Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

The Windstorm Insurance Network is sponsoring a special Texas Windstorm Insurance Symposium. It will be a one day event on April 2, 2009, at the Hilton Hobby.

The final seminar schedule should be out shortly, but it promises to be a very lively presentation. Wind versus water fact and legal issues will be analyzed. Tim Marshall, of HAAG Engineering, is going to make a presentation. Bad faith, appraisal procedures and law, and many other topics with a Texas twist will be part of this one day insurance event.

Mark your calendars and register at the Windstorm Insurance Network web site.

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State Farm has a method and reason for just about everything it does. As indicated in yesterday's post, its actions do not always reveal its strategy.

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Florida Senate President Jeff Atwater is a banker with a heart. He has supported policyholder friendly legislation in past sessions. From a policyholder’s perspective, and unlike the Chamber of Commerce that is dominated by State Farm and the insurance industry, he is a businessman who stands up to insurance lobbyists and is one of the “good guys.”

Atwater is keenly aware of the financial problems with the Florida Catastrophe Fund. I found this remark in his January 28th letter regarding the Federal Stimulus Law important to all Floridians and the insurance industry:

“State discretion in the use of at least a portion of the package would allow Florida to stabilize its CAT fund and improve the viability of the commercial insurance market within the state. This would reduce the liability of our citizens for the financial consequences of a devastating hurricane season. Stability in the insurance markets would help sustain recovery in the housing market.”

The Catastrophe Fund must file a report by February 1st. Most anticipate that it will indicate that the Fund will not have sufficient access to money in the event of a hurricane because the credit markets are in turmoil. Atwater and all Floridians may need this “discretion” more than that one paragraph may indicate. 

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State Farm is hard to figure out. They say one thing and often do another. When you finally get to the decision makers, there is usually some logic to why they do things despite disagreement from consumers or regulators. State Farm's announcement that it was leaving the Florida property market really has me wondering--"what's up?" From what I read and hear, I am not the only one.

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Nobody calls my office telling me what a great job their adjuster has done to fairly maximize their recovery in a prompt manner. Why should they? Risk managers, property managers, insurance agents, attorneys, public adjusters and policyholders, generally call our firm because they need help with claim delay or a denial. Their stories usually have derogatory, but colorful, language describing the insurance company representatives.

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"Merlin is just on a 'fishing expedition' seeking these emails, your Honor." Similar phrases are argued by insurance counsel all the time when our firm is trying to get to the truth of what happened and, just as important, why something happened. In today's manner of doing business, the truth of many disputed matters is best found in emails. The contemporaneous history of emails between individuals is often the best record of the logic and thought processes leading towards action and decision. If I were representing insurers with corrupt or wrongful claims practices, I would argue against turning over those emails as well---why would anybody hide emails that proved innocence?

A recent Order in Citizens for Responsibility and Ethics in Washington v. Executive Office of the President, highlights why emails are so important. The Court stated:

"I have always begun with the premise that, as just indicated, the emails that are said to be missing are the very heart of this lawsuit and there is a profound societal interest in their preservation. They are, after all, the most fundamental and useful contemporary records of the recent history of the President’s office. If Napoleon was right when he said that he did not care who wrote France’s laws if he could write its history, then the importance of preserving the e-mails cannot be exaggerated." (emphasis added)

Modern insurance companies operate through emails. Company goals, management initiatives, discussions, reflections on performance, actions and history of activities are substantially recorded in emails. Judges in insurance disputes should quickly and, as a matter of routine, dismiss the "fishing expedition" arguments by insurance company attorneys. It has been our experience that many insurers, knowing what those emails say, are much more inclined to discuss settlement and quickly resolve cases when insurance company emails are discoverable. If judges in insurance disputes do not permit acces to emails, there is far too great a temptation for insurance companies to re-write or sanitize a claims history. 

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I really suck at politics. It is why I have not one, but two, lobbyists help me. Jon Moyle and Chris Floyd stick out in Tallahassee because they are two of the few lobbyists who are trying to help consumers. Most lobbyists are the "bad guys" from the consumer's standpoint, although insurance lobbyists create propaganda to convince consumers and politicians otherwise. I guess insurance company lobbyists are "sneaky bad guys" with a lot of money.

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Crooks operate in secret and often use code language to avoid prosecution. Most of what they do is never written down in order to avoid detection. Even when speaking among themselves, they will use code words so the police cannot easily follow the plan of criminal conduct. Maybe these mobsters should sign up for the class being offered by the Medical Technology Learning Institute which is entitled, Dangerous Documents: Avoiding Land Mines in Your FDA Documents and Emails.

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The probability of a ruinous event happening may change behavior or cause you to insure to reduce the misery. The greater the financial misery, the more likely you are to insure yourself when it strikes. The greater the chance of the event happening, the more likely you will take measures to avoid the misery.

The American Association of Insurance Services recently published its Homeowners Cause of Loss Report. It details the cause of reported losses from 2005 through 2007 for property and liability payments on Homeowners policies. While the expanded version which lists the cause of loss by state is not available to the public, the property loss statistics are informative:

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Something is rotten in Florida and Texas regarding the manner Citizens Property Insurance Corporation and Texas Windstorm Insurance Association (TWIA) are treating their customers. Rotten because both are breaking obligations they owe to policyholders. Somebody needs to be held accountable because claims management is condoning, if not initiating, the wrongful behavior.

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My last meeting as a member of the Citizens Mission Review Task Force is today. There is already dissatisfaction with the Task Force and our Report is not complete.

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Kelly Kubiak burst into my office jubilant in her recent victory over Great American Insurance Company. She received an Order granting her Motion for Summary Judgment in a case where the central dispute involved the interpretation of the valuation clause of an insurance policy. We so often talk about the problems of causation that we fail to spend enough time talking about how many benefits insurance policies are supposed to provide. It has been our experience that many policyholders think they have obtained a fantastic settlement from their insurance company until we explain how much money was left on the table through lack of knowledge and experience.

The insurance company adjuster is ethically required to help the policyholder maximize benefits. A properly trained and motivated adjuster teaches the policyholder how the policy can be used to soften the financial blow caused by insured peril. One can imagine how much money is innocently not claimed or recovered when an adjuster does not understand the policy.

In Kelly’s case, the small business she represented had an adjuster fight with the owner over  “new” merchandise versus “used” merchandise. I wonder how many other insureds have been cheated as a result of Great American's obviously wrong interpretation of the valuation clause. Many policyholders do not realize the issue or simply fail to fight the issue by retaining an attorney. Unfortunately, this scenario is repeated far too often as many insurance company adjusters do not help the policyholder find ways to encourage payment of full policy benefits.

Have you ever heard of an insurance adjuster saying, “I think the policy can help you and pay you more if you would just….?” 

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The Tampa Tribune ran an editorial on January 12th regarding the Citizens Mission Review Task Force. As usual, I had something to say about their opinion, and wrote the the following reply, which was published in Sunday's paper:

Florida Dangerously Vulnerable

This is in response to the Jan. 12 editorial, "New Ideas Could Bring Sound Hurricane Coverage."

You raise some important points regarding the safety net of property insurance, and the Citizens Mission Review Task Force meetings also revealed issues that all Floridians must be made aware of.

First, dried up credit markets have left our current system dangerously vulnerable. In the event of a major hurricane season, it is unlikely that Florida would be able to raise the money needed to cover the debts of Citizens through bond sales.

Second, as you noted, Citizens rates are currently lower than being actuarial sound. Yet everybody wants rates to remain affordable. The task force recommended responsible, capped increases to prevent wallet shock.

Third, encouraging a private insurance market to replace those carriers that find Florida too risky is a viable long-term solution. The Legislature passed laws aiding and regulating these companies that often provide coverage at rates lower than Citizens, especially for policyholders who take advantage of the My Safe Florida Home program.

Finally, the best long-term solution is to harden structures. Yes, it is costly but offering premium discounts to homeowners who make improvements has to be encouraged, even if it takes a state and federal tax relief program too beneficial to pass up. That is something our federal and state leaders can start working on now.

We cannot afford to put our heads in the sand and hope Mother Nature will spare us for another season. We must act now for the long-term because there is no easy short-term solution to the very difficult situation we all face.

WILLIAM F. "CHIP" MERLIN

Tampa

The writer is founder of the Merlin Law Group and was appointed to the Citizens Property Insurance Mission Review Task Force by Gov. Charlie Crist in 2008.

The final meeting of the Task Force is scheduled in Jacksonville on Thursday, January 22nd. Our Report is due to the Florida Legislature by January 31.
 

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Dr. Steve Lyons, The Weather Channel's Tropical Weather Expert, has admitted that he has been interested in property insurance and rates for the past fifteen years. He recently posted on the Weather Blog his opinion is that Florida's only long term solution to high insurance rates is to mandate that building codes be enforced so that buildings will be toughened to withstand hurricanes---my opinion as well. (see my previous posts and my comment to Lyons' blog post)

He also suggests that rate discounts be given to those who harden their structures. This is an excellent idea and is actually in place, although it is not well publicized. The Florida Legislature and Office of Insurance Regulation have laws and regulations which provide mitigation credits for rates and also grants under the My Safe Florida Home program. I wish more consumers took advantage of the program because it can reduce rates and prevent hurricane damage. Grants up to $5,000 are available and are tax free.

We need more celebrity experts such as Lyons calling attention to the need for hurricane mitigation. His reference to an article entitled, FLORIDA FLIRTING WITH HURRICANE INSURANCE DISASTER, should be a read for all concerned about the grave insurance situation facing Florida.
 

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Paul Krugman wrote an editorial, Insurance Horror Stories, in the New York Times which shows remarkable similarity between the health insurance industry and the property insurance industry in Florida, Mississippi, Louisiana and Texas. He noted:

"Because everyone faces some risk of incurring huge medical costs, only the superrich can afford to be without health insurance. Yet private insurers try to refuse coverage to those most likely to need it, and deny payment whenever they can get away with it."

This scenario must seem pretty familiar to most of my clients.

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The national media can be fickle. Hurricane Ike devastated Galveston and the Bolivar Peninsula. Those communities and people in them are suffering as much as those in Louisiana and Mississippi following Hurricane Katrina. Yet, I have seen little in the national media regarding this story.

The Houston Press ran an excellent article, Hurricane Ike's Wake, detailing the effects of Hurricane Ike. It also questioned why there is so little national media attention to the devastation. Even the charitable contributions to Hurricane Ike relief efforts has been minuscule compared with Hurricane Ike.

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I was going to use the word "hate," but that is too strong for everybody. The truth is that many insurance company adjusters hate some public adjusters. Public adjusters are thought of as the enemy by most insurance company claims departments. I do not think those claims departments visualize me as a white knight, either.

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Absolutely. The problem is that there is no industry to uncover these acts and no propagandists sensationalizing what is going on. But the evidence is there.

For example, Marsh & McLennan just paid over seven million dollars as partial punishment for a bid rigging scheme involving other insurance companies.

"The intricate bid rigging scheme allowed Marsh to designate which insurance company's bid would "win" a particular account. To create the appearance of a competitive bidding process, Marsh would instruct certain insurers to submit inflated, intentionally uncompetitive bids. These schemes gave commercial policyholders the impression that they were receiving the most competitive commercial premiums available, when they were actually being overcharged."

Where are the insurance industry propagandists like Barry Zalma and Dennis Jay calling for these individuals to be jailed? Where are their calls to stop cheating claims practices that result in delayed and underpaid claims everyday?

I do not mean to be unfair. Policyholder cheating and fraud is wrong and hurts everybody. It just seems the insurance companies need to get their house in order before calling their customers bigger cheats than they are.

What do you think? 
 

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The Citizens Mission Review Task Force made a significant recommendation at its meeting on Tuesday. Prior testimony was that the average Florida rate hike, which would be approved by the Office of Insurance Regulation, would almost certainly be higher than 30%. We recommended to the Florida Legislature that they to pass a statute to cap that rate increase at 10%. Without this law, the rate would probably go up over 30% on a statewide basis.

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My Tuesday morning last week started with an early interview with a Tampa radio station, WFLA, regarding the Citizens Mission Review Task Force. Insurance rates, caps to rate increases, bankruptcy of the state, and hurricanes could only make the morning radio news in Florida. What happened to the debate about Sarah Palin's sexiness? Anything is more exciting than topics discussed by actuaries. 

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With a name like mine, I have a tendency to research obscure and unscientific informational sources. Our friends and families living from Jupiter through Boca Raton should breathe a sigh of relief because Susan Hansen, a psychic, has indicated that Florida's Treasure Coast will be spared from serious hurricane strikes in 2009. Unfortunately, she is not so optimistic for the West Coast of Florida, Louisiana and Texas.

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After posting two Blogs (Effective Endgame Communications; Influence and Persuasion) regarding the topic of settlements, I was amused by SLABBED referring to settlements as "kissing one's sister." While that was on my mind, I was provided our Leeds Appellate Answer Brief to a trial that I won with Jean Niven in 2007. While I can understand that civil lawsuits play a very important role by uncovering socially significant information, the bottom line, as examplified in the Leeds case, is that most civil insurance lawsuits involve disputes between private parties where money is the heart of the issue.

In the late 1980's, Tony Cunningham, a very prominant trial attorney, gave me some good advice that applies today. He told me that we are always salesmen for our clients, and our zealous advocacy in the courtroom comes only after we have failed to sell our client's cause to our opponent before trial. I teach this to our attorneys because a relatively large and quicker monetary recovery is usually what is most important to our clients. Since we typically work on on a contingency fee basis, it is important to us as well.

The press reported the Leeds trial win. The Leeds' neighbors were ecstatic because our theory of loss was that the Leeds' home was on the ridge of an ancient relic sinkhole which caused the entire community to have homes damaged by earth movement covered under their policies. As a result of that trial, the neighbors also have hope for a recovery. We have more clients as a result of the publicity. But instead of acknowledging the loss and paying the Leeds' claim, Citizens Property Insurance has fought us every step of the way, seeking to overturn the jury verdict. It has now been 18 months since the trial, and we have put no money in the Leeds' hands. While we have publicly won so far and have not "kissed our sister" through a settlement, I am certain that our clients wished we could have obtained their recovery, which will be very large compared to the initial claim, through a much quicker private resolution rather than the public loss we are putting Citizens through.

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Every now and then, I come across something in the media that is simply wrong and feel compelled to do something about it. I recently came across an editorial in the Bradenton Herald, linked below, which is simply fear mongering. Accordingly, I responded with my opinion for all to contemplate on this very important issue in Florida:

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The December issue of Florida Community Association Journal ran my article, "Directors and Officers Liability Coverage: What Every Board of Directors Member Needs to Know."  While I am certain that many think the only insurance law we practice is property insurance, our firm handles a variety of first and third party insurance coverage disputes and bad faith cases.

The important issue for Condominium Boards is that most Director and Officer liability policies exclude coverage for errors in obtaining proper insurance coverage. I think this is the largest potential error a board may face. The most prevalent issue is underinsurance.

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Most people do not look at their insurance policy until loss or damage forces them to. And most will agree that trying to find confirmation of coverage is not as easy as expected. Typically, insurance policies are very long and the various coverage provisions and exclusions can be confusing and sometimes ambiguous.

This scenario became glaringly apparent in the aftermath of Hurricane Katrina. Many policyholders found themselves in a very uncertain world, trusting solely on their relationship with their insurance carrier only to be denied coverage based on an exclusion they had never heard of. And oftentimes worse, many policyholders did not receive many benefits under their policy because their insurance adjuster did not inform them of the coverages and benefits available to them. 

In an effort to prevent this unnecessary chaos in the future, several Mississippi lawmakers have recognized the importance of legislation to ensure that the citizens of Mississippi are aware of their rights as policyholders and informed of any exclusions in their policies that would be cause for denial of coverage. Unfortunately, these measures have not yet made their way to the Governor.

The Mississippi lawmakers started back in Session on January 6, 2009. We are in the process of preparing and pitching an Insurance Modernization Package to our lawmakers that will include, among other measures, a Policyholder Bill of Rights and other important legislation that will provide for timely payment of claims and penalties for noncompliance and unfair trade practices.

So far, this has proven to be an uphill battle in Mississippi, but one worthy of pursuing. The citizens of Mississippi are not insisting on anything that the insurance carriers are not already obligated to do in many other states across the nation.  

In the typical, hospitable Mississippi fashion, Mississippi has focused on the needs of their business guests first. As Mississipians rebuild their beautiful coast, they are acutely aware of the need for a fair and balanced co-existence with their insurer. It is now time to focus on the needs of the citizens of Mississippi.

Stay tuned....we are in for a promising year!

Deborah
 

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 "be the change you wish to see in the world....."

Ghandi

My work on the Citizens Property Mission Review Task Force will be coming to an end soon. MSNBC, the Tampa Tribune, and the Sun-Sentinel have all run stories on Tuesday’s upcoming Task Force meeting. There are a multitude of issues coming up. I might as well report on some of my views.

The rates will have to go up. Next July, Citizens must file for actuarial sound rates and, at this time next year, the rates will go up. This is only fair. It is not right that the State of Florida and others provide a subsidy to Citizen policyholders where a valid market exists.

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There are some fights where you simply cannot sit on the fence. You have to choose what you stand for, who you want to help, and fight for what is right versus what is wrong.
You know that the people supporting you are "good" and the other guys--those that support cheaters and do not want to be accountable for their broken promises-- are simply "bad."

We have that fight going on in Mississippi as indicated in a story filed by Anita Lee. The Mississippi Policyholder Bill of Rights needs to be in legislation and regulation. It needs teeth. It needs to be enforced. Deborah Trotter has been leading our efforts to get something passed that is not a watered down form over substance piece of paper.

The problem is the insurance companies are very powerful "bad guys" when it comes to legislation giving their customers an even hand. Insurance companies are not people. They are mere fictitious entities filed under law. They do not breathe, bleed nor die. They can, and have, accumulated more money than most of people can imagine. By law, these fictitious paper entities are supposed to serve a public purpose. They agree to abide by laws required under licenses for which they voluntarily apply.

In Mississippi, there are people who will be "bought off" by the insurance companies. They are the insurance company lobbyists, lawyers, publicists, and employees that will do everything they can to prevent laws and regulations that support the rights of the insurers' customers. The insurers will influence patronage of bad public servants through donations and money. They have done this for a long time and have many supporters dependent on the largesse spread by the insurance support industry. These are the "bad guys."

This fight is not about the interpretation of a law or contract. It is not about how much an insurance rate should be or a lawsuit about whether a promise or duty has been violated.

This is a fight, like so many in different venues, where people are simply trying to make laws that force insurance companies to uphold promises and duties owed to the people that are to them, the customers. There can be nothing wrong with making laws that hold insurance companies accountable for breaking contractual promises and duties they agreed to abide by when getting their licenses.
 

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A financially strong and profitable insurance industry is in everyone's best interest. When insurance is profitable, companies sell more of their products, usually at more affordable rates. Consumers and insurers win. A tongue in cheek example of this is found in my line of work. Our firm wants insurance companies to sell as much of their product as they can. Affordable insurance with broad coverages sold to everyone gives insurance claims departments more opportunity to do what is in their short term economic interest---delay and deny payment of claims.

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