State legislatures hold special session on rising insurance rates as homeowners across Florida face skyrocketing costs.
Harry Appel, sued insurance company: “I was shocked because I couldn’t believe there was nothing left of a concrete house.”
Harry and Jennifer Appel’s home and bed and breakfast were completely destroyed when Hurricane Irma hit Big Pine Key.
Jennifer Appel, Insurance Company Sue: “I knew we had insurance, and I thought we had good policies.”
They had flood and storm, their flood carrier immediately paid the full damage. Storm…
Jennifer Appel: “They just made us spooky.”
The Appels spent months emailing and calling to get their carrier to look at their claim. They had no choice but to file a lawsuit.
Jennifer Appel: “You’re desperate, aren’t you? You are just, you have no place to live. You don’t know – you know – your business has been closed for two years, your house is gone, and they’re just jerking around.”
And they are not alone. Insurance payment litigation is big business in Florida.
The Office of Insurance Regulation says while we account for only 8% of homeowner claims in the state, Florida has 76% of property insurance claims.
dr Charles Nyce, FSU: “The cost of property insurance fraud in Florida is huge right now.”
The insurance expert Dr. Florida State University’s Charles Nyce says the costs of litigation and fraud are prohibitive for insurance carriers.
dr Charles Nyce: “We had a very fragile property insurance market and now we are seeing these companies go bankrupt. We’ve lost four companies so far this year, in 2022. This is in addition to the eight or nine companies that have now announced they will stop writing new policies in the state of Florida.”
And suing insurance companies is big business. State-owned citizens have spent nearly $406 million on legal fees since Hurricane Irma struck in 2017.
Other insurers say their numbers are about the same, which is why prices are rising.
Florida Peninsula’s Stacey Giulianti: “Eighty percent of that is litigation costs, which insurance companies in the state of Florida have paid $12 billion to trial attorneys over the past eight years. None of that money went to consumers.”
Stacey Galanti is Chief Legal Officer at Florida Peninsula Insurance Company. He says some lawsuits are justified, but many are outright frauds.
Stacey Galanti: “The problem is when a public adjuster or an attorney or someone files a claim a year or two years, three years after the incident and there’s all that damage and now we have no possibility or just a big possibility more difficult to prove whether it happened or not.”
And Galanti says that under Florida law, attorneys are guaranteed a paycheck because the insurance company has to foot their bill as long as they get something back on behalf of their clients.
Stacey Galanti: “In one case it was maybe worth $20,000 or $30,000. Attorney fees could be over $1,000,000.”
Citizens fought back, actually suing a Miami law firm for racketeering and winning. The company agreed to pay Citizens $1 million in a settlement.
The company said that if left unchecked, the fraud scheme would have cost policyholders $16 million a year, and that’s the bottom line for insurance companies.
Stacey Galanti: “The amount of cost that’s going out, particularly in relation to this whole explosion of litigation that’s really causing all the problems, is economically the same: a Category 3 hurricane that hits the state every year.”
Insurers want lawmakers to scrap the law that guarantees lawyers get paid even if they lose.
Stacey Galanti: “It has been widely abused and until that changes the cost will continue to rise.”
But dr Nyce says that probably won’t happen.
dr Charles Nyce: “You know, consumers need redress, and it shouldn’t be something that’s prohibitively expensive for those consumers.”
As for the Appels, it took two engineers, several appraisers, and a lawyer to get their insurance company to pay.
Harry Appel: “So it ends up costing them more money. If they had just paid us for a complete disaster in the beginning, we would have made it, wouldn’t have gotten this far.”
Lawmakers plan to address the insurance issues later in the week along with roof issues. There are currently laws in place that say if your roof is under 15 years old an insurance company can’t deny you if the roof is in decent condition and if your roof is over 15 years old you can still deny it to get insurance coverage if an inspector finds you have five good years of life left you can still be insured.
The Senate has referred this to a committee and the House of Representatives will bring it to its Tuesday morning session.
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