Florida’s Citizens to Lawmakers: AOB Reform is a Must

Florida lawmakers can expect substantial pressure to tackle the assignment of benefits (AOB) and water loss claims crisis from the state’s insurer of last resort when Florida’s legislative session begins early next year.

At a governing board meeting Wednesday, leaders of Citizens stressed that rising water claims and “out of control” litigation are threatening the insurer’s long-term financial stability and will stifle efforts by Citizens to offer premium breaks to policyholders in 2017

The company said that barring significant changes, including possible legislative action on assignment of benefits, non-hurricane losses will continue to chip away at Citizens‘ reserves and could result in policies returning to the state’s insurer of last resort as private insurers face similar challenges.

“Without significant reform, litigation, water claims and AOB pose a serious threat to the financial position of Citizens,” said Chris Gardner, chairman of the Board of Governors. “This is not a sustainable situation.”

Citizens plans to make AOB reform its 2017 legislative priority, the company said


Property Insurance & The Cost To Protect Property

The second largest home insurance company in Florida would have asked state regulators to raise premiums by 25 percent if it could have asked for a hike that big. Citizens Property Insurance, instead, wants regulators to okay an average increase of 8.2 percent.

“What we needed was 25 (percent),” says Citizens CEO Barry Gilway.

The property insurance company is backed by state taxpayers. Under state law, it can’t hike annual insurance premiums by more than 10 percent. South Florida homeowners with Citizens insurance will see their annual premiums for their regular homeowner’s coverage go up between seven percent to almost 10 percent, depending upon where they live.

Still, Gilway says, “We are under-pricing the risk in the tri-county area today, and we are under-pricing it by 15, 16, 17 percent.”

AOB, Not Storms

After a quiet decade, Florida has been hit by four hurricanes in the past two storm seasons. Two have been major storms; Irma in 2016 and Michael in 2017. But, Gilway says, “The latest round of premium increases(is) not coming as a result of Irma or Michael, or natural disasters.”

Assignment of benefit allows a homeowner to sign over any insurance claim to someone else, usually a contractor fixing your problem or a lawyer. They then deal with the property insurance company and argue about the claim, oftentimes in court. The Florida Office of Insurance Regulation has found those assignment of benefit claims that wind up in court are 85 percent more expensive to settle than insurance claims that don’t involve an assignment of benefit.

A decade ago, these lawsuits numbered in the few hundred. Now there are thousands of these cases.

“I’ve been quoted as saying ‘many of these claims are mined and manufactured,'” says Gilway.

Supporters of the assignment of benefit practice say it helps even the playing field between homeowners and deep-pocketed and legally skilled insurance companies, and it can help get a problem fixed faster.

Citizens says almost half of the insurance claim lawsuits filed against it come from customers with claims who hadn’t complained before proceeding with legal action.

Efforts to reform the assignment of benefit system in the past five Legislative sessions have failed, but Gilway thinks this legislative session will be different. “The numbers are so compelling and the rate increases by so many companies are so dramatic that we finally got the attention of key legislators.”

Editor’s note: Citizens Property Insurance is a sponsor of Florida Public Radio and the Florida Public Radio Emergency Network. WLRN is a member of that network.

Original article from: http://www.wlrn.org/post/sunshine-economy-citizens-property-insurance-and-cost-protect-property

The Changing Nature of Insurance Claims Litigation

Mergers and acquisitions, sophisticated litigation management technology and hedge fund-backed capital has made the plaintiffs’ bar a formidable opponent in recent years.

In the last podcast in the Insights on InsurTech series, The Future of Insurance Claims Litigation, Wesley Todd, a former insurance defense attorney and creator of CaseGlide, a collaboration, workflow and analytics platform for insurance litigation departments, explains why carriers need to focus on implementing insurtech in claims litigation management.

You can view it here.

“There are claims litigation platform providers, like us at CaseGlide and others…that have actually handled claims, been in court rooms,” said Todd.

For carriers considering implementing new technology, the claims litigation department is a good area to start in because the return on investment is readily apparent.

“Because with the high expense of a vendor, like an attorney, and with the ability to fast track deploy these things…you can get ROI real quick,” he said.

Plaintiff law firms have changed considerably since Todd first discussed claims litigation management with Claims Journal in 2015.

“They have become more sophisticated than our claims litigation departments. Not in the entire insurance industry, but these firms are merging and acquiring all of the other plaintiffs’ firms…across the country,” explained Todd. “We’re not talking about mom and pop shops here anymore.”

He said their claims litigation management software is now more adept than those within carrier litigation departments.

“If you took a look at their dashboard, the dashboard that your fiercest opponents log into every day, I think you might take claims litigation a little more seriously in your own company,” said Todd.

And while carrier claims litigation departments are fighting for pennies to add a couple of people every year, the plaintiff’s bar is partnering with hedge funds, he said.

“The plaintiff’s bar is more sophisticated, has better technology, and now has a lot more money invested in the…litigation battle for insurance proceeds,” said Todd, whose team manages nearly a hundred thousand cases.

Todd said insurers’ focus on just one metric, expense, has resulted in massive employee and vendor turnover.

“I think that it is time that we in the industry makes sure that everybody’s focused on total litigation management,” he said.

Original article from: https://www.claimsjournal.com/news/national/2019/01/30/288980.htm

Aerial imagery brings property underwriting to the next level

The challenge for commercial property insurers has always involved underwriting and rating a commercial property as accurately, quickly, and profitably as possible. As data and analytics capabilities progressed, insurers were able to draw upon insights gleaned from property-exposure detail, risk assessment, loss control surveys, and replacement cost estimates such as those offered through Verisk’s ProMetrix® solution.

However, now, our capabilities are being amplified by leveraging powerful aerial imagery technologies offered through Geomni, Verisk’s geospatial business unit. Geomni’s remote-sensing capabilities utilize machine-learning technologies to help insurers interpret images and data and which provide detailed exposure information across the policy life cycle.

Images and data captured by remote sensing aircraft are deeply integrated into Verisk’s commercial property solutions.

What is remote sensing?

Remote sensing generally comprises many image- and data-gathering platforms. At the higher end, it can involve fixed-wing aircraft equipped with cameras and sensors which, flying at relatively low elevations, gather high-resolution images and other important information about a property – creating 3D images that can provide information about elevation heights, roof slope, door and window sizes, and the like, as well as information about extra surfaces, new structures, adjacent exposures, and other changes that might occur over the course of time.

Geomni’s fleet – piloted by company-employed pilots – is based in 13 regional hubs strategically located throughout the United States to optimize response times. Equipped with sophisticated sensors, fleet aircraft are able to capture both oblique and orthogonal (top-down) images of a property, a capability that combines the attributes of aerial photographs with a GIS map.

Imagery captured by unmanned aerial vehicles (UAVS), or more popularly known as drones, offer another platform. They’re generally flown at a mere 100 to 200 feet in the air, a close proximity that helps capture the highest-resolution images from multiple angles to focus on specific structure features – potentially spotlighting close-up physical damage not visible from a higher-flying aircraft, such as roof condition of the property, and adjacent risks.

Mobile devices and satellites offer yet two other platforms. Our inspectors can use mobile cameras to capture high-resolution images and data which, when combined with other source images and data, can provide a 360-degree property profile. Satellite imagery, which covers broad geographical areas, can serve as a valuable before-and-after baseline when combined with other geospatial data.

Benefits across the policy life cycle

By combining imagery from all four platforms – fixed wing aircraft, drones, mobile, and satellites – Verisk helps provide the commercial property professional – underwriter, surveyor/risk engineer, or claims adjuster – with highly accurate and reliable information. Detailed roof data often gives underwriters a property perspective not before seen. Drone and ground-truth images open a new window, permitting more accurate property assessments that together with a loss cost, can provide a more complete picture of the risk. Verisk plans to continue expanding the use of these advanced aerial imagery and machine learning technologies over the coming weeks and months.

Original article from: https://www.verisk.com/insurance/visualize/commercial-property-insurance-insight-meets-aerial-imagery-expertise/

Debate Heats Up Over Property Insurance Claims

With insurers and regulators blaming a surge in water-damage claims for higher property-insurance rates, Florida lawmakers Tuesday began grappling with a controversial debate that includes homeowners, contractors, insurance companies and trial lawyers.

The issue centers on a practice known as “assignment of benefits,” which involves homeowners signing over insurance benefits to contractors who are hired to do repairs. Supporters say the practice can help ensure that insurance companies pay claims properly — but critics say abuses of the practice are driving up insurance premiums.

The Senate Banking and Insurance Committee heard testimony from both sides Tuesday, and the House Insurance and Banking Subcommittee is scheduled to host a panel discussion Wednesday. Lawmakers also tried to untangle the issue last year but could not reach agreement on a bill.

“The time to act is now,” state Insurance Consumer Advocate Sha’Ron James told the Senate committee Tuesday.

Much of the focus of the issue is on Miami-Dade, Broward and Palm Beach counties, where water-damage claims for problems such as leaking pipes have soared in recent years. The increased claims have affected the state-backed Citizens Property Insurance Corp., which blames water-damage claims and assignment of benefits for playing a key role in rate increases taking effect Feb. 1.

Critics contend that assignment of benefits can lead to inflated or fraudulent claims and increased lawsuits against insurance companies. David Bronstein, an insurance-defense attorney who spoke on behalf of the Florida Justice Reform Institute, told senators that the current assignment-of-benefits system “is simply not in the best interest of Florida consumers.”

“This whole AOB (assignment of benefits) system is about a special interest of lawyers and vendors creating clients, as opposed to clients in need of lawyers,” Bronstein, who is from Broward County, said. “No one’s house gets fixed any better or any faster. It only gets fixed more expensively with this fabricated system that’s been in place for a few years now.”

But some contractors Tuesday accused insurance companies of delaying claim payments or not paying the proper amounts. They said assignment of benefits helps force insurers to act properly.

“They don’t pay me. I wait 60, 90, 120, 150 days to get paid. … There’s so much abuse (by insurers). The AOB protects us little guys, the David against the giant,” said Dave DeBlander, owner of Pro Clean Restoration & Cleaning in Pensacola.

Members of the Senate committee said relatively little about the assignment-of-benefits issue, though Chairwoman Anitere Flores, R-Miami, released a statement later that said the meeting “ensured us the opportunity to openly discuss the rising costs of insurance, and the need to stay accountable to consumers.”

“The insurance rate hikes that have been going into effect recently will negatively impact the growth of our state in regards to home ownership and new business opportunities,” Flores said. “As an advocate for legislation that keeps insurance rates predictable and affordable, I reminded my Senate colleagues that we were not only elected as the voice of our constituents in Tallahassee; we were elected to bring about responsible reforms on a growing statewide challenge.”

Citizens Property Insurance has aggressively targeted the assignment-of-benefits issue. Officials said last month that Citizens could grow by about 50,000 policies in 2017, as private insurers shy away from issuing policies in South Florida because of water-damage claims.

But some contractors said lawmakers should use regulations to weed out people who improperly use assignment of benefits, rather than making major changes to the system.

The News Service of Florida’s Jim Saunders contributed to this report.

Original article from: https://miami.cbslocal.com/2017/01/10/debate-heats-up-over-property-insurance-claims/