Florida’s Citizens Property Insurance Claims Committee Reviews Litigation Data, Approves Contract Extensions
Sep 10, 2014
Florida’s Citizens Property Insurance Corporation (“Citizens”) Claims Committee (“Committee”) met on September 8, 2014 to review the status of claims-related litigation and act on various vendor-related agenda items, including the extension of Citizens’ existing independent adjuster contract.
To access the agenda and meeting materials, click here.
Below is a summary of the proceedings.
Strategic Update
Prefacing his remarks with the news that Jeff Handy has been promoted to Senior Director of Claims, Citizens’ Vice President of Claims Jay Adams updated Committee members on strategy relating to claims activity.
Changes have been made to Citizens’ litigation structure to allow the State-run insurer’s leadership to have greater participation in litigated claims, he explained.
Mr. Adams related that vendor relations have been strained by the new requirement for Citizens to utilize the State of Florida procurement procedures contained in Chapter 287 F.S. The overall length of time needed for procuring goods and services has increased substantially.
Non-Litigated Claims Update
It was related that Citizens has gone to great lengths to engage in sinkhole settlement agreements with policyholders in order to avoid litigation. To date, over 1,700 disputed sinkhole claims are pending against Citizens that are either based on method of repair, or a claim denial.
Citizens’ Voluntary Sinkhole Stabilization Managed Repair Program provides its policyholders with coordination of all approved repairs, pre-qualified stabilization contractors, monitoring of repairs by professional engineers, performance bonds and a five-year warranty for all repairs. Twenty vendors have been pre-qualified to participate, and over 70 homes have been repaired by the program to date. However, Citizens’ staff believes many more homes will enter the Program as more settlement agreements are finalized.
Litigated Claims
A claims litigation “triage unit” has been developed for Citizens to evaluate litigated claims in a timely manner. The triage unit evaluates all non-sinkhole residential lawsuits within 48 hours of receipt to determine the viability of Citizens’ claims position and defensibility of the allegations presented in the lawsuit. This allows for early identification of settlement opportunities, with the goal of avoiding protracted litigation and identification of strong trial candidates where Citizens’ claims position is sound.
Preliminary findings reveal that 53 percent of matters evaluated have been identified as early settlement opportunities with no need for protracted litigation, while 10 percent have been identified as strong trial candidates. The remaining 37 percent represent matters for which limited discovery is necessary to determine the exact nature of the dispute and formalize the best course of action for the policyholder and Citizens.
Vendor Update
Citizens’ Special Investigation Unit (“SIU”) is a dedicated unit that conducts investigations pertaining to fraudulent or false insurance claims, and other fraud-related actions against Citizens throughout the insurance claims cycle.
When the SIU field team reaches its case load limit, or there is an assignment outside the zones where Citizens has field investigators, an approved Special Investigative Services vendor is used to handle those assignments. Citizens’ current vendor contract was approved by the Board of Governors on July 8, 2009 and executed in October 2009. It expires on November 9, 2014. The Committee approved an extension of current vendor A.C. Roman & Associates to continue handling SIU services.
Citizens also had contracted with Xactware Solutions, Inc. for property loss estimation software and services in 2006. The contract term was extended in 2009 for five years, resulting in an expiration of May 31, 2014. In March 2014, Citizens exercised an emergency extension of six months for Xactware Solutions’ continued services, while completing a competitive solicitation for new software and services. Meanwhile, the Committee approved an additional six-month extension of the Xactware Solutions contract at this week’s meeting.
In 2008, Citizens’ Claims’ Management department established contracts with vendors capable of providing Independent Adjusting Services to settle catastrophic and non-catastrophic claims. Given the May 2014 expiration of these contracts, Citizens initiated a competitive solicitation for these services in October 2013, but a bid protest prevented execution of the contracts award. In March 2014, Citizens’ Board of Governors approved a six-month emergency extension for continued services, while completing a competitive solicitation for new vendor services. Meanwhile, the Committee approved an additional six-month extension of the existing independent adjusting services contracts at this week’s meeting.
It was noted that the availability of adjusting services in Florida has declined in the last few years due to the reprieve from major storms. In an effort to prepare for future events, Citizens has contracted with 26 independent adjusting firms to provide a minimum of 3,250 adjuster resources, should they need to be ready to work upon request.
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