Florida Insurance Consumer Advocate Westcott Calls for Regulatory Investigation into Alleged Insurer Post-Claim Underwriting Tactics
Oct 31, 2012
In a letter sent to Florida Insurance Commissioner Kevin McCarty yesterday, October 30, 2012, Florida Insurance Consumer Advocate Robin Smith Westcott advised it has come to her attention that some insurers are denying claims by intentionally using credit information after a claim has been reported to accuse Florida policyholders of misrepresentation on applications, sometimes after having collected premiums for years.
Based upon related consumer complaints addressed to her office, as well as to the Division of Consumer Services, Ms. Westcott described a post-claim underwriting scenario in which insurers are alleged to be canceling or rescinding policies years after the initial application based on their “abusive and inappropriate application” of Section 627.409, F.S. (relating to representations in applications), in conjunction with the notice of cancellation provisions in Section 627.413, F.S. and certain underwriting guidelines in order to avoid payment of claims and void policies.
Ms. Westcott said the tactic should be considered an unfair trade practice because it puts consumers in a precarious position and threatens homeowners’ financial stability, especially in light of the current foreclosure crisis.
Her letter is attached for review.
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