State Farm will stay, Florida insurance regulators say
12/16/2009 at 11:26 AM

State Farm has cut a deal with Florida insurance regulators, promising to keep selling property insurance in the state.

Florida Insurance Commissioner Kevin McCarty announced the decision Wednesday morning.

Under terms of a consent order with Florida, State Farm is allowed to non-renew about 125,000 of its 810,000 property insurance policies statewide.

It also was granted an across-the-board rate increase of 14.8 percent. State Farm initially sought a 47 percent rate increase.

State Farm, in turn, agreed to free its agents to write policies with other carriers. However, McCarty said that doesn't indicate that a significant number of policies that it sheds will not wind up in state-run Citizens Property Insurance.

In January, State Farm, the largest private homeowners insurer in Florida, said it was pulling out of the state's property market because it couldn't charge high enough rates to be profitable.

Initially, McCarty and Gov. Charlie Crist played hardball on the topic of State Farm. The governor went as far as to say Florida would be better off if State Farm left.

In recent months, however, regulators have increasingly softened their rhetoric. McCarty has been open to approving property insurance rate hikes for other carriers, some in the double-digits.

"Having State Farm in Florida is better than no State Farm at all," McCarty said Wednesday. "That continues to be our position."

Source: Tampa Bay News

 Florida Fines People's Trust Agency for Unlicensed Sales; Orders Policy Rewrites
12/8/2009 at 4:15 PM

A Florida online insurance agency found to have sold homeowners policies using unlicensed personnel will pay a $100,000 fine. The agency will also contact every customer affected and offer to rewrite their policies, under terms of a settlement reached with state officials.

In March, Chief Financial Officer Alex Sink’s Department of Financial Services took legal action against People’s Trust MGA, LLC, charging that the firm had used unlicensed personnel to market and sell homeowners insurance.

People’s Trust MGA will pay a $100,000 administrative penalty, which DFS says is one of the largest penalties ever paid to it by an insurance agency.  People’s Trust MGA must also send a letter to every customer who bought homeowners insurance between March 6, 2008, and March 5, 2009, if their policies have not already been re-underwritten, offering a review of their coverage with a licensed insurance agent or customer representative.

Customers will have the option to compare policies, re-underwrite their policy, or cancel their policy without penalties and have their pro-rated unearned premiums refunded.

The problems at the MGA were uncovered in March by the Office of Insurance Regulation in a market conduct examination of People's Trust Insurance Co., which regulators found was growing faster than it should.

People's Trust only began writing business in March, 2008 but had written more than 20,500 policies worth $22.6 million in premiums by the end of 2008. That's about $5 million more than it had agreed to write in its first year under the business plan it submitted to the OIR to get its license.

For more, click here: Florida Fines People's Trust Agency for Unlicensed Sales; Orders Policy Rewrites

Source: Insurance Journal

QBE Insurance Corporation Sued for More Than $500 Million for Bad Faith Claims
11/24/2009 at 3:29 PM

A Miami condominium association has sued its insurer, QBE Insurance Corporation, and its Florida general managing agent, for more than $500 million in damages, claiming bad faith and deception in handling hurricane claims.

Daniel S. Rosenbaum, the managing partner of Katzman Garfinkel Rosenbaum, LLP, in West Palm Beach, obtained a judgment against QBE from a Federal Court jury trial in February, 2009 for approximately $25 million, plus another $1.75 million being awarded in attorneys' fees, for Buckley Towers Condominium in Miami.

Rosenbaum has now filed another lawsuit in Miami-Dade County Circuit Court. This second lawsuit is against QBE and its managing general agent, Florida Intracoastal Underwriters Limited Company, a wholly-owned subsidiary of Brown and Brown, Inc. ( BRO). The new lawsuit accuses both companies of engaging in deceptive and fraudulent bad faith claims handling practices as a general business practice, and having a specific intent to injure Buckley Towers while it sought insurance coverage to repair the heavily damaged buildings.

Earlier this year, the Miami-Dade County Unsafe Structures Board condemned as unsafe the two 17-story towers, located at 1321 N.E. Miami Gardens Drive. The buildings were ordered to be demolished in late 2010 unless they are repaired, which cannot be done without the insurance money awarded to Buckley Towers. Buckley Towers has 564 units, which are home to more than 1,200 residents.

For more on this article, click here QBE Insurance Corporation Sued for More Than $500 Million for Bad Faith Claims

Source: PR Newswire

Sweetwater hit by flood map
12/1/2009 at 6:11 AM

After 15 years of booming development and tropical deluges, federal emergency managers have redrawn Miami-Dade County's badly outdated flood-risk maps. Broward is in the midst of a similar update, with preliminary maps due out for public review in June.

The changes are literally across the map, mostly in small pockets but large swaths, too. Much of Sweetwater, for instance, went from unclassified by the Federal Emergency Management Agency to high-risk flood zone -- a tag that comes with a price.

``We fought tooth and nail against it,'' said Mayor Manuel Maroño. ``I find it extremely ironic since we spent over $20 million on improvements. It's one of those Catch 22s.''

The city bought huge pumps and other upgrades to fix notorious drainage woes. State and federal agencies, FEMA among them, spent $50 million on two massive storm water basins. Yet lower risk added up to higher premiums, Maroño said -- about $1,400 a year for flood policies many residents will now require.

``I've got a lot of phone calls and a lot of complaints,'' he said. ``I'm extremely unhappy about being put on the map.''

On the flip side, a third of unincorporated Miami-Dade was dropped from high-risk to lower-risk zones. That could potentially save homeowners money in reduced premiums -- but they may need to look up the changes themselves to find out.


For more on this article, click here: Sweetwater hit by flood map

Source: Miami Herald

Should it stay or should it go? State Farm's decision affects all of us
12/12/2009 at 1:15 AM

Pembroke Pines resident Luis Lobo was surprised recently when his State Farm agent told him that his homeowner's insurance would cost 70 percent more because the insurer had eliminated certain discounts.

But Lobo knows there may be bigger headaches ahead, if the insurance giant decides to leave Florida as expected. He's also worried that State Farm's rates could rise higher even if it stays.

"I hope they do stick around," said Lobo, a seafood distributor and importer who also has State Farm coverage for two cars, a boat and several life insurance policies. "I've always felt more secure with them."

Lobo isn't the only one who should be anxious about State Farm's decision. Customers with other insurers could see rate hikes depending on whether the insurer stays or leaves.

Plus, the departure of the number one private insurer in the state could leave all Florida automobile and property insurance policyholders open to higher fees to support state insurance programs if a big hurricane hits.

"It's definitely a market signal when the largest private player decides to withdraw," said Bob Hartwig, president of the Insurance Information Institute.

Visit the Sun Sentinel

Source: Sun Sentinel

A bad deal from Citizens
11/18/2009 at 2:01 PM

Florida's state-run insurer absolutely should be rooting out fraud and incompetence that is inflating hurricane-mitigation discounts for homeowners. But Citizens Property Insurance Corp.'s board of directors should not award a no-bid $60 million contract to a private vendor who has not tackled a project of this size. The board should reconsider and seek competitive bids.

Citizens' action, which drew only one dissenting vote from former state Rep. Carlos Lacasa of Miami, is an affront to all Florida insurance policyholders. All policyholders are on the hook whenever the state-backed entity's coffers run dry, and they already are paying assessments by Citizens for the 2004 and 2005 hurricanes. Plus, Citizens' plan to reinspect up to 400,000 of the 1 million homes it insures will set an industry precedent. There is no guarantee, without a competitive bidding process, that Citizens has struck the best deal for itself and, by extension, the entire industry.

For more on this article, click here: A bad deal from Citizens

Source: St. Petersburgh Times

Insurance based on credit scores stirring controversy
11/23/2009 at 6:02 AM

Despite efforts at the capitol in recent years to end the practice, property and automobile insurance companies in Florida are allowed to use a customer's credit history in setting premiums, something opponents say could ensnare more Floridians as the economy weakens.

The insurance industry says the practice is justified by data showing that someone with a poor credit score is more likely to report losses to their insurer, but critics say the rules are discriminatory and have no relevance to rates.

Insurance Commissioner Kevin McCarty has pushed for the use of credit scores to help determine premiums to be banned.

"I think 20 years [from now], we're going to sit back and say, 'Why did we ever allow this?'" he said recently.

McCarty said it is cut from the same cloth as an old practice, since banned, of allowing race-based rate-setting practices. In fact, some opponents of using credit scores as part of premium calculations say it essentially serves as a stand-in for socioeconomic status or race.

"I believe it's a significant civil rights issue, frankly, as well as an economic issue," McCarty said.

Legislation meant to bar the practice for car insurance died in the House and the Senate last spring under pressure from insurance companies, according to lawmakers who supported the measures. But McCarty said he doesn't intend to abandon the fight.

"What's right is right, and we're going to continue to pursue what we think is an unfair underwriting practice," he said.

Lawmakers who support doing away with the practice say there's no reason for insurers to tie credit scores - as well as a person's profession or education, which also wouldn't be allowed under the bills - to premiums.

For more of this article, click here Insurance based on credit scores stirring controversy

Source: Jacksonville.com