Consumer advocate challenges insurers on water
Article Courtesy of The Sun Sentinel
October 21, 2015
Florida's new insurance consumer advocate wants
property insurance companies to produce data to back up their statements
about rising water damage claims in South Florida.
Sha'Ron James, who took over the statewide position in August, told
participants at a public workshop Tuesday that she has asked the top 15
insurers to document their assertions that non-weather-related water
damage claims from South Florida are spiraling out of control.
"My hope is within 30 days, we'll have data to find
out whether what the insurance companies are saying about water loss
claims is actually happening," James told a group of residents at the
Fort Lauderdale Commission Chambers.
Citizens Property Insurance Corp.
this fall blamed inflated damage claims and lawsuits
over the claims for the company's decision to raise
premiums in the tri-county area in 2016 while most
policyholders in the rest of state will see decreases.
Complaints from insurers have been growing over the past
three years and have become a contentious issue in the
Insurers say attorneys, repair
companies and public adjustors, mostly from Miami-Dade
County, are encouraging homeowners to submit water
damage claims and sign over the benefits of their
insurance policies. The attorneys and companies then
inflate the damage claims and sue insurers for thousands
of dollars more than the claims are worth, insurers say.
Sha'Ron James, Florida's newly appointed consumer
insurance advocate, addresses residents at a community forum at
Fort Lauderdale Commission Chambers.
Some damage repair companies, attorneys and public adjusters counter
that insurance companies too often delay investigating claims, then
offer to pay much less than the cost to make proper repairs.
Legislative bills have been introduced over the past three years to
restrict homeowners' rights to sign over their property insurance
benefits, but died in committees as trial attorneys and their allies
questioned whether the restrictions would stand up in court.
James and state Sen. Maria Sachs, who hosted the workshop, predicted
that more bills would be introduced on the issue at next spring's
Officials of Citizens this month said they're developing a campaign to
encourage policyholders to call Citizens first — and not a third party —
when reporting a claim. Citizens might also ask the state legislature to
pass a law requiring policyholders to choose from a list of pre-approved
repair firms. Spokesmen for statewide associations of trial attorneys
and public adjusters said they opposed such a law, arguing that
policyholders should have the right to hire anyone they choose to repair
Citizens, the state's largest property insurance company with 573,000
policies in September, received a letter from James' office on Oct. 6
seeking total number of claims and non-weather water damage claims for
each of the past five years as first reported by policyholders,
attorneys, public adjusters and contractors. The letter also asks how
many claims resulted in lawsuits and how many were reported to the
company's fraud investigators.
In an interview last week, James said she didn't know why insurers
haven't already produced their own analyses to support their
contentions, adding, "It's impossible for us to craft a policy to fix
the problems without having the data to support it."
At the workshop, Claude Hanuschak, a member of the Florida Association
for Insurance Reform, said he believes some water damage repair
companies are abusing the system, rather than committing fraud.
He called for repair companies to be licensed by the state and he
proposed setting specific fees for cleanup-related tasks that the
companies would have to accept.
But Mike Prempin, a Fort Lauderdale public adjuster, said fee schedules
are common in the industry but are often manipulated by both sides. In
addition, an increasing number of insurance companies try to save money
on claims by forming their own repair companies staffed by $10-an-hour
employees "who don't necessarily do the best work," Prempin said.
Charles Stephens, a marine insurance adjuster, said insurance companies
could save money and guarantee quality work by posting detailed
descriptions of damages online and solicit repair companies to bid on
James, who spent three years overseeing liquidation of failed insurance
companies for the state Department of Financial Services, was in South
Florida to meet with insurance customers prior to conducting a public
forum in Tallahassee on Thursday on the issue of excessive medical
She also attended a reception in Palm Beach Gardens on Monday night and
was scheduled to convene another workshop Tuesday afternoon in Delray