Florida Senate Banking and Insurance Committee Holds Roundtable Discussion on Insurance Issues

By the Colodny Fass Insurance Regulatory Team

On October 15, 2019, the Florida Senate Committee on Banking and Insurance held a roundtable discussion on insurance claims issues. Insurance Commissioner David Altmaier, Department of Financial Services (“DFS”) Insurance Consumer Advocate Tasha Carter, Locke Burt and Melissa Burt DeVriese of Security First Insurance, Chip Merlin of the Merlin Law Group, and Amy Boggs of the Boggs Law Group testified before the committee during the 90-minute meeting.

Committee chair Doug Broxson told the committee that over $6.7 billion in claims have been paid for over 132,000 claims relating to Hurricane Michael, but over 10,000 claims were still open. The Chair asked the Insurance Commissioner to study issues with claims handling by domestic carriers, national carriers, and surplus lines carriers and report back to the committee before the legislative session. He specifically asked for information on the use of multiple adjusters by an insurer to deal with a single claim. Vice Chair Daryl Rouson suggested that the Commissioner propose “action items” for possible legislative action. The Commissioner said his report would include any “gaps” between its power to deal with insurers and current Florida law.

Locke Burt testified that the current litigation environment is a danger to the insurance market. He said the number of lawsuits has tripled since 2013 and doubled since 2016. This increase is driven by the ability of attorneys to collect fees from insurance companies. Burt proposes litigation reform as a solution to the problem. He said that private carriers have lost $600 million due to recent storms and that Citizens Property Insurance Corporation pays $1.47 in claims for every $1.00 collected in premium. Such trends will cause rates to rise 20%-30%. Burt testified that such trends cannot continue.

Senator Jeff Brandes asked whether insurance fraud is a significant problem. Burt said that only five out of every one hundred cases reported to the DFS Division of Insurance Fraud are referred to prosecutors. He suggested the state create an entity like the Medicaid Fraud unit within the Office of the Attorney General to deal exclusively with property insurance fraud cases. Amy Boggs testified that fraud was not the major problem and that the issue is that insurers are not paying claims in a timely manner.

Insurance Consumer Advocate Tasha Carter said her office is reviewing open claims to determine why claims remain open. The Insurance Consumer Advocate is holding a roundtable in Panama City on October 19 for members of the community to bring issues to the DFS.

Carter explained to the committee how the DFS Division of Consumer Services deals with consumer complaints. A consumer can file a complaint by phone, email, in writing, or through an online portal. A DFS employee gathers information from the consumer and reaches out to the insurer to ask specific questions regarding the complaint. The insurer must respond to the DFS within 20 days. Upon receiving the response, the DFS works with the consumer and insurer to resolve the issue. The DFS refers allegation to its Division of Insurance Fraud, its Division of Agent and Agency Services, or to the Office of Insurance Regulation (“OIR”) if there appears to be a violation of law.

Altmaier explained how the OIR responds when it receives a “notice of issues” from the DFS. When a notice that there might be a violation of law is received, the Bureau of Market Conduct investigates the complaint. If the bureau finds a violation, it can require a company to pay interest (in cases of late claims payments) or take additional action if there is a pattern of violations or other issues are discovered during the OIR investigation.

Chip Merlin testified that the problem is not attorney fees but delays by insurers in paying claims. He said the problem is due to insurance adjusters lacking the authority to make significant payments early so that insureds can begin repairs. He also suggested that a private right of action allowing insureds to act against insurance companies for claim delays would be helpful.

The Committee will not meet during next week’s interim committee meeting week. Future interim meetings are possible the week of November 4, November 12, and December 9 and will be announced the week before the meeting. The 2020 session begins on January 14.