In May, Universal Property & Casualty was fined 1.26 million dollars after an extended market review found new and repeated statutory insurance violations. Although Universal initially challenged the fine, a consent order was signed last week and Universal says it will pay, and has reportedly agreed to change its business practices. Nearly 300 denied claims will be reevaluated, according to Insurance Journal.
Based on the State’s market investigation, it appears as if most of these denials were based upon post-loss or post-claim underwriting. Universal has frequently alleged application misrepresentation as a basis to deny claims. The application issues were not raised by Universal until the policyholder filed a claim. However, judging from the clients we have helped and the evaluations that have been made public about Universal, it appears that many of the allegations of "application lies" stemmed from certain background questions that Universal accused claimants of misrepresenting relating to applicants financial condition.
Many of the material misrepresentation allegations by Universal that I have reviewed focus on two financial application questions. These questions are listed in the Background Section of the standard Universal form application. Below is a sample from an application excerpt.
- Has any prospective insured had any bankruptcy in the past 60 months?
- Has any prospective insured been subject to any lien in the past 60 months?
- Has any prospective insured been subject to any judgments in the past 60 months?
- Has any prospective insured had any voluntary repossession in the past 60 months?
- Has any prospective insured had any involuntary repossession in the past 60 months?
- Has any prospective insured been convicted of a felony in the last 10 years?
- Has any prospective insured had his or her driver’s license suspended in the last 5 years?
- Has any prospective insured ever been involved in a 1st Party Personal Lines lawsuit against an Auto Insurance Company or a Homeowners Insurance Company?
- Has any prospective insured ever been arrested for driving under the influence of alcohol or some other illegal substance, assault or battery or disorderly conduct in the past 10 years?
- Does any prospective insured have or intend to have any dogs on the premises?
It is these questions Universal would look into after an insured filed a claim.
After applying for insurance and paying premiums, often times being insured for 2-3 years, the policyholder would suffer a loss and receive a denial letter that stated the policy was being voided. Included within the letter was a refund of the policy premium payments. Sometimes Universal would also include the basis for the denial.
What evidence did Universal Use to Deny Claims?
Public Records. That’s right, many insureds in Florida who suffered a claim with Universal would be sent the denial letter attaching a public record that Universal relied upon to say that an applicant had not been truthful about a debt. The documents were filed judgments or liens that were pulled from the county records and pre-dated the application. That begs the question, why didn’t Universal pull these public records when it was doing the underwriting of the claim? After all, the underwriting period is a time when an insurance company is supposed to be evaluating the risk and exposure it will have if it binds coverage. These financial public records were available at the time of the application but Universal waited to use these documents against the insureds as a way out of paying claims.
Universal Didn’t Care if Your Finances Were in Order
Judgments and liens that were satisfied or withdrawn years before the application was filled out were still used by Universal to deny claims. This is exactly what happened to our clients, who were featured twice in the Palm Beach Post about their fire loss. Most recently, their front page picture made news on Monday.
Universal is Still in the Money – It Just Raised Its Rates
According to MarketWatch, the Fort Lauderdale-based company, (NYSE: UVE), which owns Universal Property & Casualty Insurance Company, had a profit of $17 million, up from a profit of $7.8 million in the same quarter a year ago. That was its highest quarterly income since 2007. Its earned premiums grew by 20 percent.
Universal got approval to raise homeowner insurance rates for its more than 540,000 members in Florida by 14.1 percent in February.
"With underwriting margins continuing to improve and a significantly better investment portfolio performance, we were able to more than double earnings over the second quarter of last year," Universal Insurance Chairman, President and CEO Sean Downes stated in a news release.
The company recently leased a new office building in Fort Lauderdale and holds a $6 million purchase contract on it.
How will Universal Remedy it Wrongs?
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