Hurricane Irma powers sharp increase in lawsuits
Article Courtesy of The Orlando Sentinel
May 10, 2018
Lawsuits against property and casualty insurers with
the largest market shares in Florida increased sharply in the first
quarter of 2018 compared with the same period last year, and Hurricane
Irma claims are to blame, insurers say.
The top 20 property insurers in Florida,
as ranked by policy count, were served with 10,933 suits
between Jan. 1 and March 31. In the same quarter last year,
those same insurers were sued 6,768 times. This year’s total
was a 61.5 percent increase, according to a Sun Sentinel
analysis of pending suits entered by attorneys into the
Florida Department of Financial Services’ Legal Service of
Increased costs to insurers from the suits won’t affect
rates for hurricane insurance this year but could impact
them next year, when insurers negotiate reinsurance
contracts based in part on total losses from the September
2017 storm, the president of a large Florida-based insurer
Fort Lauderdale-based Universal Property & Casualty Co., the
state’s largest insurer, saw the largest increase both by
overall numbers and percentage — from 1,095 suits in January
through March 2017 to 2,829 during the same period this year
— a 158.4 percent jump.
Insurance companies send settlement checks to
Hurricane Irma victims with string attached.
Universal spokesman Travis Miller attributed the
increase to Hurricane Irma, noting the company has received nearly
80,000 Irma claims overall, including many from Palm Beach, Broward and
“In terms of the percentage increase for [Universal] compared to other
insurers, we cannot speak to other insurers’ situations but an important
consideration is that [Universal] has continued to serve the residents
of South Florida by consistently writing policies in that area,” Miller
said in an email statement.
Universal has aggressively increased market share in South Florida over
the past two years while numerous companies, citing losses from claims
abuses and increased litigation, have redlined parts or all of the
Suits against state-owned Citizens Property Insurance Corp., the second
largest insurer, increased 32.5 percent — from 2,323 to 3,078 — between
the first quarters of 2017 and 2018.
Irma claims accounted for nearly 58 percent of all new lawsuits against
Citizens filed between Jan. 1 and Feb. 28, the company reported at its
Board of Governors meeting on April 11.
Of the 1,266 Irma-related claims filed against Citizens in January and
February, 59 percent challenged the company’s decisions about the scope
of damages, asserting that the amount of money paid to restore
homeowners to their pre-loss conditions was inadequate.
About a quarter — 23 percent — of the suits against Citizens challenged
the company’s determination that it owed the policyholder no money
because the value of the loss did not reach the hurricane deductible.
And 15 percent of the suits against Citizens challenged the company’s
denial of responsibility for the claim.
Jimmy Farach, president of the Florida Association of Independent Public
Adjusters, blamed insurers for the increase in Irma-related lawsuits.
“We have received reports from our members, statewide, about too many
Floridians still waiting to receive full and fair settlements for
Hurricane Irma claims,” he said by email. “This should be of particular
concern with hurricane season less than one month away.”
Statewide, Florida property owners filed 924,439 claims related to
Hurricane Irma, with estimated insured losses of $8.6 billion, state
records show. But 105,918 claims remained open on April 4.
An analysis of lawsuits against Tampa-based Homeowners Choice Insurance
and eight of its competitors, compiled by Homeowners Choice, showed that
new Irma suits exceeded the number of new non-Irma suits in six of the
nine companies in March.
Company president Paresh Patel said a majority of suits against his
company stem from disputes over roof damage. Some, he said, were likely
generated by contractors or attorneys who canvass neighborhoods and urge
homeowners to reopen Irma claims that had been closed.
At Homeowners Choice, the increase in Irma suits corresponded with a
decrease in suits related to “Assignment of Benefits,” an affidavit that
gives contractors the power to invoice and sue insurers while standing
in policyholders’ shoes, Patel noted.
Citizens’ chief financial officer, Jennifer Montero, on April 11
acknowledged that the majority of lawsuits against Citizens has
“shifted” to Hurricane Irma, but company spokesman Michael Peltier said
it’s too early to know whether AOB suits would increase again after the
Irma suits recede.
Patel expects the number of Irma suits against his company to peak late
in the second quarter or during the third quarter of the year, he said.
If the increase in Irma suits affects rates for wind insurance the way
AOB suits have driven up costs for all-perils coverage over the past two
years, policyholders won’t feel it until the summer of 2019, Patel said.
Higher costs from the lawsuits this year would be reflected in rates for
reinsurance — which is insurance that insurance companies must buy to
ensure they can pay claims after a catastrophe — by June 1 of next year,
Irma sparks increase in lawsuits against largest insurers between first
quarters of 2017 and 2018:
(Ranked by number of policies in Florida)
1. Universal Property & Casualty: 1,095 to 2,829 suits — 158.4 percent
2. Citizens Property Insurance Corp.: 2,323 to 3,078 — 32.5 percent
3. Security First Insurance: 233 to 584 — 150.6 percent
4. American Integrity Insurance Co.: 300 to 442 — 47.3 percent
5. Federated National Insurance Co.: 215 to 374 — 74 percent
6. Heritage Property & Casualty Co.: 552 to 607 — 10 percent
7. American Bankers Insurance Co. of Florida: 19 to 31 — 63.2 percent
8. United Property & Casualty: 220 to 484 — 120 percent
9. St. Johns Insurance Co.: 125 to 192 — 53.6 percent
(Size unknown) State Farm Florida: 171 to 227 — 32.7 percent