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

Since 2004, the majority of our law firm's large insurance battles have focused on hurricane loss insurance disputes. It is not surprising that we are getting phone calls from people asking whether our firm will open offices somewhere between North Carolina and Boston as Hurricane Earl is projected to hit that area. I was surprised by a recent newspaper article that indicated our firm "specializes" in sinkhole losses.

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Chip brought up the five year anniversary of Hurricane Katrina in his post last week titled, “The Hurricane Katrina Five Year Anniversary is Noted as New Hurricanes Lurk in the Atlantic Ocean.” The anniversary of Katrina will have special meaning to all who were affected by it, but this five year anniversary also has a practical importance to anyone in Florida that is still attempting to put the pieces back together after Katrina, thanks to Florida’s five year statute of limitations on contract lawsuits. Fla. Stat. § 95.11(2)(b) requires that “[a] legal or equitable action on a contract, obligation, or liability founded on a written instrument…” must be commenced within five years.

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This month, a letter to the editor by Guy Marvin was published in the Florida Times Union.

Marvin is the President of the Florida Insurance Council (“FIC”). The FIC is based out of Tallahassee, but Marvin has ties to Jacksonville from his former work as general counsel at Independent Life Insurance Company.

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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.

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Many residential insurance policies in Florida have additional coverage for “Ordinance or Law” or code upgrade coverage. I wanted to write about this additional coverage in the context of the Hurricane Law series because it is important to understand how this additional coverage kicks in during a typical residential hurricane claim. In South Florida, many property insurance claim issues remain from the 2005 and 2005 hurricanes. Many of the open disputes concern hurricane damage to residential roofs and whether they can be repaired or necessitate replacement. Of course there are many other issues still being litigated from the hurricanes of 2004-2005 in Florida, but this post will focus on the Ordinance or Law additional coverage in the context of a residential roof.

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Sinkholes won’t go away. While policyholders, insurance companies and governmental leaders fantasize that this peril would sink into oblivion, nobody’s magic wand will make this a reality. Hurricanes and sinkholes will happen in Florida because of the geography and geology. As more people who live and work in Florida, more losses will result.

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Coral Insurance Company has been placed in receivership. One aspect of handling claims where the insurer is in receivership is that a statutory time limit exists to file a lawsuit. However, for adjusters and policyholders, before a lawsuit can be filed, a "claim deadline" must first be met. We often get requests shortly before the lawsuit deadline only to find the claim deadline had not been met.

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As many people are aware, property insurance policies often have a large deductible for hurricane losses. In Florida, the hurricane deductible can be a percentage of the dwelling policy limit: 2%, 5%, or even 10%. These percentage deductibles can be very large on personal lines residential claims where a policyholder’s house may be insured for several hundred thousand dollars. Policyholders must be aware that the Florida legislature has created a statute prohibiting an insurance carrier from applying a policy hurricane deductible more than once during a calendar year for personal lines residential claims.

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The insurance industry never rests when it comes to lobbying and politics. The Florida Insurance Council has a new leader who used to be its old leader. Insurance lobbyist Cecil Pearce has taken over the reigns from Guy Marvin. Here is a little about Pearce from the press release:

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Just a few weeks ago, the Fort Myers Division of the United States District Court for the Middle District of Florida handed down its memorandum opinion on the insurer’s motion for summary judgment in Royal Marco Point I Condo. Ass’n, Inc. v. QBE Ins. Corp., No. 3:07 CV 16, 2010 WL 2757240 (M.D. Fla. July 13, 2010). Among other things, the insurer, QBE Insurance Corporation, argued that its participation in appraisal and timely payment of the appraisal award precluded an action against it on bad faith.

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On Tuesday, July 27, 2010, The SunCoast News ran an article by Carl Orth titled: “Fasano Aide Brings Ideas Back from Sinkhole Conference.” According to the article, issues regarding public adjusters, sinkhole losses, fraud, the rise in sinkhole claims in the downturned economy, and the value of Florida’s Neutral Evaluation program were discussed at the conference.

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Florida's Third District Court of Appeal, which sits in Miami-Dade County, ruled yesterday that a public adjuster constitutional challenge to the public adjuster fee limitation and solicitation restrictions that was filed in Miami-Dade County should have been filed in Leon County. As noted in Sink Appeals Public Adjuster Suit: Delay Possible For Miami-Dade County Public Adjuster Lawsuit, this venue dispute slowed this lawsuit significantly. In the interim, a similar suit was not ruled on favorably by a Leon County judge, as noted in Public Adjusters Lose 48 Hour Solicitation Ban Case.

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Scott Johnson is an excellent leader for the Florida Association of Insurance Agents (FAIA). His father was President of the FAIA for 37 years. Scott Johnson has a keen and unique perspective on insurance in Florida. His views regarding the insurance landscape should be considered and not dismissed without analysis, even by those in strong disagreement.

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The year was 1944. The average price of gas was 15 cents a gallon. The median home price was less than $4,000.00. George Lucas was born. Coppertone Suntan Creme was invented in an attempt to shield the soldiers fighting in the Second World War from harmful rays. This was also the year that Alfred A. Lesser (“Al”) began public insurance adjusting in Florida.

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As previously noted in the first four posts of the Hurricane Law series discussing Late Notice of Claims, in Florida, if a policyholder does not timely report an insurance claim to the insurance carrier, prejudice to the insurer will be presumed. This presumption may be rebutted by a showing that the insurer was not prejudiced by the late notice. Bankers Ins. Co. v. Macias, 475 So.2d 1216 (Fla. 1985). If an insurance carrier claims a policyholder breached a cooperation clause however, the insurance carrier “must show a material failure to cooperate which substantially prejudiced the insurer.”

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I often get questions about Citizens Property Insurance Corporation and what to do about its controversial claims activities which harm policyholders. A former Citizens claims adjuster told an audience of some of these activities at last week’s FAPIA annual convention. Following this presentation, some called upon me to file bad faith suits against Citizens for wrongful delay or denial of claims. While some of the activities may give rise to class action lawsuits, Citizens has immunity for bad faith claims conduct.

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Continuing on with last week’s post on late notice claims, this week I want to expand on Shaun’s post from last week about the difference between supplemental and reopen claims. Blurring the distinction between the two is an easy way to confuse the issues that may result in the denial of an otherwise valid claim. That is why it is so important to keep the two separate.

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A number of policyholder attorneys have asked me why FIGA is being so difficult lately. At one time, it was not that way. There has obviously been a change of the guard because nobody should expect quick resolution of any claim from FIGA based on recent complaints and the developing case law helps demonstrate this point.

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Continuing with our discussion regarding late notice and prejudice defenses asserted by insurers, when is a re-opened hurricane claim a “supplemental claim?” This issue often presents itself in the context of a demand for appraisal by the policyholder on a re-opened hurricane claim. Insurance carriers treat the re-opened claim as a “supplemental claim” because a certain amount of time has passed since its claim determination. What would the time criteria for a “supplemental claim” be: one month; one year; two years; three years; four years? The issue of time is not a factor in the test of whether a re-opened claim is in fact “supplemental.”

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Jeff Masters' post, Act I, Scene I, Tropical Depression One of the Hurricane Season of 2010, indicated that a tropical depression was forming in the Western Caribbean. The National Hurricane Center has now confirmed this prediction and designated the storm Alex. In the discussion this morning was a note I did not like at all:

THE GFDL...SHIPS...AND LGEM
MODELS FORECAST ALEX TO BE A HURRICANE OVER THE GULF OF MEXICO.
THE INTENSITY FORECAST WILL NOT YET DO THAT...BUT WILL CALL FOR
MORE STRENGTHENING OVER THE GULF THAN THE PREVIOUS FORECAST.

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Merlin Law Group has two great reasons for Florida public adjusters to come to West Palm Beach, Florida, on Wednesday, July 14th.

• We are offering a 1-hour Continuing Education Credit Ethics class for Public Adjusters:

• We are celebrating the opening of our office in West Palm Beach at 777 South Flagler Drive with an Open House

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"Maybe if we think and wish and hope and pray it might come true"
            --The Beach Boys

A recent Florida case that involves examinations under oath demonstrates that insurers should  cooperate with policyholders and not try to use technicalities to prevent payment. In First Home Ins. Co. v. Fleurimond, 3D09-2034, 2010 WL 2178839 (Fla. 3rd DCA June 2, 2010), policyholders were allegedly yelled at and badgered during an examination under oath. They left, obtained counsel, and the insurer then refused to reconvene the examination under oath. The policyholders filed suit, demanded an appraisal, and the insurer refused. The trial court ruled that the matter should proceed to appraisal, and the insurer appealed.

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Politicians who keep their campaign promises should be applauded. They are a special breed, particularly when knowing that such integrity will be criticized. Charlie Crist kept his word to Floridians when he vetoed a property insurance bill that would have allowed insurance companies to raise rates by ten percent each year. His veto is a huge victory for every Floridian who is outraged over the highest property insurance premiums in the country. The insurance industry offered the most illogical of all arguments as to why the proposed law was "consumer friendly:" by allowing rates to go up, insurance premiums would go down. This point was made in Do Florida Legislators Think We Are Stupid?

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Today is the day Governor Crist decides the fate of the pending property insurance bill by choosing whether to exercise his veto. Yesterday, investigative journalist Paige St. John's article, Lobby Had a Hand in Insurance Bill, was on the front page of the Sarasota Herald-Tribune. While I was unsuccessfully advocating for policyholders this past legislative session, I observed the insurance lobby, with an army of insurance lawyer lobbyists, seemingly writing most of the proposed laws that eventually passed. Indeed, I have not found one quote from a Florida representative claiming to have stopped any insurance industry sponsored law.

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(Note: This guest blog is by Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series she is writing on Examinations Under Oath and Public Adjusters).

In my post last week, I explained the new provision in Citizens’ homeowners policy and received many comments that address great issues.

In Part I of this series, I posed several questions for discussion:

1. What happens if the Public Adjuster refuses to sit for an EUO?
2. Is the Public Adjuster always required to give an EUO?
3. Can the Public Adjuster fill the shoes of the policyholder and give the only EUO?
4. How can the statements given by the Public Adjuster during an EUO change a claim decision?

I want continue evaluating these questions and pose a few more. How each of the questions can be answered depends on many factors. Discussing this policy change is important because it can change the way a claim is presented and the obligations of those involved.

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(Note: This guest blog is by Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. She will be writing a guest blog series on Examinations Under Oath and Public Adjusters).

After taking a look at the new Citizens Property Insurance Corporation policy, which potentially requires a non-party to sit for an examination under oath, lots of discussion has started and some of the same main themes keep coming up.

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Dennis Wall's weekend post, Florida Civil Remedy Notice Insurer Violation Holding: "Sufficiently Specific" Requirement, raises an important issue concerning bad faith cases in Florida. While the Florida Supreme Court ponders common law obligations of good faith in a first party context, as discussed in A Confusing Oral Argument in QBE vs. Chalfonte Baffles the Florida Supreme Court Regarding First Party Bad Faith, a raging legal battle ensues in many statutory bad faith actions because insurance companies complain that civil remedy notice of violation is not sufficient.

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In an editorial, Insurance Bill Needs Improvement, the Miami Herald called on Governor Crist to veto the property insurance bill now sitting on his desk.

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(Note: This guest blog is by Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. She will be writing a guest blog series on Examinations Under Oath and Public Adjusters).

The new language in Citizens Property Insurance Corporation’s 2010 policy has spurred debate and questions about the obligations of both policyholders and public adjusters in Florida.

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Religion sure brings out some strong and sometimes bitter feelings among friends. A number of adjusters, after hotly debating the topic with emails copied to me, have inquired whether the pending property insurance bill is unconstitutional because of the exemption to the required examination given to the members of the National Association of Christian Catastrophe Insurance Adjusters. Since I am scheduled to take the California Bar Examination this July, some may think that my First Amendment Constitutional Law expertise has been refreshed with recent study and that I am able to address this question. My friends know better and often wonder how I passed any bar examination.

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Governor Charlie Crist will certainly be asking himself the question whether the property insurance legislation before him is bad for average Florida insurance consumers. Yesterday’s afternoon post, Pay Higher Premiums and Get Less Coverage Legislation -- Can Anybody Explain Why This is Good for Floridians? provided a simple explanation of why many are calling for Governor Crist to veto this legislation. The analysis is not easy because the proposed law was rolled into one massive piece of legislation, some very bad and some good. The media is starting to pick up the overall aspects of the proposed law.

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Governor Charlie Crist should veto the property insurance legislation which passed (SB 2044) and has been presented to the Governor. He made a promise not to raise rates when he became governor. Many other politicians made similar claims about standing up to insurance companies, but they seem to have forgotten. These proposed laws not only raise rates, they take away coverage and benefits Floridians have enjoyed for a long time.

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(Note from Chip Merlin: This guest blog is by Shaun Marker, an attorney with Merlin Law Group in our West Palm Beach office)

As many homeowners, condominium owners, directors, property managers, and public adjusters are aware, the Florida statutes of limitation are approaching for Hurricanes Katrina and Wilma. There has been much litigation in Florida related to these catastrophic events, however, we are not out of the woods yet…and we may not be even once the limitation periods pass. The scope of this post relates to the fiduciary duties that condominium and homeowner associations and their boards of director have to maintain and repair damages to the common areas of these communities.  

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Florida public adjusters have been served a huge loss in their ability to solicit and aid policyholders within 48 hours of a loss. A final judgment in Frederick Kortum vs. Alex Sink was issued on May 7, 2010. The ruling, in favor of the Department of Financial Services and upholding Florida Statute Section 626.854(6), reached my desk this morning.

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I have seen this look before. Panic and loss have a certain emotional face where people need compassion and then a plan. Over my only meal of the day late last night, I told my client, Dewey Destin and his wife that I felt proud to be an American and part of the Gulf Coast community because of the way people were responding to very dire circumstances. Fishermen were volunteering and politely demanding that their knowledge of local waters be used to help mitigate the impact of oil. Engineers were suggesting ingenious methods of oil prevention and clean up. Local leaders such as State Senator Don Gaetz and Florida DEP Secretary Mike Sole were candid and helpful with these requests.

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The Honorable Governor Crist:

I respectfully request that you veto the insurance legislation recently passed in SB 2044. While there are many good provisions in this bill including some of the Public Adjusting proposed changes, other provisions will cause great harm to Florida policyholders particularly when the next big storm or other perils impact already struggling Floridians.

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Our firm has been receiving calls from a large number of Florida condominium associations over the past few days regarding the increasing problems associated with the oil spill that is plaguing the gulf coast. I have a personal connection to this growing crisis. I spent a large portion of my life in Destin, Florida, and part of my family still lives and works in the area. Late last night, I flew to the panhandle to see what our firm could do to help.

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The estimates of oil escaping were far too low. At first it was, "we dodged a bullet." Then, it was 1,000 barrels a day. Then, 5,000. And now, 25,000 barrels a day are flowing from the ocean floor. The Wall Street Journal has been excellent in its reporting:

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The Merlin Law Group has been responding to inquiries from potential, current and former clients who have contacted its offices with concerns about the effect of the Gulf of Mexico Oil Spill on their properties and businesses. These inquiries are wide ranging. Most are asking about preparation issues to prevent damage as well as legal help documenting damage and the law firm’s representation of them for those claims.

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I hate to make doomsday predictions, but there is a possibility that the BP Oil Spill could be worse than any hurricane or catastrophe that I have been involved with. I spent yesterday speaking with others about the current situation. Indeed, my father teaches those in the oil industry how to recover and react to oil spills. Unless the source of the oil is stopped or slows down soon, oil is going to be all over the northern Gulf Coast and Florida. If the spill cannot be contained or slowed in the near future, it will significantly impact our economy.

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A number of former and current clients have called our offices about the recent oil spill in the Gulf of Mexico. They have expressed fear about damages to their business and property, as well as actions that they can take take to protect themselves from the consequences of this disaster. We have already been retained for business losses as customers of clients are cancelling plans for travel to the Gulf Coast. If something does not change soon, this disaster will likely be much worse than most hurricanes. It has the potential to be worse than any of them.

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Nicole Vinson has just joined Merlin Law Group. Nicole’s first party insurance advocacy began in Jacksonville, and now she will be handling claims throughout Florida from our Tampa office.

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"Laws are like sausages, it is better not to see them being made." 
         -Otto von Bismarck

Our law firm's Knowledge Manager, Ruck DeMinico, was commenting to me that the new property insurance bill passed by the Florida House of Representatives yesterday was over a hundred pages long and that it would take a while to read through the entire document and analyze the changes from the last minute amendments. We joked that most of the Florida Representatives who voted on the bill had not yet read the entire bill either. Indeed, if they had read it, most would not understand what they were voting on because the complexity and subtlety of insurance law is not learned over several months.

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Policyholders know when they have been "ripped off" by the fine print of an insurance policy. The most common "rip off" is when insurance companies sell replacement cost insurance and then do not immediately pay replacement cost value. A number of insurance companies, like Chubb and AMICA do not play this "bait and switch" game in other jurisdictions. However, the insurance industry wants to change Florida law to make it legal in Florida.

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(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series he is writing on post-loss duties). 

In Florida, discovery in breach of contract actions usually centers around the mystical “claim file” which insurers guard more closely than their first born child. As most who read this blog already know, the “claim file” has been held to be generally protected by Florida courts, and usually undiscoverable in a breach of contract action.

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Senate Bill 2264 passed yesterday on a 37-1 vote, with Senator Rudy Garcia casting the lone "No." A corresponding bill must pass the House before the legislation can be sent to the governor.

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The Associated Press reported today that Senate Bill 2044 and House Bill 447 have stalled in the Florida legislature.

The article, published at Insurancenewsnet.com, states:

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Florida Farm Bureau Casualty Insurance Company appealed a final judgment in favor of the Mathises, awarding them their homeowners policy limits. Hurricane Ivan caused substantial wind and flood damage to the Mathises’ home. The home was insured with a flood insurance policy with policy limits of $250,000, issued pursuant to the National Flood Insurance, and with a Florida Farm homeowners policy with policy limits of $295,600, which covered windstorm damage but excluded flood.

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Florida legislators will be debating insurance on the Senate floor today. The Senators are likely to have significant debate because recent indications are that there is extraordinary controversy about how to “fix" all of Florida's property insurance problems.

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(Note: This Guest Blog is by Kristin Demers-Crowell, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series that she and fellow attorney Donna DeVaney are writing on sinkhole issues).

I haven’t seen a ghost, but the new insurance legislation pending in the Florida legislature is almost as scary. There has been a flurry of activity in the Florida House this week regarding HB 447. The Florida Senate is considering a similar bill, SB 2108. It is helpful to review the Florida Senate Bill Analysis and Fiscal Impact Statement for an overview of the major reforms.

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A new Committee Substitute version of SB 2264 was filed yesterday. Attached is the new version of the proposed bill and the staff analysis on the version.

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Circuit Court Judge Tony Black was appointed to the Florida Second District Court of Appeal by Governor Charlie Crist. Here is what the press release stated about his selection:

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Sandy Burnette won an appeal and had a matter remanded for appraisal. In American Capital Assurance Corp v. Courtney Meadows Apartment, 35 Fla. L. Weekly D802a (Fla. 1st DCA  April 7, 2010), the court held:

[T]here is no language in the policy that requires appraisal to be invoked, if at all, within any set time from receiving or waiving the sworn proof of loss. Thus, under the terms of the instant policy, the insurer's demand for appraisal was not untimely. Furthermore, the insurer has not waived its right to appraisal as it has not acted inconsistently with that right from the time of demand...

Accordingly, because the insurance contract provided for appraisal, the insurer's demand for such was not untimely, and the insurer did not waive its right to appraisal, the trial court erred in partially denying the motion to compel appraisal.

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These are actual photographs of damage to the ceiling and walls of one of my client’s homes. A carrier denied this sinkhole claim based on a report from an engineering firm that opined that the damage wasn’t caused by sinkhole activity. In addition to the numerous 2-4” wide openings to the walls and floors of the home, the floor elevation survey revealed a 7.25 inch floor elevation differential. Note that these photos show only a fraction of the actual damage to the house. Indeed, several veteran attorneys on both sides of the case and a well-respected retired judge who mediated the case all agreed that this was one of the worst sinkhole damage cases that they had come across.

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Insurance coverage disputes are often decided by laws and regulations made outside the insurance contract. Insurance companies have known this for years. They employ an army of lawyers and seemingly have an unending treasury to lobby for laws and regulations that favor insurance company interests.

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A Proposed Committee Substitute bill significantly impacting sinkhole claims was drafted over the weekend and has been filed this morning.

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This Property Insurance Coverage Blog set record visits last month. Thank you! I noticed a significant drop as the Easter weekend started. The Florida legislature took a well deserved breather last week as well. So, it seems like it is a good time to get caught back up.

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The question posed in this title was the headline to a post by the St. Petersburg Times columnist, Robert Trigaux. It was pretty harsh against some of our elected representatives who are neither running the insurance companies nor conducting these actions. Still, here are some of the significant observations in his post:

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The Florida House of Representatives appears to be following the lead of the Florida Senate regarding public adjusting. As noted last week in Amended Florida Public Adjuster Bill Passes in Florida Senate Banking and Insurance Committee, significant amendments to the original language of proposed legislation regulating public adjusters is moving through the Florida Senate. These amendments and proposed laws appear to be approved by committee action yesterday afternoon in the Florida House of Representatives. In my view, public adjusters should be prepared for these significant changes to become law because similar language is running simultaneously in both chambers of the Florida legislature.

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(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell are writing on sinkhole issues). 

Insurance companies have come up with a whole new excuse not to pay covered sinkhole claims. The recent trend has been to deny payment on confirmed sinkhole losses by arguing the damage is not "structural" damage as defined by Florida Statute 627.706.

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The Florida Senate Banking and Insurance Committee passed an amended bill regarding public adjusters yesterday. It is different than the legislation previously proposed and noted Monday in Public Adjuster Senate Bill on Banking and Insurance Committee Agenda.

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The Sarasota Herald-Tribune conducted a year long investigation into the manner Florida insurance companies diverted premiums and monies as expenses and losses to hide actual profits. This revelation is probably shocking to many who have been told repeatedly that the Florida insurance industry is losing money as a result of "unfair" rates and for other claims related reasons.

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Florida Senate Bill 2264 has been set on the agenda of the Banking and Insurance Committee Agenda this Wednesday. This is the same legislation that was filed in the Florida House of Representatives as HB 1181.

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An Order by the Office of Insurance Regulation shows one method some Florida insurers may use to “poor mouth” losses to the public and our legislators in Tallahassee while taking millions home through shell accounting techniques. Many of the smaller insurers operate as three corporations--the insurer, a managing general agent, and a holding company. It does not take a financial genius to figure out that investors and managers can siphon off profits by simply charging excessive fees through the managing general agent. The insurance part of the jointly owned enterprise then claims it cannot make any money for various reasons which we have been hearing about in the press and from some insurance lobbyists looking to raise rates and reduce benefits to policyholders.

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(Note: This Guest Blog is by Kristin Demers-Crowell, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series that she and fellow attorney Donna DeVaney are writing on sinkhole issues).

Two weeks ago I wrote on the three ring circus that Florida’s statutory neutral evaluation of sinkhole claims has become. Fla. Stat. 627.7074. This follow up blog focuses on the “down and dirty” reasons why the process is unfair to policyholders.

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The Florida legislature is a difficult place to navigate. The place is an adult maze, and it takes effort to find the right room. Possibly, the logistics are a warning to novice citizens such as me that actually try to have some small input regarding the laws we agree to abide.

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"You gotta be kidding me" is probably being repeated by many after reading the title to this post. I wrongfully wrote about Representative Janet Long without giving her an opportunity to explain her concerns and longstanding advocacy for policyholders when she worked as a Deputy Insurance Commissioner in a Florida Department of Insurance Branch office. Before the spotlight of politics and public life subjected her to criticism without an ability to fully explain the purpose of the laws she proposes, her job in the Florida Department of Insurance required her to talk with and help policyholders upset about every imaginable wrong that could possibly befall an insurance consumer. I should have been more diligent in my research of her before jumping to conclusions about the framework for her views in this very public blog.

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Matt Gaetz is running for a seat in the Florida House of Representatives. His chances of getting elected have become better since former Governor Jeb Bush provided his endorsement to Gaetz. Here is Gaetz commenting on the endorsement:

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Florida Supreme Court justices seemed as bewildered as I when policyholder's counsel explained last Thursday that he was not arguing a "bad faith" case. I will be the first to say that a "bad faith" case is really a lack of "good faith" case since the standard is whether the insurance company breached the obligation of good faith and fair dealing. While I understand what the very accomplished appellate attorney, Bruce Rogow, was trying to argue, I wish his argument had been more simple and to the point because he confused me. I am afraid he may have alienated the Court with his very esoteric argument about a good faith breach of contract issue in a first party insurance situation.

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The poor policyholders whose homes cracked, popped, and dipped as a result of sinkholes induced by citrus farmers spraying their crops to prevent freezing damage should be happy it happened to them this year. Newly proposed anti-consumer sinkhole legislation would limit policyholders to 25% of their coverage limits for the most common sinkhole problems.

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The Florida Senate Banking and Insurance Committee has a number of very intelligent and very well meaning members. Two of them, Senator Rhonda Storms and Mike Fasano stood up yesterday to the insurance lobbyists who know little about insurance, but a lot about propaganda and politics. Full time and professional insurance lobbyists have one agenda--achieve their clients agenda. They have an army of lawyers, a ton of money, and their message is "spin" at its finest. No wonder so many public servants can get snowed by the misinformation and insurance industry proposed laws.

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If you are a policyholder, don’t expect prompt payment of replacement cost benefits and payments for damage to older roofs if Florida Senate proposed legislation passes. A proposed bill filed as a substitute that will be heard in the Florida Senate and Banking & Insurance this Wednesday was just released this afternoon. I have not had an opportunity to review it in detail, but a number of anti-consumer provisions are contained within this proposed legislation.

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Julie Patel of the Sun-Sentinel published Battle Brewing Over Public Insurance Adjusters which was preceded by Florida Cabinet Tables Insurance Fee for Hurricane Claims: Fraud Suspected and a St. Petersburg Times article "State Delays Bond Sale for Hurricane Wilma Claims.” In each of these, the message from the insurance industry was clear:

The Florida Insurance Council, Property Casualty Insurers Association of America and the Florida Property Casualty Association issued statements Wednesday backing bills filed this week by Sen. Mike Bennett, R-Bradenton, and Rep. Janet Long, D-Seminole. They say public adjusters -- who represent homeowners in claims disputes with their insurer -- inflate claims, driving up costs for all policyholders.

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(*Chip Merlin's Note: This guest blog is by Frank Artiles, candidate for the Florida State House of Representatives)

“Determine never to be idle…It is wonderful how much may be done if we are always doing.”
      -Thomas Jefferson  

Thank you for hosting a Forum that informs and educates so many regarding insurance industry trends and concerns. I feel privileged to work in a part of the insurance industry dedicated to helping people. I am humbled that you have asked me to write about a topic that is so important and that I feel strongly about.

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Some public adjusters were calling me asking about the recent proposed legislation of Florida House Bill 1181. This extraordinarily anti-consumer legislation was filed by a Democrat, Janet C. Long. My impression is that this legislation is a potential nuclear bomb for policyholders and public adjusters.

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(Note: this Guest Blog is part of a series on sinkhole issues).

Carriers seem to be using the 2005 changes to sinkhole legislation to stack the deck against policyholders who are seeking adequate repairs for their property. There are two statutes at play that have emboldened carriers to force inadequate repairs on the policyholders.

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All adjusters, whether company, independent, or public, have significant ethical obligations in Florida. Indeed, these adjusters even have an obligation to turn each other into the Department of Financial Services. The failure to do so is, by itself, a breach of the adjuster’s ethical obligations:

(g) An adjuster shall promptly report to the Department any conduct by any licensed insurance representative of this state which violates any provision of the Insurance Code or Department rule or order.

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(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell are writing on sinkhole issues).

In 2009, the Florida legislature passed a law allowing Florida residents to opt-out of sinkhole coverage. The purpose of the law was to help insureds lower their yearly insurance premiums. The practical effect, however, has been that we now have many in this state who have insurance policies that effectively cover nothing in the event of sinkhole damage.

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There are two active lawsuits with very good attorneys representing public adjusters who are challenging the 48 hour solicitation ban and the fee caps. The first one was filed in Miami-Dade County, as I reported in Florida Public Adjusters File Lawsuit to Overturn 48 Hour Solicitation Ban and Fee Caps. The second lawsuit challenging only the solicitation ban was filed in Leon County, as I reported in Second Public Adjuster Constitutional Solicitation Ban Challenge Filed. The later filed lawsuit seems to be moving along quicker; the first lawsuit has been delayed by a fight about venue.

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The Florida legislator is full of "flip flop" legislators that are reversing laws made in 2005 and 2006 which supported lower insurance rates and protected insurance consumers from unscrupulous insurers. Governor Charlie Crist ran on a platform of helping Floridians keep insurance rates down and he is sticking to that promise even as other politicians who once voted for such laws are now firmly supporting the opposite measures. These "flip flop" politicians are filing laws that would allow rates to go as high as the insurance industry can make them and laws that take benefits away from consumers following disaster. Crist seems to be standing tall against the insurance industry and for the people, unlike other politicians who are currently getting their responses and "speaking points" from insurance lobbyists.

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Three consumer advocates published a letter, Property Insurance Deregulation Too Costly, which claims that currently proposed Florida legislation calling for no regulation of insurance rates is bad for Floridians "because the average consumer does not have the resources or information to determine when a rate is excessive, the opportunity for the [insurance] company to abuse consumers exists." I agree, and for many more reasons than just that.

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(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the sixth part in a series he is writing on post-loss duties).

In Florida, as in other states, failure to give an insurer timely notice of a loss can provide an insurer with a potential basis for denying a valid claim. Ideal Mut. Ins. Co. v. Waldrep, 400 So.2d 782, 785 (Fla. 3d DCA 1981). This can be a harsh result for policyholders, but, as I mentioned last week, some jurisdictions such as Florida hold that the late notice must prejudice the insurer as well.

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I appreciate all the comments to posts from readers with various perspectives on insurance coverage and the insurance claims industry. I read them all, try to respond when I can, and honestly consider the viewpoint of those writing. This morning, I came across a comment worthy of consideration by all of us regarding mediation and alternative approaches to insurance claims dispute resolution.

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Why do so many of our politicians play to the lobbyists and support laws that harm the average person and voter? This is exactly what has happened with important laws sponsored by the insurance industry lobbyists and then proposed by Florida Senator Mike Bennett of Bradenton and Representative Bill Proctor of St. Augustine. These politicians and other Florida political leaders have sponsored a law that would allow insurance companies to raise the rates of Florida policyholders as much as they want. Indeed, the law they support allows for insurance companies to collude with each other, since it calls for the complete deregulation of rates. As the insurance industry is exempt from anti-trust regulation, based on a bargain it made with the federal government in which it agreed to state regulation of rates, the insurers would be legally exempt from all regulation. Is this stupid or what? Do the Florida political leaders supporting this law think people will be happy when their rates go up 100% in a couple of years, or is this just a payback to the insurance industry and their lobbyists funding certain political action committee dollars? Or, giving them the benefit of the doubt, do they really understand the issue?

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The Florida Association of Public Insurance Adjusters’ (FAPIA) winter conference starts today. On its website is a link to a summary judgment motion filed in a lawsuit I noted in Second Public Adjuster Constitutional Solicitation Ban Challenge Filed. In the summary judgment was an amazing statistic that, if true, would certainly indicate that policyholders need professional help when dealing with their insurance claims:

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Barry Zalma writes some interesting and worthwhile property insurance coverage articles. While most of his work centers on insurance fraud, his recent article, "When is An Appraiser Disinterested?" has implications for consideration in Florida as well.

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There are times when I am troubled about what I write on this blog. This is one of them. I know that many people are going to read this who have very different viewpoints. When a number of people tell you in advance that they look forward to what you are going to write, there is some tendency to write for the readers rather than having the courage to just place what is in your heart on paper. There is no way I can write about all my thoughts, but I will share points.

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In a widely read previous post, Florida Public Adjusters File Lawsuit to Overturn 48 Hour Solicitation Ban and Fee Caps, I noted how a lawsuit in Miami-Dade County challenged the fee cap and solicitation ban on public adjusters. The State challenged venue, and in a recent order, the trial court denied the change of venue.

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The appraisal clause should not be removed from Florida insurance policies. The concerns of insurers and policyholders can be addressed if we simply do two things:

1.  Mandate that the appraisal clause remain in all property insurance policies.

2.  Pass legislation which provides the safeguards for a fair procedure while allowing the parties to make the process as formal as they need to insure due process and still reflect the desire to avoid the time and expense of litigation.

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This Wednesday will be the Roundtable discussion regarding appraisal. It will be significant and I urge anybody with an opinion or interest to write to Sean Shaw, the Insurance Consumer Advocate. You can also watch the roundtable at WFSU Florida Channel and call into the conference at 1-888-808-6959 Code: 4132880.

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The issue in this case was whether the amended sections of Florida Statute sections 627.7065, 627.7072, and 627.7073 (2005), which affected database information, testing standards, and reporting requirements for sinkhole claims, created a presumption that shifted the burden of proof to the homeowner to disprove an insurer’s expert’s opinion that damage was not caused by a sinkhole or whether it created a presumption that vanished once a homeowner produced evidence that a sinkhole damaged his or her property.

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Miami Herald reporter, Bea Garcia, wrote a very important story, Tackling Contentious Insurance Issues, concerning Insurance Consumer Advocate Sean Shaw. It appears the Roundtable meeting I wrote about in Alternative Resolution Roundtable: Appraisal is the Hot Topic and Is There Any Chance that Appraisal Will Stay the Same in Florida?, is going to be an important last meeting before Shaw takes stances on how Florida legislators should deal with current insurance consumer issues:

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In a post last September, State Farm Agents are Fighting State Farm for Economic Survival, I wrote:

"Again, for many different reasons, I hope McCarty and State Farm can work out a deal."

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Over the past several weeks I have had a number of public and private discussions with attorneys and public adjusters about the appraisal process. My post last week, Alternative Resolution Roundtable: Appraisal is the Hot Topic, had a comment from Mike Rump that I thought was worth sharing as this debate rages on:

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(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the ninth in a series she is writing on valued policy laws).

Sometimes, if not most of the time, a covered peril will only cause partial damage to a structure. For example, let’s pretend an insured inadvertently drops an object on his tile floor and the object cracks a single tile. For the sake of argument, let’s assume that the policyholder has continuous tile throughout the house, and that due to the age and style of construction, a matching tile is no longer available on the market.

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In a blow to policyholders, Florida’s Fifth District Court of Appeals found that Citizens is not subject to bad faith lawsuits. The Court concluded:

In summary, we hold that Citizens is immune from first-party bad faith claims pursuant to section 627.351(6)(r)1. Likewise, we hold that Citizens is not subject to bad faith liability under section 624.155(1)(b)(1), as that statute is not applicable to it.

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The Florida Office of Insurance Regulation (OIR) has entered a Consent Order today resolving the attempt by State Farm to leave the Florida property insurance market.

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Floridians currently have legislators that are in the pockets of and doing business for insurance companies. Virtually all states regulate insurance rates because insurance companies have been historically notorious for over charging customers following losses, as well as for under charging customers before declaring bankruptcy.

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Julie Patel, of the Sun Sentinel, reported that Florida officials and State Farm appear to be working towards a mutual solution to keep State Farm selling property insurance in Florida:

Insurance Commissioner Kevin McCarty told the Florida Cabinet Tuesday that State Farm may not leave the state's property insurance market as planned and the state is developing a report card on insurers to help consumers and increase competition.

“We’d like them to be a good neighbor so long as they are a fair neighbor," Gov. Charlie Crist said about McCarty's prediction that State Farm will stay in Florida in a smaller form.

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Nancy and Anthony Podorski hired On Target, Inc., a leak detection service, to locate a leak under the floor of their home. The On Target technician who responded presented Mr. Podorski with a two-page form titled “Customer Information Card and authorization to proceed with the work.” The Customer Information Card authorized On Target to find the leak, provided general information about the nature and extent of the services provided by On Target, and the indemnification provision at issue in this case:

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Last week, I made a statement in my post, Are Wind Mititgation Credits Killing Profits of Florida Insurers, that everybody is predicting insurance rates are going up . Then, the St. Petersburg Times ran a story, Citizens Property Rates Headed Up, or Maybe Down, Depending on Where You Live.

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It is hard to imagine any Florida property insurers not making a killing in 2009. With no hurricanes or significant tropical storms, the most financially devastating peril was eliminated. Yet, over 100 Florida residential property insurers reported losses.

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I wonder how our clients, the Leeds, would feel if they had purchased only catastrophic sinkhole coverage or no sinkhole coverage, rather than the normal sinkhole coverage required when they purchased their "all-risk" insurance policy. Their home slowly but surely cracked, drooped, and sank over several years before it was condemned. If they "saved" money on their premium as Florida Senator Mike Fasano successfully pushed for in legislation, they would have lost the entire investment on their home. They would also still owe money on the mortgage, possibly causing bankruptcy.

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My appointment by Florida's Governor Charlie Crist to the Citizens Mission Review Task Force afforded me the opportunity to learn about and have a small voice in the Florida insurance marketplace. At War With the Weather: Managing Large-Scale Risks in a New Era of Catastrophes is a significant academic work which our regulators and legislators must read and understand to fully appreciate the complexity of the property insurance issues in Florida and elsewhere. I wish it had been published while I was serving on that Committee. The historic lessons and current conclusions contained in this book are important to everybody living and working along Coastal areas.

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Florida Senator Mike Fasano, a public servant ever vigilant about consumers of regulated industries getting ripped by the amounts they have to pay for mandated services and products, forwarded a recent news article, “Group Backs Florida Property Insurance Rate Hike.” When the Florida legislators and Governor were concerned about the severe escalation of property insurance premiums following the 2004 and 2005 storm seasons, they froze the rates charged by Citizens Property Insurance Corporation. Governor Charlie Crist ran for elected office on a platform of preventing the severe escalation of such prices. At that time, many of Florida’s legislators ran their political campaigns suggesting they were no friend of the insurance industry that was raising rates in an extraordinary manner. While Governor Crist proved he is a man of his word by vetoing legislation which would have allowed major insurers to charge whatever they want, only a few elected legislators seem to remember the promises they made to their electorate. Associated Industries supports those politicians that are more concerned about insurers profits than the promises to their constituents—except when elections are around the corner.

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(Note: This Guest Blog is by Ruck DeMinico, Knowledge Manager with Merlin Law Group).  

In State Farm Florida Ins. Co. v. Seville Place Condominium Ass'n, Inc., No. 3D08-2538, ___ So. 3d ___ (Fla. 3rd DCA, October 14, 2009) Florida’s Third District Court of Appeal held that an insured could amend their complaint to add a bad faith claim after coverage was admitted by the insurer and an appraisal award had been entered, but before final judgment. 

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A lawsuit was filed in Leon County Circuit Court yesterday challenging the 48 hour solicitation ban on public adjusters. Last month, we posted Florida Public Adjusters File Lawsuit to Overturn 48 Hour Solicitation Ban and Fee Caps, reporting on the first of these two similar lawsuits. The second lawsuit is different in that it focuses solely on the 48 Hour Ban on solicitation, where the first challenges the fee caps enacted by the Florida legislature.

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Yesterday, Chad Hemenway, associate editor of BestWeek, reported that State Farm and Florida’s Office of Insurance Regulation jointly moved to delay the administrative hearing that will address State Farm’s move to leave Florida’s property insurance market.  The saga continues....

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Imagine if we had truly knowledgeable advocates for insurance consumers in our legislatures. Many politicians advertise they are for policyholders as election day approaches, but they refuse to push any agenda other than the insurance industry’s the rest of the time. In Florida’s past legislative session, Florida Senator Don Gaetz, sponsored three significant pieces of insurance consumer legislation protecting the rights of policyholders regarding the fair treatment of claims. The person helping to write that legislation, his son Matt Gaetz, is now running for the Florida House of Representatives and he deserves support from those who want strong laws protecting Floridians from slow, frustrating, and wrongful insurance claim handling.

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Kelly and Craig Kubiak successfully presented a case to a jury this week involving a dispute with a long time USAA policyholder following a denial of her property insurance claim. The $245,000 jury verdict came after lengthy and contentious litigation with USAA. The opposing counsel and his law firm are one of the most successful in Florida. The most USAA ever offered in settlement to our client was fifty thousand dollars, so our client was thrilled and in tears following the jury’s verdict.

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It is curious how some insurance company claims managers allow their insurance defense counsel to treat their customers with an arrogant, demeaning tone, along with long requests for largely irrelevant lists of information following a loss. Any objection to the treatment is usually met with a threat the claim will be turned down for a failure to cooperate. The “threat” letter is usually in a similar tone requiring the policyholder to obey…or else. For insurance adjusters that do not act this way or allow their insurance defense counsel to do so, this treatment may shock you. Yet, many policyholder representatives see this as a growing trend in claims treatment following a loss.

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(Note: This Guest Blog is by Ruck DeMinico, Knowledge Manager with Merlin Law Group). 

The recent case of North Pointe Insurance Company v. Tomas, No. 3D08-2245, 2009 Fla. App. LEXIS 12505 (Fla. 3d DCA August 26, 2009), illustrates why many insurers who wrongfully fail to pay a claim choose to unnecessarily delay payment rather than out right deny them.

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(Note: This Guest Blog is by Kelly Kubiak, an attorney with Merlin Law Group in the Tampa, Florida, Office).

Some insurance companies feel that although they may not have investigated a Florida loss promptly during the time period Florida suffered successive hurricanes, the companies have an excuse due to the vast amount of claims.

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I would pay to be a fly on the wall during the discussions the Florida Office of Insurance Regulation is having with State Farm regarding its withdrawal from the Florida property insurance market. As I noted in State Farm Must Love the Clash, many of us suspect that State Farm’s bullying and threatening tactics demonstrate that it does not want to leave Florida, but uses such tactics to get what it wants from Florida’s politicians and regulators.

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A lawsuit was filed by three public adjusting firms seeking to enjoin the State of Florida from enforcing the 48 hour solicitation ban and the fee caps public adjusters may charge to policyholders. The mastermind behind the lawsuit is lawyer turned public adjuster, Pat Catania of East Coast Public Adjusters. The lawsuit is not a surprise. Many public adjusters have been complaining that their business has been significantly impacted by these laws as insurance restoration companies act as surrogate public adjusters since the 48 Hour Ban does not prohibit insurance contractors from actively soliciting work from policyholders immediately after a loss.

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(*Chip Merlin's Note--Rocco Calaci has been a noted meteorology expert witness in the Katrina Legal Wars. After meeting him at a recent FAPIA Convention, I invited him to write a series of guest blogs. Click here to read his previous guest blogs)

(*Note from Rocco Calaci: I started issuing a "plain talk" interpretation of National Hurricane Center bulletins at the beginning of the 2008 hurricane season. I remind everyone that this is strictly a courtesy, I have no affiliation with any government agency, this is not a commercial service and the information is not for any type of decision. It is strictly FYI). 

***

There is an area of disturbed weather moving across the Atlantic and approaching the Lesser Antilles. This area may become Tropical Storm Erika in the next day or so.

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Why do insurance companies get to play the float in some jurisdictions? After all, most regulations and good faith duties require prompt payment. Without penalties or awards of prejudgment interest, rules of promptness become meaningless because there is no accountability for claim delay.

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Where are our insurance consumer advocates? Are they publicly wanting to appear one way to get their constituents’ votes, but then voting another way behind closed doors? This is my concern, because otherwise the last bill placed before Governor Crist would never have appeared. My powerful, worthy, much richer, and able State Farm lobbyist, Mark Delegal and other similarly powerful interested insurance industry lawyers show how the insurance industry has already set out its agenda on the insurance consumers of Florida in a recent article:

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I once told an Allstate Insurance Company adjuster that if forced, I was going to sue over a very small matter, less than a thousand dollars, because it simply was not right that Allstate was taking “betterment” deductions on the adjustment of an automobile comprehensive coverage loss to a friend of mine. This small county court case eventually resulted in a significant class action settlement in Florida in excess of $20 million dollars. I have no idea why some insurance companies do not try to settle earlier and would rather wait until the information uncovered results in a bad situation getting worse. Unfortunately, unless the litigation fortunes of one public adjusting company changes dramatically on appeal, a seven thousand dollar fee dispute could cost many public adjusters millions in class action lawsuits.

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As this is being posted, I am providing an ethics seminar to Florida public adjusters along with Merlin attorneys Bob Reynolds and Michelle Claverol. This follows my earlier posts on the topic, Public Adjusters Sued in Class Action for Wrongful Conduct--Are Unauthorized Practice of Law Class Action Suits Next? and Public Adjusters Targeted by Lawyers for Overcharging Policyholders.

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Dan Luby of the Florida Insurance News forwarded a Blog, Alex Sink's Cold War with the Insurance Commissioner, by Gary Fine regarding a possible “riff” between Alex Sink and Kevin McCarty. I find this curious because the two of them are leading consumer advocates for policyholders. I have never found Bill McCollum, Sink’s opponent for Florida Governor next year to be a supporter of policyholders. He is clearly the insurance industry’s candidate. Yet, the Blog noted:

“Interestingly enough, Attorney General Bill McCollum - and Sink's likely rival for the governor's office in 2010 - praised McCarty's report, saying that Floridians should be "very pleased" with the amount of surplus lines coverage since it has helped decrease the need to have commercial coverage picked up by state-created insurers.”

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Two significant pieces of information show a continued trend in the property insurance business and suggests that insurance customers should not rely on the loyalty of their insurance companies. An article by Bea Garcia in the Miami Herald, Florida May Gut Discounts for Hurricane Shutters highlights the industry wide issues raised by State Farm’s requests to eliminate discounts and “recalibrate” the terms of previously granted discounts for measures taken to protect structures from hurricane damage.

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"Cheaper" insurance rates often mean far less coverage. In this world, you often get what you pay for. If there is ever a lesson to be learned about that, just ask those that live in the "Sinkhole Capital of the World," Pasco County, Florida. They can elect to get "Catastrophic Sinkhole Coverage" as ordinary coverage or get "Sinkhole Coverage" which is every bit as catastrophic where it counts--the ability to get back to where you started from--but covers damage from a slow moving sinkhole. The latter optional coverage is very expensive and covers Floridians from loss caused by most of the sinkholes that occur. The other coverage, which is much less costly, covers only very quick and substantial collapse sinkholes which happen once in a gazillion years to the properties owned by anybody. Guess which form the insurance industry wants to insure? BINGO!

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Imagine if our legislatures had truly knowledgeable insurance consumer advocates. Do you think the insurance industry would have tried to pass laws in Texas and Florida that allowed insurance rates to unfairly rise or allow immunity for wrongful conduct after a loss occurs like TWIA is attempting in Texas?

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State Farm is a tenacious opponent. "If you at first you don't succeed, try, try again" is a motto which must be emblazoned in bold letters somewhere in its Bloomington, Illinois, headquarters. But, down in the Sunshine State, some are criticizing State Farm for its creative methods of raising rates.

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I was going to write on the fascinating topic of errors and omissions aspects of 100 percent coinsurance penalties, but the response to yesterday’s Post, Should the Rust Family Stay in State Farm's Power and Ownership Given the Recent Record of Policyholder and Corporate Citizen Ethics, requires some follow up.

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State Farm lost its most significant claims case while Ed Rust Jr. was the "owner/manager" of State Farm. Ed Rust Jr. was the person who ultimately decided that thousands of State Farm policyholders would be underpaid or denied benefits in Mississippi. He is the chief corporate leader of State Farm Mutual, the corporation that allows its wholly owned subsidiary, State Farm Florida, to essentially lie about its financial situation. Everybody—especially Rust--knows that State Farm Florida is paying millions that would otherwise be profits to State Farm Mutual. I suspect a number of highly qualified agents and claims adjusters wonder why there has been no change in the top management for two generations. After all, in the United States, we believe in earning leadership rather than being born into it.

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In the last week, two Florida cases have been released which discuss prejudgment interest.

In Sunshine State Insurance Co. v. Davide, 34 Fla. L. Weekly D1422a (Fla. 3d DCA 2009), Florida’s Third District Court of Appeal held that when an insurer erroneously withholds a portion of a payment due, the insured is entitled to prejudgment interest on the amount not timely paid from the date the payment became due under the policy, not from the date the property was damaged. As I will explain at the end of the case summary, this case applies only to pre-2007 claims. On July 11, 2007, consumer friendly legislation took effect which would have provided Davide with a statutory right to interest from the date Sunshine received notice of the claim.

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Yesterday, we filed an amicus curiae brief on behalf of United Policyholders in the Florida Supreme Court. This type of legal argument is often called a “Friend of the Court” brief because it is not filed by a party to the lawsuit, but it is filed by a person or entity with an interest in the outcome of the case. In theory, amicus briefs provide courts with information needed to reach the right decision. Usually, amicus briefs address the public policy or state or nation wide effects of a legal decision, while the parties to the case focus solely on how the outcome will affect them.

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Suppose you were not such a good person and tried to pay less than you owed on several debts. There was a process to resolve those debts, and you repeatedly lost and eventually had to pay the debts. What would you do? Well, if you are Citizens Property Insurance Corporation and its Board of Governors, you change the rules, looking for a different resolution process to avoid paying the debt and the publicity of underpaying claims.

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At the Greater Delray Beach Chamber of Commerce Hurricane Seminar this morning, Brent Winans of the Plastridge Agency gave a fantastic presentation, "10 Ways to Get Ready for a Hurricane Claim in 10 Minutes." Winans holds the coveted CPCU designation and is Vice President of Risk Management Services.

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Governor Charlie Crist just vetoed HB 1171, which was euphemistically titled the "Consumer Choice Bill."

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I do not know why the State Farm Florida President would write a letter to Governor Crist telling him State Farm will remain in Florida if Crist signs the bailout bill. Of course it would. What a competitive advantage a few large insurers would have over the rest of the domestic competition.

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The Insurance Journal ran an article, Florida Domestic Insurers Urge Veto of 'Dangerous' Deregulation Bill, which indicates a significant portion of Florida's insurance industry opposes State Farm, State Farm agents, and the other big insurers trying to get a competitive advantage from this legislation. The article outlined many of the competing views and stated in part:

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I received an email from a right wing group that has ties to the insurance industry. It is a call to lobby Governor Crist to support State Farm's bailout legislation. Every consumer group I know of has called the bailout another giveaway to the insurance industry at our expense. But the insurance propagandists are still pushing their illogical arguments.

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Governor Crist has signed the flawed Surplus Lines Bill (HB 853) into law. The story was reported today by the Insurance Journal in an article, Gov. Crist Signs Florida Surplus Lines Regulation Bill:

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The issue whether Florida will join the majority of states recognizing an insurer's duty of good faith at common law is squarely before the Florida Supreme Court. In Citizens Property Ins. Co. vs. Louis Bertot, the Third District Court of Appeal noted the issue before it:

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One way to get cheaper rates is to buy an insurance policy that covers nothing. An article shows this is how the Florida legislature is tackling the insurance rate problem:

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The Texas Windstorm Insurance Association (TWIA) has a new operations plan and laws that affect it, assuming Governor Perry signs the legislation. The good news for TWIA policyholders is that the consumer protections of Chapter 541 are still in place. The bad news is that I predict rates are going to increase substantially.

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The Consumer Advocate for the Florida Public Interest Research Group,  Brad Ashwell, wrote a letter published in the Gainesville Sun calling on consumers to urge Governor Crist to veto the State Farm bailout legislation. He clearly explained how the bill will harm Floridians:

"The problem is that this bill would remove consumer protections by no longer allowing the OIR to protect Floridians from excessive or discriminatory rate hikes as Kevin McCarty and his office have successfully done time and time again.

If HB 1171 becomes law, major insurance carriers would not only be able to charge whatever they like, they would also be able to game the system by manipulating rates, quoting excessive premiums to coastal homeowners, then dropping those policies if they choose to so they can maintain and grow inland policies where there is less exposure. The lack of predictability this would create is exactly what we don’t need in a state with an already fragile and overstrained property insurance market.

And perhaps the most troublesome provision is that the bill would help further grow the surpluses of these larger insurers while preventing small Florida-based carriers from doing the same. In this way the bill aims to provide an unfair competitive advantage to larger companies by discouraging across the board competition with smaller carriers. This would ultimately harm consumers and businesses by fostering an insurance market offering fewer choices in terms of dependable insurers. It’s also important to recognize that there’s no guarantee these large companies will continue writing policies in Florida.

Rather than deregulating the market, which hasn’t worked out in the past, we should be working on policy goals that support a more competitive insurance market that provides consumers with more affordable options. In short, we need more Florida-based companies competing, not fewer large insurers who dominate the market, essentially holding homeowners hostage, charging any rate they choose."

He is right, and nobody disputes his facts. Proponents of the bill argue it gives consumers the “choice” to pay excessive rates if they want. The legislators who voted for the bill did so because of political pressure, without understanding the consequences, or because they like the incentives offered by insurance companies for their votes. Either way, the “choice” is just a way to justify this bad legislation.

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What happened to the time when a significant insurance coverage decision arrived and everybody in my line of work analyzed that topic for several years? Now, the insurance industry is writing so many new and differently worded forms, it is hard to rely upon case decisions as being of widespread significance. If a case decision is made which insurance companies want to avoid, they re-write the policy or the insurance industry lobbies legislators to change the statutory law "gaming" the insurance business to outcomes predetermined in the insurer's favor. Accordingly, I spend more time researching trends of politics. I also review insurance trade journals to contemplate how my policyholder clients may be impacted.

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Following up on Sunday's post, The Insurance Checklist--Insurable Interest and Address of the Risk, and while waiting for the politicians to decide how much our rates may go up in the following year, as indicated in yesterday's post, A Big Week for Texas and Florida Politics of Insurance, here are some cases that explain insurable interest.

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The Texas legislature has its hands full this week with an omnibus biill regarding TWIA. Florida Governor Charlie Crist has to decide whether to veto various measures regarding insurance legislation. Additionally, three federal bills were just filed which may impact the landscape of how insurance is made available and sold.

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The politics of insurance is tough for consumer champions. The insurance lobby has many faces and methods of forcing its position. In Florida, the dirty campaign against those governmental officials who stand up to State Farm and the big insurance industry has begun in earnest. Florida has one of the most respected insurance commissioners in the country, Kevin McCarty. Mike Bennett, a relatively unknown state Senator, is attacking McCarty simply because McCarty voiced the opinion that Bennett’s insurance “choice” bill would hurt Floridians.

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Amy Boggs has an interesting case against QBE Insurance Company which has recently moved from the contract portion of the case to the claims practice a/k/a Bad Faith case. The condominium client we represent is The Dorsett House Condominium Association which was damaged from Hurricane Wilma. QBE Insurance Company insured many condominiums in Florida and has been the subject of much criticism. It recently lost a trial where the verdict on the contract damages was over $20 million.

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Suppose some shingles on a roof are damaged, but not all. Does a policyholder get a hideous looking checkerboard roof which affects the value of the structure and possibly the neighborhood? If part of a carpet is damaged, is it patched leaving a new part slightly different looking in the middle of a room? Many of these issues never arise because many insurance companies pay to match, trying to maintain a happy customer. Some pay for only the damaged amount, and end up fighting with their customers.

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Since last May, just before we opened our Houston office, I have been reviewing and pondering causation and burdens of proof found in Texas insurance cases. While writing yesterday's post regarding sinkhole coverage cases, I came across two Florida cases that demonstrate Florida’s view that policyholders truly have minimal proof requirements coverage under all-risk property insurance policies. Texas insurance case law does not follow this majority view. I will explain how they are different in two posts. Today will focus on Florida law. Tomorrow, I will provide Texas case examples and some practical suggestions so Texas policyholders do not get surprised at trial. I figure the insurance company adjusters and attorneys do not need any more help, so they get no suggestions.

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I am an advocate for insurance policyholders. I am accountable to them. Our firm accomplishes the results they expect through a "can do" outlook, innovation and the timeless All-American mother of most success-- hard work.

I was imagining what it would be like to make a living as an insurance industry lobbyist. Lobbyists are usually lawyers or staffers that go by a title such as a "governmental affairs assistant." Some are the directors of various insurance trade organizations. Insurance companies measure their lobbyists’ accountability in a different way.

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Imagine if the only way politicians could raise campaign money was from the people who could vote for them. Until that happens, the insurance industry, which is among the strongest lobbying powers, will continue to influence otherwise well meaning public servants into making laws serving only insurers. Thank goodness there are a few independent consumer-centered public service groups with expertise to take on the sophisticated and well funded insurance lobbyists and their lawyers.

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The Florida Consumer Action Network (FCAN) has urged Florida Governor Charlie Crist to veto recently passed legislation that would allow insurers to raise rates without approval by the Office of Insurance Regulation. FCAN is probably Florida’s largest consumer action group. The Bradenton Herald quoted foes of the legislation who refer to the bill as "the State Farm bailout bill." I agree.

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Numerous newspaper articles have discussed this session’s bills which impact the insurance industry. The anti-consumer bill, which provides for deregulation of insurance rates, passed. I expect Governor Crist will veto that bill as was previously reported.

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Florida Insurance Commissioner Kevin McCarty is working tirelessly for fair treatment of insurance consumers. It is amusing that the Florida legislature may give into State Farm's bullying and even allow higher insurance rates, which McCarty says are unnecessary. Some of our legislators are pandering to State Farm and the Florida insurance industry by using the usual "word spin" games. Deregulating rates under the guise of "consumer choice" will simply lead to higher premiums.

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I wrote about surplus lines insurance companies in an earlier post, Surplus Lines Insurers, Sinkholes, and the Law of Mars. I explained how an attorney in our firm, Donna DeVaney, was able to get a favorable ruling in a sinkhole case involving a surplus lines policy due to a recent Florida Supreme Court case, Essex Ins. Co. v. Zota, 985 So. 2d 1036 (Fla. 2008).

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Most of the time, I battle large corporate insurers in David vs. Goliath like battles. I find it amusing that State Farm's attorneys are struggling in this fight, given State Farm’s enormous size and power. Today, State Farm's lawyers, lead by the very able Mark Delegal, are lobbying Florida's leaders on a very anti-consumer bill. This bill would allow State Farm to charge whatever rate it wants. Florida Governor Charlie Crist is reportedly prepared to veto such legislation.

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Surplus lines insurance companies are a different breed of insurance cat. They are not admitted carriers in the state in which they do business. Thus, most states have consumer protection laws specifically regarding how surplus lines insurance carriers can do business.

Surplus lines carriers are very important to the insurance marketplace. They will often insure the risks many admitted carriers find too risky or novel. For example, when a property owner buys surplus flood insurance or a complex Difference in Conditions policy, it is often sold through the surplus lines market.

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Free enterprise is great until your competitors beat you. Dominant competitors may find it advantageous to combine interests to prevent new players from entering markets, destroying profit margins, and taking market share. It is amazing that there has not been more investigation and calls for transparency into the major personal lines insurance companies’ discussions and agreements which may reveal such a conspiracy. While anti-trust exemptions exist for insurance companies regarding sharing of loss data for rate making and other rate or form issues, there are no anti-trust exemptions for agreements that otherwise restrain trade and competition through collusion.

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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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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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The agenda for the first Citizens Mission Review Task Force meeting this Friday is as follows:  Tampa Airport Marriott, Tampa International Airport, Tampa, FL Friday, October 10, 2008 Meeting: 10:00 am - 4:00 pm Conference Call Dial-in: 1-866-855-4989

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Alex Sink may have been very wise to have paid Warren Buffet so much money for an option to have ready access to money if a major hurricane hit Florida.  (She paid Berkshire Hathaway $224 million for the option of borrowing $4 billion this hurricane season).  A recent St. Petersburg Times article highlighted the problems facing Florida should a major hurricane hit.  The bottom line is that the State could float bonds backed and paid for by every Floridian to cover the shortage of money to pay claims, but there are no of buyers to purchase them. I do not see this topic on the Agenda of the Citizens Mission Task Force for this Friday. I am certain it is a major concern for all and will come up. I am happy we are another week into October. Historically, the most severe hurricanes are over by now, as the waters start to cool and wind shear from the north becomes stronger. Let's hope a late hurricane such as Wilma or Opal does not visit us this year. I truly do not know if we can afford it.

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Just when the lights are turned back on, roads cleared and the messes cleaned up from Tropical Storm Fay and Hurricane Gustav, here come the next two platinum hits on the 2008 Storm Charts. Tropical Storm Hanna cannot seem to figure herself out.  She will likely move along the Carolinas and up the Atlantic Coastline. Hurricane Ike is very, very troubling.  Already a category 4 hurricane, Ike is aiming for South Florida--the worst possible place to come ashore.  A category 4 hurricane that hits Dade or Broward county will cause unprecedented property loss.  Moreover, it would be a financial catastrophe to the state of Florida, as the legislature agreed to underwrite the hurricane insurance policies. I pray Ike goes elsewhere, and it is a long way from land. However, the initial models look bad.  Insurers and policyholders should prepare and plan for the logistical needs in the aftermath of what could be one of natures worst storms.

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Allstate Insurance Company fought the law in Florida -- and the law won. After Allstate and its lawyers thumbed their noses at the Florida Office of Insurance Regulation's requests for documents and information earlier this year, Florida insurance regulators prohibited Allstate from offering new policies in Florida.  For anybody who watched the proceedings or saw the hearing on videotape, it was a disgusting display of corporate arrogance.  Allstate delayed and simply refused to provide answers to regulators, even though it was legally obligated to do so. 

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The Tampa Tribune ran an editorial in today's paper regarding the forty-seven percent average rate increase request made by State Farm. Many editorials are not very helpful. This one is on point and I hope that our government leaders are paying attention. Here is the editorial in its entirety:

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When will our legislature learn not to trust insurance executives and, especially, their lobbyists?  Maybe when we vote insurance-beholden legislators out of office. The Tampa Tribune, St. Petersburg Times and Miami Herald ran front page stories regarding State Farm's administrative request for an average rate increase of 47%.  At first I thought it was a mistake, until all three papers reported the same increase and the St. Petersburg Times indicated that some increases for existing rates could be 91%.

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Some of the interesting changes in the public adjuster trade are the increased requirements to obtain and maintain a license.  This past legislative year, the Florida Association of Public Insurance Adjusters (FAPIA) lobbied for and obtained an apprentice period as well as specific continuing education requirements for public insurance adjusters.  Some may be surprised that FAPIA pushed for this legislation, but there was an obvious need for it.

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The Tampa Tribune and St. Petersburg Times ran front page articles regarding a surcharge being made to all policyholders in Florida.  The cost for a typical policyholder with a $1,000 to $1,500 premium is $30 to $40. This morning I spent nearly $90 to fill my car's gas tank.  Not that long ago, it cost about $60.  So, to put that insurance surcharge in perspective, many of us pay the same additional amount as the annual surcharge every week or so when we fill our gas tanks. The story did not deserve front page coverage.  What does deserve to be on the front page is an article informing people what the assessment would be if a Hurricane Katrina struck Miami, Ft. Lauderdale or Tampa.  The assessment would be hundreds, even thousands, of dollars tacked on to every auto, boat and homeowner's policy.

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Kevin McCatry, of the Office of Insurance Regulation, announced that six fairly obscure insurance companies have taken the insurance for 100,000 risks which were previously underwritten by Citizens Property Insurance Corporation.  The good news for consumers is that their new insurance carriers are insuring them for the same or better coverage and for the same or better price.  What a deal!!  Or is it?

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Tropical Storm Arthur starts off the 2008 hurricane season with some early inning excitement.  In my line of work, I am always asked during the summer months how many hurricanes there will be and where they will hit.  The newspapers are full of stories from meteorologic prognosticators regarding these events.  I simply reply it is a guess:  the odds are a major hurricane will form in the Gulf of Mexico and there may be an Atlantic Coast hurricane as well.  The truth is nobody knows. But the fact that nobody knows does not mean that you should not be vigilant, especially along the Gulf Coast areas in June and July. 

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 Capitalism and economic venture are alive and well in the Florida insurance market.  The Florida Underwriter reported this month that over 1.7 million policies have been written by new insurance companies since the 2004 hurricane season.  As Allstate, State Farm and Nationwide retreat from the Florida property insurance market, these new insurance companies are accepting risks that would otherwise end up with Citizens Property Insurance Corporation.

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 June 1st starts another hurricane season.  USA Today quoted the Climate Prediction Center as saying, "there's no reason to think that break [from hurricanes over the past two years] will continue."  In short, they think the probabilities are good (or bad, if you think about it) that a few times this year somebody, somewhere, is going to get whacked along the coastal areas. There are several things people and businesses should do now to prepare and then to remember as the season progresses. 

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Allstate Insurance Company has reportedly canceled or non-renewed more than 500,000 Florida property insurance policies over the last five years.  The decision to cut those policies was made by Allstate management.  Where were the insurance industry spin and propaganda people--often referred to as "spokespersons" of various insurance industry trade associations--to say that the victims of that decision were Allstate agents? The decision to raise the remaining Allstate policy rates an average of over 40%, after promising much lower rates to Florida government officials, was made by Allstate management. 

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 It's about time.  For a decade, Allstate has refused to comply with discovery and court rules regarding its internal documents which demonstrate who, how and why Allstate redesigned everything in its claims program to simply pay less on claims. The Florida First District Court of Appeal issued an opinion which condemns many of the tactics Allstate and its attorneys have long used to thumb its nose at judges. 

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Florida Chief Financial Officer Alex Sink has claimed that the recent legislative session was favorable to consumers of insurance.  It was, but it left a lot to be desired. While not noted as significant legislation, Senate Bill 2860 contains a renewed agenda concerning Citizens as a primary insurer versus an insurer of last resort.  Private market advocates should be happy to see a commission has been established to study this.  Personally, I think this is good and Florida should try to keep out of the insurance business as much as possible.  "Free enterprise" is important and while government has a significant role regulating insurance, there is a definite difference between being the regulator and the government being the operator. 

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Florida newspapers (Tampa Tribune, St. Petersberg Times, Sun- Sentinel) reported on the recommendations of the Florida Senate Select Committee on Property Insurance Accountability, a committee formed in response to the insurance industry misleading Governor Crist and the Legislature about rates during last years legislative session.  Because of these misrepresentations Florida provided under-market prices for reinsurance and assumed greater risk in the event of a hurricane in return for lower rates.  The insurance industry then raised rates after getting the favorable legislation. The letter from the Committee to Senate President Ken Pruitt contains significant and progressive recommendations to help consumers.  A memorandum also indicated that the work of the Committee was not done and that the Select staff would be working with standing committees to help shape legislation protecting consumers. Finally, there appear to be some serious and well conceived changes to help insurance consumers.   The big insurance lobbyists were not pleased, and that is usually a sign that something has been done to help the insurance customers -- all most large insurers seem to care about is return on investment, even dishonorably like they did last year.  Even our governmental representatives have learned that you cannot trust big insurance.

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Allstate Insurance Companies are being called before the Florida Senate Select Committee to testify today and tomorrow regarding a number of issues, especially its rate filings.  I have publicy applauded this inquiry and those interested can read the Committee's filings on the internet. The issues are a little broader than just rates.  The letter to Allstate from Senators Atwater and Geller list claims history and profitability factoring.  I expect that the Core Claims Process Re-Design documents and processes will again be a matter of inquiry. The hearing should be interesting because something like this has never occurred.  Public inquiry with extensive press coverage regarding an insurance company's honesty of its operations is something that should have occurred long ago.

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 The Tampa Tribune reported Friday that the Florida Department of Insurance is seeking McKinsey & Company consulting reports which are allegedly tied to an Allstate plan to underpay claimants.  These documents are at the heart of contention in a Colorado case where Allstate is being fined for not providing them, and also in a Missouri Department of Insurance investigation where Allstate is being fined $25,000 per day for refusing to cooperate with the state regulator's investigation.  I am seeking similar documents in an Indiana case in which Allstate has been already sanctioned and ordered to provide them. For over a decade, I have criticized Allstate's reliance on a claims program which appears to unethically calculate the value of an individual's bodily injury claim and not honestly disclose how Allstate arrived at its determination.

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Allstate and other insurers are notorious for not complying with discovery seeking internal corporate documents which would expose corporate culture in bad faith cases. From the news yesterday and today, it appears the Florida Department of Financial Services has learned the same lesson most policyholder attorneys have known for quite some time.

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 A year ago the news from Mississippi largely concerned insurance claims practices, trials, and significant settlements. Except for the recent article of our firm's settlement of twenty two cases against State Farm, the media focus has been on alleged corruption of some policyholder attorneys, especially Dickie Scruggs. Insurance industry leaders must be smiling because this news coverage has completely derailed efforts for meaningful claims practice reform and protective legislation for policyholders.

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In January 2007 Governor Charlie Crist announced that Citizens was going to compete with private insurance companies. More recently however Citizens announced that it plans to give away a huge book (173,000 customers) of its business to other insurance companies; this seems a strange method of competing.

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Playing before, and up to, an insurance industry crowd, former Florida governor Jeb Bush lobbed criticism at a solution to a problem he helped create. The problem is high insurance premiums and Florida's vulnerability to financial calamity if confronted with a Katrina type of event. It seems ironic that he can make money giving speeches about a mess he let come about. It seems even more ironic that the group he gave the speech to, the National Association of Mutual Insurance Companies (State Farm is a mutual insurance company), would give its "State Legislator of the Year" award to one of the most prolific anti-consumer legislators in Florida, Don Brown.Let's set the record straight, the hurricanes of 2004 and 2005 occurred while Jeb Bush was the Governor of Florida. He and the leadership of Florida allowed insurance companies to cancel and non-renew insurance policies at an escalating rate prior to Hurricane Charley.

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In an interview with Victoria Langley, Alex Sink, Florida's Chief Financial Officer, weighed in on what she believes went wrong with Florida's insurance reform plans.  Part of the reform involved lawmakers putting an additional $12 billion dollars of taxpayers' money into the states Catastrophe fund. This was supposed to allow insurance companies to reduce rates; however, we're not seeing any real significant rate decreases. As a matter of fact, many companies have filed for rate increases.

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Following the passage of recent insurance legislation, I wrote an op-ed piece for the St. Petersburg Times noting that Floridians are now a Hurricane Katrina away from financial disaster. Recently, the St. Petersburg Times and Miami Herald have run stories finding that our elected politicians have also come to the same conclusion. 

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CFO Alex Sink and Governor Charlie Crist are still new to their elected jobs; this was obvious from statements made by Sink in her interview with the Miami Herald. In one statement, she astonishingly relates that it wasn't until last month, while driving along Ft. Lauderdale's Condo Canyons, that she realized how vulnerable Citizens Property Insurance Corporation and its insureds are in the event of a significant hurricane. She and Crist, among others, are clearly annoyed that the hopes for lower insurance rates have not materialized and are calling for an explanation and investigation.

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Two weeks after Alex Sink was sworn into office as Florida's new chief financial officer, lawmakers embarked on a 10-day special session to come up with ways of lowering insurance rates and providing some respite for the state's beleaguered homeowners. "I was still trying to find the ladies room," recalled Sink during an interview with the Miami Herald last week. The end result of the special session was the expansion of the Florida Hurricane Catastrophe Fund to $28 billion, allowing insurers to buy less expensive back-up insurance. This special session, in conjunction with more recently passed insurance legislation expanding Citizens, came with promises of savings to policyholders, with rate cuts averaging 20 percent or so.  Six months later, the promised savings have not materialized -- as a matter of fact in recent weeks atleast five homeowner insurance groups have filed requests for rate increases.  With more requests for rate increases inevitable, Sink, Crist, and other state officials are left questioning the viability of Florida's plan to reduce property insurance premiums.

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It was recently reported by Paige St. John that the Florida Department of Financial Services is not keeping complete copies of consumer complaints (civil remedy notices) and insurance company responses. Instead, the Department's legal staff has determined that according to section 624.155 of the Florida Statutes they are only required to maintain two documents.  One is the civil remedy notice and the other is the report of the disposition.  Any other documents received (i.e. attachments, responses, etc.) are not part of their statutory duty pursuant to the Florida Sunshine Records laws or section 624.155 to be retained and are being discarded. Legal counsel having differing opinions about how to interpret the law is not new.

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Florida Farm Bureau Casualty Insurance Co. issued a homeowners insurance policy to the Coxes. The policy excluded any losses caused, either directly or indirectly, by flood or water damage of any kind.  The Coxes' home sustained extensive damage caused by Hurricane Ivan and was determined to be a total loss due in large part to flood damage and in lesser part to wind damage. The Coxes demanded coverage, and Florida Farm tendered $12,000 for the windstorm damage. The Coxes declined the payment.

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June 1st was the first day of hurricane season and already the Florida Coast has been hit by its first tropical storm (Andrea).  If predictions from NOAA are correct we are in store for a very busy 2007 hurricane season and preparedness is at the forefront of everyone's minds. Governmental entities throughout the Gulf Coast are making final preparations for implementation of catastrohe plans. In Florida, many are taking advantage of the State's sales tax holiday and purchasing various and sundry items in preparation for the hurricane which may never come. Many policyholders are reviewing their policies to make sure that they have adequate coverage and worrying about what would happen if a Katrina event struck close to home. Last week, a long time client with a nearly $70 million property called regarding a major problem; the property budget would not allow them to purchase enough coverage, including code upgrade coverage and excess flood coverage. They could afford one or the other, but not both.

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Facing criticism for thousands of 2004 and 2005 hurricane claims still open, Citizens Property Insurance seeks to rein in the lawyers and freelance adjusters it alleges are whipping up disputes in order to pocket large fees. Chip Merlin, of the Merlin Law Group, warned against limiting the rights of homeowners to contend with what he said are ''statistical issues'' at the state's largest property insurer.  Read more... Is this part of Citizen's ongoing effort to improve policyholder and applicant services?

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Insurance is a business based on trust. If the public does not trust that you will pay claims promptly and for what is owed, your business will flounder.  Fair value assessments and prompt payments aren't just expected by policyholders - they are required by every State insurance code. How this is going to happen is rarely open for public debate. Until now. Citizens Property Insurance Corporation is no longer an insurance company under Florida law. It acts like one, is subject to most of the insurance code, but it is the creation of the government and is the government....whatever that means.

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A Broward County Court has approved a class action settlement on behalf of more than 12,000 State Farm Insurance policyholders in Florida who will receive 100 percent of the damages they requested in a $6.8 million settlement of claims filed last year in which they alleged the insurer refused to pay replacement costs of screen enclosures damaged by Hurricanes Katrina and Wilma, attorneys for the plaintiffs announced. Read more....

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