Sinkhole Investigation Started By Office of Insurance Regulation
The Insurance Commissioner has apparently decided to start calling some of my clients. According to the St. Petersburg Times, his office is trying to find statistical information regarding sinkholes reported between 2006 and 2009. We'll call and try to find out more information so we can help them get accurate answers, but, in "Florida Regulators Investigate Rash of Sinkhole Claims" reporter Jeff Harrington found the following:
Florida Insurance Commissioner Kevin McCarty said Wednesday that he has issued a "data call" to commercial and residential property insurers to collect sinkhole claims information.
Specifically, regulators are seeking details about claims opened anywhere in the state from 2006 to 2010. Included in the report will be the types of claims, testing procedures to determine legitimacy, costs of inspections, locations of claims, legal fees and public adjuster fees, and amount of structural loss.
The reason behind the investigation is something I cannot figure out from the story or response:
McCarty said the data will help his office learn more about the frequency, severity and location of claims to determine if any regulatory action is needed.
"We're going to try to take it out of the anecdotal realm and into the statistical realm," said Jack McDermott, a spokesman with the Florida Office of Insurance Regulation.
Can you imagine anybody admitting to doing something illegal when an official shows up to ask? That is what McDermott apparently thinks some will do or that he will get credible statistical information from simply asking:
McDermott said the state also is examining whether sinkhole damage payouts are being properly used to fix property and whether some homeowners are filing sinkhole claims for undamaged property just to get a "free and clear" bill of health from their insurer.
"Someone trying to sell a house, say, in Hernando County (could) file a claim with an insurance company, which investigates and says there is no (damage)," he said. "They could use it as a marketing piece."
I have heard this from insurance company officials for years. I suppose some policyholders are stupid enough to say, "Yep, I submitted a fraudulent insurance claim just to be able to sell my house." But, I would not count on those clever enough to do so to also admit it.
It is hard to believe this is not something of a witch hunt or outcome oriented investigation supported by innuendo from insurance companies. Since the government is now in the business of insurance and has a legislative affairs department at Citizens Property Insurance, it is not unrealistic to think the government will ask its other branches for support. Right now, except as to rates, there is a very cozy relationship between the Office of Insurance Regulation and the insurance companies it regulates.
When was the last time you saw a story about an insurance company adjuster acting wrongly and being subject to regulation?
Chip, in your last blog on Sinkholes you said: "Right now, except as to rates, there is a very cozy relationship between the Office of Insurance Regulation and the insurance companies it regulates. When was the last time you saw a story about an insurance company adjuster acting wrongly and being subject to regulation?"
Isn't the DFS responsible for regulating company adjusters, not the OIR?
ALso, my guess is the OIR may be looking to verify some of the data that carriers are submitting on sinkholes as they lead to a number or rate increases last year.
Just FYI.
Chip
Kevin should be concerned about the method of forcing average Homeowners to secure High Costing Policies with Rag-Tag Insurers, after their Long term Policies have been non-renewed. The offered reasoning is that we are "Windstorm Prone" or high risk,when in fact there has not been a hurricane of great fame since Wilma!! I am one of the Victims. After 20 years ala Liberty MUT.I have been non-renewed. Now my best choice is (DELAY PAY) Universal Casualtyor God forbid, Citizens Property Insurance Company.
Tell me, How in Hell does McCarty get to be the insurance Commissioner? Is there a good ole boy association in Tallahassee?
I remember his support and lies about Northern Cap. Disgraceful! Many Ind Adjusters are never to be paid for service to N.C. when they went under.
Thanks for your Blog!!
ED
Chip,
Will he be gathering the data from Insurers as to claims made and denied/closed without further action from insured and will he make any corresponding engineering reports part of his findings?
Chip,
He is looking for any info that would bolster an argument to allow insurance companies to exclude sink hole coverage from their policies.
Scott Johnson,
Thanks for keeping me honest.
Regarding your guess, you are probably in a better position to know the truth than me.
Our Knowledge Manager, Ruck Deminico, is going to do something a little different tomorrow morning to find out. He is going to call the Office of Insurance Regulation and ask.
Always good to get your views.