into the room, I encourage you and your clients to say to that person, I don't need to see you. If I can't get the free service that my tax dollars are paying for, I'll come back. But many times now, people file a claim and the first thing they do is hire a lawyer,” Miller said. The resulting “cottage industry of 15 to 20 law firms” are responsible for the majority of homeowners claims lawsuits in the state, currently numbering about 100,000. “The theory is, the more you sue, some are going to stick,” said Miller. The Florida Legislature’s 2021 reforms in Senate Bill 76 that now require lawyers give a 10-day notice to insurance companies before filing suit, are being challenged in federal court. “It forces them to come to the table and have a conversation like human beings should do…and work it out. They don’t want to do that. It’s easier to file suit, hope for the best, and get attorney fees,” Miller said. Many of those lawsuits she said are driven by unscrupulous home contractors and roofers canvassing neighborhoods doing free inspections and proclaiming “you need a new roof and we’ll get the insurance company to pay for it,” said Miller. “I want us all to have a new roof but that's not what an insurance policy is all about. If you need a new roof and it's wear and tear, you have to figure out how to pay for it yourself. If it's wind or weather damage, they'll (insurance companies) pay for it. It's just that simple,” Miller told the Realtors. Reinsurance: From 40- to 45-cents of every dollar of a homeowners insurance premium goes toward the cost of reinsurance – insurance that insurance companies buy to protect themselves from overwhelming losses in larger claims and catastrophes. Miller noted that money flows from Florida to off-shore reinsurance companies in Bermuda, London, and Germany. But some reinsurance is purchased from the less expensive Florida Catastrophe Fund, a state-run...

The Florida Legislature begins its 2022 session on January 11. Among the bills filed are those seeking enhanced insurance consumer protection, greater safety for high-rise condominium buildings following the Surfside collapse, COVID-19 relief, controls on prescription drug costs, and legislative redistricting. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with state capitol reporters Mike Vasilinda of Capitol News Service and Jim Saunders of the News Service of Florida, to discuss which bills may get serious consideration and why. Show Notes With 2022 being an election year for the Governor and many legislators, one of the questions is whether lawmakers decide to wait and see if the 2019 and 2021 insurance consumer reform measures previously passed into law are having enough of an impact on Florida’s “dire” property insurance market as recently described by Insurance Commissioner David Altmaier – or maybe at least go for minor adjustments? “I don't think we can discount that this is an election year. I think that you can frame a lot of issues in that context and property insurance is one of them,” said Saunders, who is Executive Editor of the News Service of Florida. He noted that certain proposed measures in this session would drive up costs, including a failed mandate from last session that would have required actual cash value instead of replacement coverage for roofs. “I think the real key is how far Governor DeSantis wants to push on doing something about property insurance. You know, if he comes down and says we have to do something, maybe the legislative leadership will do it, but he's going to be in a reelection campaign and does he want to take that on in an election year? I'm not sure at this point as we haven't heard a lot from him about it,” said Saunders, who has covered legislative sessions for the past 24 years. “I think the Governor's got to pay attention,” countered Vasilinda, who is founder and chief reporter for Capitol News Service, covering the legislature for 49 years for television stations across Florida. “It was Charlie Crist who stalled Citizens (Insurance Corporation) rates when he was governor in 2007 for two years where they couldn't raise their rates and then they created the 10% glide path, which, for whatever reason, Citizens never ever got to 10% across the board on anybody. And now they're proposing 11 and 12%, across the board on everybody. There is going to be some political pressure for the Governor. He’s going to hear about it in The Villages and everywhere else he's going. And he's going to know that Governor Crist at the time was the guy that froze those rates. And he'll try and use that against the former governor,” who is running again for governor against DeSantis. Another question is how the Florida Office of Insurance Regulation (OIR) will act on Citizens request for those maximum rate increases statewide, even in Miami-Dade County, where Citizens’ actuaries had indicated a 3.2% rate increase. “I think OIR feels political pressure as well. To think otherwise is probably a little naïve,” said Saunders. Host Miller noted that the Florida Senate last year passed a bill containing actual cash value for roof claims but the House rejected it. “I think we have to start at the roofing manufacturers, educate consumers that there's no such thing as a 30 year shingle, especially in Florida. Consumers, in my opinion, should have a choice if they want to have skin in the game and have a lower premium with actual cash value. For those that want replacement costs, let them have it. But those choices were not offered in the legislature and unfortunately, who knows where that's going to go this session,” said Miller. The other big story in Florida in 2021 was the collapse of the Champlain Towers South high-rise condominium in Surfside which killed 98 residents. A Miami-Dade County Grand Jury this month recommended that such buildings be re-inspected every ten years for...

Florida Insurance Commissioner David Altmaier told a legislative committee in late September that the state’s property insurance market is in “critical condition” with a growing number of insurance companies losing money and consumers facing continued double-digit rate increases. A new set of reforms designed to help is already being challenged in federal court by roofers and restoration companies. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with Jose Pagan, a former fraud regulator who is now one of Florida’s leading insurance defense lawyers, to discuss the legal challenges to the new reform law, the ongoing litigation abuse and unlawful activity in the marketplace, and how consumers are ultimately losing. Show Notes Jose Pagan, Partner with the Walton, Lantaff, Schroeder & Carson Law Firm, said the issues in Florida’s property insurance market today have their roots in the aftermath of 1992’s Hurricane Andrew in Miami, where he and host Miller worked together as insurance regulators. The mediation program for property insurance claims created after Andrew was such a success that the legislature made it standard protocol for handling all future claims. “While those programs still exist to try to resolve cases pre-litigation, a cottage industry has developed of a very small segment of the legal community as well as some contractors and some public adjusters who are really abusing the system,” said Pagan, an insurance defense lawyer with more than 25 years’ experience in the insurance industry, including as an insurance agent and fraud investigator. He cited Insurance Commissioner David Altmaier’s report to the Florida Legislature earlier this year that Florida has 8% of all homeowners’ claims in the U.S., yet 76% of all homeowners’ claims lawsuits. “And moreover, if you look at some of the information that was provided…. it's really only a handful of law firms that was generating a majority of all of those lawsuits,” he added. “Those are the cost drivers that ultimately are generating the premium increases for all Floridians in this marketplace.” To stem the abuse and stabilize the marketplace, the Florida Legislature last spring passed Senate Bill 76 (SB 76, now Florida Statute section 489.147) its most recent property insurance reform law. Yet just two weeks after Governor Ron DeSantis signed the bill into law in June, the first of two lawsuits was filed in federal court in Tallahassee by a roofing and restoration company, complaining that the section of the law dealing with prohibited advertisements and soliciting infringes on its constitutional right of free speech. The section establishes that contractors and public adjusters, or unlicensed persons acting on their behalf, may not solicit or incentivize a residential property owner to file a roof damage insurance claim. Violations carry a fine up to $10,000. Chief U.S. District Court Judge Mark Walker granted a preliminary injunction on the section in July, pending full trial scheduled for spring of 2022. “Clearly, Judge Walker indicated that there was a significant government interest in attempting to address fraud and abuse in litigation…(but) his assessment, at least on the preliminary injunction side of it, looked at it in terms of commercial speech…and he was able to reach the conclusion that it was an infringement upon commercial speech,” said Pagan, who outlined the series of court tests the judge used. “It's pretty clear to me that the legislature was trying to just stop some of the high pressure sales tactics by solicitors knocking on front doors that we see every day, read about on social media, and experience in our own neighborhoods,” said host Miller. Miller and Pagan also discussed a second lawsuit, filed by the Restoration Association of Florida in the same federal court. It seeks to throw-out the entire law, which includes a series of provisions, including broadening the longstanding one-way attorney fee statute formula where...

In the wake of the Champlain Towers South condominium building collapse, insurance companies are looking to tighten their underwriting requirements on Florida condo association policies. Policy renewal premiums are expected to increase up to 25% for those that can’t show a good building maintenance record. While the commercial residential market tightens, Florida’s homeowners insurance market is going through an upheaval of its own. One insurance litigation reform measure passed into law is now coming into play in court: presuit settlements. Former Florida Deputy Insurance Commissioner Lisa Miller talks with two professionals on the underwriting and legal side for their insight on market changes afoot and advice for insurance companies trying to navigate the changes. Show Notes This Florida Insurance Roundup podcast covered two topics that have one thing in common: how to clamp down on rising premiums, rising costs, and excessive litigation expense. Condominium Association Underwriting: Florida’s commercial residential insurance companies are actively looking at how to avoid insuring another condominium building collapse or similar major catastrophe. The Champlain Towers South collapse in June killed 98 residents in Surfside, Florida. At least five other high-rise buildings in Miami-Dade County have since been partially or fully evacuated for being deemed unsafe. Brian Squire, Managing Executive Senior Vice President at Hays Companies, a national insurance consulting agency, said there’s a systemic issue at play with how condo buildings are maintained and how their associations are governed. “You have a board of directors that make decisions on behalf of the association, but then the condominium association’s governing documents allow its members to veto the board's decision. These decisions made regarding the maintenance of these associations, on a lot of cases, are based on cost first, then life safety. This mindset needs to change,” he said, noting there have been multiple associations who’ve had decisions levied against them recently. In the wake of the disaster, Surfside officials are moving up building recertifications for occupancy from every 40 years to every 30 years and requiring sign-off by both a structural engineer and a geotechnical engineer checking the foundation and subsurface soils. But Squire insists the age of the building shouldn’t be the sole factor. “I've seen newly constructed buildings have issues similar to a Champlain Towers. So we really need to wipe away the mindset that this is only needs to be applied to a 40 year building,” said Squire, who has been in the insurance business for 21 years and is based in the condominium-popular Destin, Florida. In his recent conversations with many insurance companies, Squire said there’s many potential new underwriting requirements now under consideration. They include: Among the solutions he suggested, is requiring engineering studies of all existing condominium buildings, pre-qualification of underwriting through insurance carriers, and possibly legislative changes. Squire said associations should be proactive prior to policy renewal, too. “What's going to make it look better is replacing or maintaining a roof and making sure that you have impact windows. Those are really the two items that can easily be addressed,” he advised. Host Lisa Miller noted that the Building Officials Association of Florida recently held a summit to address structural safety issues and potential changes with other groups. They included the International Code Council, the National Institute of Building Sciences, the Building Owners and Managers Association, and the Florida Bar’s Condominium Law and Life Advisory Task Force. Proposed legislation is being drafted as well for the Florida Legislature to consider in its January 2022 session. Presuit Settlements: The new presuit settlement law is part of SB 76, Florida’s broader new property insurance reform law that took...

Florida’s new property insurance reform law takes effect on July 1. While its intent is good, Florida policyholders are in desperate need for the law to have a significant impact on double-digit rate increases and questionable door-to-door solicitation practices. Will it deliver? Former Florida Deputy Insurance Commissioner Lisa Miller walks us through the details of Senate Bill 76 with two insurance defense lawyers who provide experienced analysis and perspective on each section of the new law, its likely impact, and the areas where legal conflicts may arise in its interpretation. This is a must-listen to podcast for anyone in Florida’s property insurance industry. Show Notes Lisa is joined by Tom Diana and Michael Monteverde of the award-winning Zinober Diana & Monteverde law firm with offices in Ft. Lauderdale, St. Petersburg, and Tampa. Tom is a Co-Founder and Principal Partner of the firm. He is a civil engineer turned lawyer whose main practice areas focus on insurance claims involving engineering and architectural experts, all matters related to construction, and coverage issues related to professional and general liability policies. Michael is a Partner at the firm who focuses his practice on the litigation of complex construction defect matters, first- party and third-party insurance disputes, as well as insurance coverage matters, including high exposure bad faith claims. This extended hour-long podcast walks through the new law from the 44-page Senate Bill 76 (SB 76), section by section, as follows: 489.147 Prohibited property insurance practices, which cover advertisements and solicitations by contractors and public adjusters and establishes contractors or unlicensed persons acting on their behalf may not solicit or incentivize a residential property owner to file a roof damage insurance claim. 624.424 Annual statement and other information, requiring insurance companies file an annual report with specific data regarding litigation of personal and commercial residential property insurance claims 626.7451 Managing general agents; required contract provisions and 626.7452 Managing general agents; examination authority, which clarifies that the Office of Insurance Regulation has the authority to examine MGAs, including insurers’ affiliates. 626.854 “Public adjuster” defined; prohibitions, establishes that a public adjuster, a public adjuster apprentice, or unlicensed persons acting on their behalf may not incentivize a residential property owner to file a roof damage insurance claim and has an “up to $10,000 fine” for violations. 626.9373 Attorney’s fees, regarding lawsuits not brought by an assignee, directing awards of reasonable attorney fees only as provided under two specific statutes. 627.428 Attorney fees, regarding lawsuits not brought by an assignee in judgment against an insurance company. 627.70132 Notice of property insurance claim, changes the notice of claim deadlines by requiring that any claim must be provided to a property insurer within two years of the date of loss and the policyholder then has another year to file a supplemental claim if needed. 627.7015 Alternative procedure for resolution of disputed property insurance claims, creates new statutory requirements for residential or commercial property lawsuits that are not brought by an assignee, including a ten-day presuit notice and demand, before bringing suit against an insurance company. The company has 10 days to respond in writing to such notices. This section also broadens the current one-way attorney fee statute formula. If the claimant recovers at least 50% of the disputed amount, full attorney fees would be awarded; less than 20%, then there would be no attorney fees. Judgments between 20% and 50% would merit the same proportional attorney fee to the percentage of the disputed amount obtained. 627.70153 Consolidation of residential property insurance actions, requiring each party that is aware of multiple lawsuits...

The Florida Legislature has passed a property insurance reform bill designed to stem double-digit rate increases, costly claims practices, and excessive litigation. While the bill awaits the Governor’s expected signature into law, there are questions about just how effective it will really be. Host Lisa Miller, a former Florida Deputy Insurance Commissioner, talks with a leading state Senator and a veteran insurance defense attorney and legal strategist on what the measure does and doesn’t do – and its expected impact on Florida consumers. Show Notes Over the past 18 months, Florida’s residential and commercial property insurance market has seen a growing number of policy cancellations and non-renewals, greater coverage restrictions, and regulatory approval of necessary double-digit rate increases, some as high as 50%. Senate bill SB 76 changes the calculation of attorney fees and restricts solicitation of roof damage claims, requires claims be filed within two years and requires that insurance companies receive a ten-day presuit notice in first-party litigation. It also directs state regulators to collect insurance claims and litigation data annually. (For a complete summary of the bill, click Lisa’s 2021 Bill Watch.) State Senator Jeff Brandes (R-Pinellas County) voted in favor of the bill, which was watered-down in the last week of session, but warned colleagues on the Senate floor that it was just a 40% solution for what is needed to restore a competitive property insurance market and lower costs. “We have a rash of roof claims across Florida. The two things that we really needed to deal with were attorney fees and roof issues… most of that is missing (from the bill),” he shared on the podcast. The bill changes the decades-old one-way attorney fee statute formula. If the claimant recovers at least 50% of the disputed amount, full attorney fees would be awarded; less than 20%, then there would be no attorney fees. Judgments between 20% and 50% would merit the same proportional attorney fee to the percentage of the disputed amount obtained. “The attorney fee provision is a step in the right direction,” said John Henley, Vice President and Head of Claims Shared Services at UPC Insurance, one of the largest writers of homeowners insurance in Florida. “It’s so much better than the current paradigm, where if a claimant gets a judgement of a penny more than the insurance company offered, they get all their attorney fees paid, and even more.” And the bill’s required ten-day notice before being sued, “is better than nothing, which is what we have now, where we settle the claim and think everything is fine and then they sue us and don’t tell us what they’re demanding,” Henley added. Senator Brandes, a champion for insurance reform in the Florida Legislature, said he hopes the provisions will bring all parties to the table and to act reasonably. “Prior to this law, people had no incentive to be reasonable. In fact, they had an incentive not to be reasonable.” Midway through the legislative session, Florida Insurance Commissioner David Altmaier released a letter citing National Association of Insurance Commissioners data that showed in 2019, Florida had 8% of all homeowners' claims in the U.S., yet 76% of all homeowners' claims lawsuits. The letter “completely changed the dynamics and the tone of our colleagues in the House, because it’s indefensible,” said Brandes. “It’s also unsustainable. That’s largely what’s driving both the cost of insurance but also the investors out of the market.” Henley, a longtime claims attorney, said the one-way attorney fee law is the reason behind the startling statistic. He said another provision in the bill requiring insurance companies annually report to regulators their litigation figures, loss cost, and adjusting cost, will lead to greater transparency of the problem. “When the state starts to get that information and they (regulators) truly see behind the veil of how much money this...

Florida’s residential and commercial property insurance market is in a precarious state of flux, for both insurance companies and consumers. Old hurricane claims, litigation abuse, and fraudulent repair tactics have led to big underwriting losses and rising reinsurance rates. Those are being passed along to Florida residents in double-digit rate increases – some as high as 50%. Host Lisa Miller, a former Florida Deputy Insurance Commissioner, talks with two veteran insurance agents on the frontline, who reveal the hidden consequences that higher insurance premiums are having on their customers and the impact now on Florida’s real estate market. Show Notes Florida’s domestic insurance companies are in a sea of red ink, with $1.6 billion in net underwriting losses. Consumers have been left holding the bag for now. Some are scrambling to find coverage. They’re increasingly turning to their insurance agents for help. “Sometimes we have to have uncomfortable conversations with clients and some clients decide they don’t want to keep insuring the property, they just want the liability (coverage),” said Ana Regina Myrrha, CEO of the American Insurance Point agency in Orlando. “I see people taking a greater risk because they cannot afford to pay for the insurance.” Myrrha, a 23-year insurance agent, said she has had to hire extra staff to review policies and quote and re-quote clients who’ve lost or can’t find affordable coverage. The availability and affordability issue is even more advanced in South Florida, with many clients seeing rate increases of 20% to 40%, according to Dulce Suarez-Resnick, Vice President of Personal Lines for Acentria Insurance Associates in Miami. “In the last two years, more and more of our markets have shut down,” said Suarez-Resnick. “I represent 16 homeowners carriers and I have four open in Miami-Dade County and six open in Broward County.” But many she said have policy restrictions, including roof age requirements of under 10 years old. Those clients have little choice than to be placed with Citizens Property Insurance Corporation, the state-backed insurer of last resort, whose policy count has exploded in the current dilemma. Both agents report the situation has begun impacting home affordability and the Florida real estate market. “Eventually what’s going to happen with people is that they are not going to be able to afford that mortgage payment because their insurance is escrowed with their taxes. And it’s just becoming a dilemma,” said Suarez-Resnick, a 36-year agent in Miami who serves on the Citizens Property Insurance Corporation’s Agent Roundtable. She said her own mortgage payment has gone up year after year, fueled by a $1,400 annual premium increase last year and another $800 increase this year. Some insurance consumers are increasing their deductibles to help reduce the premium increases. The usual 2% hurricane deductible is now offered at 5%. Myrrha worries that some who had regular $1,000 all other perils deductibles are pushing their deductibles to $2,500, $5,000, and even $10,000. “The clients that choose those deductibles, can they afford to pay them in case of a catastrophe? Probably not.” Host Miller and guests also talked about some of the insurance market and litigation reform bills being considered by the Florida Legislature, designed to ease the dilemma and help re-right the market. “It doesn’t matter what kind of reform you pass, as long as you ignore the one-way attorney fees and the fee multiplier then you have really done nothing. You’ve basically closed the door and opened the window,” said Suarez-Resnick, who has travelled to the state Capitol for years to urge reform, from litigation abuse in the 2004-2005 storms’ claims, then sinkholes, followed by Assignment of Benefits (AOB), and now litigation on old hurricane claims. She notes the constant stream of attorney commercials on local television. “So the attorneys are educating the consumer to have a different...