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 lawsuits 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.
Increased costs to insurers from the lawsuits won't affect rates for hurricane insurance this year but could affect them next year when insurers negotiate reinsurance contracts based in part on total losses from the September storm, the president of a large Florida-based insurer said.
Fort Lauderdale-based Universal Property & Casualty Co., the state's largest insurer, saw the largest increase in lawsuits -- from 1,095 suits in the first quarter of 2017 to 2,829 during the same period this year -- a 158.4 percent jump.
Universal spokesman Travis Miller attributed the increase to Hurricane Irma, noting the company has received nearly 80,000 Irma claims overall, including many from Broward, Miami-Dade and Palm Beach counties.
"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 tricounty region, refusing to issue policies on property there.
Suits against state-owned Citizens Property Insurance Co., 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 filed against Citizens between Jan. 1 and Feb. 28, the company reported last month at its board of governors meeting.
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 Public Insurance Adjusters, blamed insurers for the increase in 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 as of April 4.
An examination of lawsuits against Tampa-based Homeowners Choice Insurance and eight of its competitors by analysts from Homeowner's Choice showed that new Irma-related lawsuits exceeded the number of new non-Irma suits in six of the nine companies in March.
Company President Paresh Patel said a majority of lawsuits 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-related 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 had "shifted" to focus on Hurricane Irma, but company spokesman Michael Peltier said it's too early to know whether assignment-of-benefits suits will increase again after the Irma-related suits recede.
Patel expects the number of Irma-linked 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 lawsuits affects rates for wind insurance the way assignment-of-benefits 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. That's when higher costs from the lawsuits this year would be reflected in rates for reinsurance -- insurance that insurance companies must buy to ensure they can pay claims after a catastrophe -- by June 1 of next year, he said.
Business on 05/09/2018