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Contents June 5, 2017 • Vol. 95 No. 11 • Focus on Florida
Florida 6 Florida Court Approves Workers’ Compensation Ratemaking Process 8 Florida 2017 Insurance Legislation Targets Flood Market, Fraud Fight 11 Outgoing Florida CFO Atwater Recalls Successes, Frustrations With Industry 16 $8M Recovered in Q1 Through Insurance Consumer Helpline 19 NOAA Forecasters Predict Atlantic Hurricane Season to be ‘Above Normal’ 20 U.S. Supreme Court Rejects Appeal by Florida Floating Home Owner
6
FLORIDA COURT APPROVES WORKERS’ COMPENSATION RATEMAKING PROCESS
8
11
OUTGOING FLORIDA CFO ATWATER’S ADVICE
FLORIDA 2017 INSURANCE LEGISLATION TARGETS FLOOD MARKET, FRAUD FIGHT
22 Allianz Ends Sponsorship of Florida Golf Event Amid Holocaust Survivor Protests 22 Florida Hurricane Cat Fund Ready for Storm Season 22 Arsonists Blamed for 320 Florida Wildfires in First Part of Year
Departments
12 Florida Fraud Round-Up
16 $8M RECOVERED IN Q1 THROUGH
4 | INSURANCE JOURNAL | FOCUS ON FLORIDA JUNE 5, 2017
INSURANCE CONSUMER HELPLINE INSURANCEJOURNAL.COM
Florida Florida Court Approves Workers’ Compensation Ratemaking Process By Amy O’Connor
A
Florida appeals court has rejected a trial court’s finding that the process for determining workers’ compensation rates used by a rating organization and state insurance regulators violated the state’s Sunshine Law. The decision means that a 14.5 percent workers’ comp rate increase that went into effect at the end of 2016 will remain in place. The Florida First District Court of Appeal (1DCA) found in May that the National Council on Compensation Insurance (NCCI) and the Florida Office of Insurance Regulation (OIR) did not violate state Sunshine Laws in establishing the 14.5 percent rate increase last year, overturning a lower court’s ruling on the matter. The decision addressed an appeal by OIR and NCCI in the case of Fee v. National Council on Compensation Insurance (NCCI)/OIR (Office), that was filed in Leon County by James Fee, a Miami attorney who represents injured workers. The plaintiff, Fee, contended that NCCI’s actuary, NCCI staff, and OIR met the definition of a committee and their deliberations were subject to Florida’s Sunshine Law. The trial court judge, Karen Gievers, agreed, finding that NCCI was in violation of Florida’s Sunshine Laws by holding “multiple, non-public, secret meetings” internally and with OIR in establishing workers’ compensation rates. Gievers’ decision halted OIR’s order increasing workers’ comp rates. OIR and NCCI immediately appealed the trial court’s ruling and requested that the appeals court expedite the process and allow the rate increase to go into effect. The appeals court agreed to both requests. NCCI and OIR denied Fee’s allegations, saying they followed the proper proce-
dures for an open and transparent process when necessary, including an August 2016 public meeting that allowed testimony from stakeholders. NCCI also argued that its single actuary who determined the rates, Jay Rosen, could not constitute a committee and therefore it was shielded from the Sunshine Law’s public disclosure requirement. In the 1DCA’s May 9 opinion, justices stated that it was undisputed that NCCI’s argument that “no committee at NCCI has been charged with the responsibility for determining workers’ compensation insurance rates in over 25 years.” NCCI has instead enlisted a single actuary, Rosen, to evaluate and determine workers’ comp rates. The 1DCA disagreed with the plaintiff’s argument that Rosen, his team, NCCI staff, and OIR who reviewed his work, met the definition of a committee under Florida’s Sunshine
6 | INSURANCE JOURNAL | FOCUS ON FLORIDA JUNE 5, 2017
Law. Therefore, the court said, none of the meetings were subject to the law. The court also disagreed with Fee’s assertion that Rosen, in his individual capacity, acted in place of the rate-determination committee, saying “this argument ignores the plain language of the statute and the ordinary meaning of the terms within it.” Ultimately, the court found that it comes down to the definition of the term committee under Florida law. “The statute applies only to meetings of a rating organization committee where workers’ compensation insurance rates are discussed and determined,” the opinion states. “A ‘committee’ has been defined as a ‘subordinate group,’ not a single person.” The court added that a multi-person concept of the term “committee” further finds support in “well-established precedent construing the Sunshine Law,” for
continued on page 18
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Florida 2017 Insurance Legislation Targets Flood Market, Fraud Fight
T
he 2017 Florida Legislative Session ended with mixed results for property insurers. While several bad measures were killed, By William H. Stander like mandatory prejudgment interest and a prohibition on including defense costs in base rates, assignment of benefits abuses were not reformed. The lack of action will mean that attorneys and vendors will continue
to game the system to benefit themselves. As a result, policyholders will continue to be saddled with higher premiums that threaten to make homeownership unaffordable. Major changes to Florida insurance law that did pass this session include new measures relating to insurance adjusters, flood policies and fraud.
Insurance Adjusters
House Bill 911 attempts to clean up various provisions relating primarily to public adjusters, and in particular, draw a tighter circle around who can adjust claims on behalf of policyholders and how they do it.
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Drafted and supported by the Department of Financial Services’ Division of Insurance Agent and Agency Services, these changes take aim at so-called “loss consultants” who have multiplied in number, canvassing Florida neighborhoods and promising free repairs (usually using an assignment of benefits). Notably, the bill does the following: • Prohibits individuals from performing the duties of a public adjuster or soliciting, investigating or adjusting claims on behalf of a public adjuster, unless licensed; • Requires licensure of all adjusting firms consistent with the requirements appliINSURANCEJOURNAL.COM
cable to insurance agencies; • Requires public adjuster apprentices be licensed as an all-lines adjuster and be appointed and employed by a public adjuster. Additionally, a public adjuster apprentice is required to have a $50,000 bond and maintain that bond for at least one year after the termination of his or her appointment; • Reduces the number of public adjuster apprentices a public adjusting firm may maintain from 12 to four; • Reduces the number of public adjuster apprentices a supervising public adjuster may be responsible for from three to one; • Expands a current prohibition on self-dealing by prohibiting a public adjuster, apprentice, or any person on behalf of a public adjuster from selling other goods and services to the claimant beyond the fee for adjusting services; • Allows a policyholder to cancel a public adjuster contract by any means, not just by phone or in writing under current law, and excludes insurance deductibles from the calculation of a public adjuster’s fee; and, • Allows employees of insurers to handle residential property insurance claims that are subject to a coverage limit of $500 or less. The bill also repeals language that prohibits a public adjuster from contacting a policyholder within 48 hours of an occurrence that might be the basis of an insurance claim. While insurers originally supported this language, in 2012, the Florida Supreme Court declared the provision unconstitutional, saying it unduly restricted the commercial speech of public adjusters.
Flood Insurance
Legislators continued the search for private market solutions for flood insurance by passing House Bill 813, as homeowners continued to grapple with an evolving market following passage of the BiggertWaters Flood Insurance Reform Act. Florida legislators first tackled the issue in 2014 by passing a law to allow four difINSURANCEJOURNAL.COM
ferent types of private flood insurance that could augment or replace NFIP coverage, while allowing insurers an expedited rate filing process. HB 813 builds on that law in several ways: • Extends the time period during which private flood insurance rates may be established through an expedited rate filing to Oct. 1, 2025, from the same date in 2019. After that later date, insurers offering private flood insurance will be required to make a complete rate filing with the Florida Office of Insurance Regulation (OIR) as required by state law; • Extends the time period that a surplus lines agent may export a flood policy without diligent effort, allowed under current law, from July 1 of this year to the earlier of July 1, 2019, or the date the insurance commissioner determines that there is an adequate admitted market for flood insurance; • Changes requirements for agents to notify private flood policy applicants of the potential effect of leaving the NFIP on premiums and of later reapplying for the program. Instead of telling applicants at the time of application, the agent can provide notice to be signed by the applicant before the agent places the policy with an admitted or surplus lines insurer; and, • Exempts excess flood insurance from rules that require insurers to notify OIR 30 days before writing flood insurance and to file with a plan of operation and financial projections with the office. Lastly, the bill requires the Florida Commission on Hurricane Loss Projection Methodology to revise flood loss projections at least every four years instead of the current every odd-numbered year.
Insurer Anti-Fraud Programs
Also passed were a pair of bills intended to better combat insurance fraud, a leading cause of premium increases. House Bill 1007’s most important provisions will require state attorneys’ offices that receive money for prosecuting fraud to report their
progress to the Division of Investigative and Forensic Services (DIFS), which will file annual reports with the legislature. The final version also expands requirements for insurers’ anti-fraud efforts and reporting. Beginning Dec. 1, each insurer must file annual reports with DIFS that contain a detailed description of their insurance fraud investigative unit or a copy of the contract with the investigation firm, and a copy of the anti-fraud plan. Under its anti-fraud plan, an insurer must: • Acknowledge that it has established procedures for detecting and reporting insurance fraud; • Acknowledge that it provides required anti-fraud education to employees, and describe that education; • Describe the insurer’s anti-fraud unit; and, • Provide a rationale for staffing levels and resources provided to the anti-fraud unit. Furthermore, beginning in 2019, insurers must annually submit by March 1 information for the calendar year including: • The number of policies in effect; • The number of premiums written for policies; • The number of claims received; • The number of claims referred to the anti-fraud investigative unit; • The number of other insurance fraud matters referred to the anti-fraud investigative unit that were not claim related; • The number of claims investigated or accepted by the anti-fraud investigative unit; • The number of other insurance fraud matters investigated or accepted by the anti-fraud investigative unit that were not claim related; • The number of cases referred to DIFS, other law enforcement agencies, and other entities; and, • The estimated dollar amount of damages in cases referred. The linked legislation, House Bill
continued on page 10
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FOCUS ON FLORIDA continued from page 9
| News & Markets
1009, provides an exemption from Florida’s strict public records law for the reports filed under HB 1007, protecting those people or companies that report fraud to insurers from being identified and made the target of abuse or retribution.
Assignment of Benefits
The largest disappointment of the session was the legislature’s failure to address the assignment of benefits crisis. Fraudsters and a small group of plaintiff attorneys will continue to manipulate the system to their benefit and the
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Had the Senate acted, policyholders could also have benefited from a notice that they may be giving up rights that could lead to unwanted litigation; the ability to rescind an assignment of benefits within seven business days of execution without penalty; and protection from the assignee and its subcontractors for claims related to services performed. Instead, insurers and policyholders are left with a growing body of suspect water damage claims that will surely lead to further rate increases and insurers’ reevaluation of the marketplace. Insurers intend to work with OIR between now and the 2018 session to explore alternative regulatory solutions. Regardless, until the claims process no longer holds the promise of easy money for unscrupulous vendors and their lawyers, neither insurers nor their policyholders will see any relief. William H. Stander is executive director of the Florida Property & Casualty Association (FPCA), which represents Florida-based home insurers to foster and promote a healthy and competitive Florida insurance market. Through its lobbying and communications teams, the FPCA works to educate Florida lawmakers, regulators and homeowners on issues and policies that affect property and casualty insurance. FPCA can be found online at www.fpcaonline.org.
WORKING TOGETHER.
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detriment of homeowners and those who financially struggle to buy a home. House Bill 1421 passed the House but was never heard in the Senate. The legislation had three critical elements that would have tamped down outrageous abuses: • Data collection that examines attorney fees and claim costs; • Rules for paying attorney fees that would replace the current, unregulated system that allows a third-party vendor to seize and exercise a policyholder’s special attorney fee rights under Florida law; and, • Disclosure language that would protect consumers by informing them of the consequences of signing an assignment of benefits document.
5/19/17 10:24 AM
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FOCUS ON FLORIDA
Outgoing Florida CFO Atwater Recalls Successes, Frustrations With Industry By Amy O’Connor
L
ifelong Florida resident, long-time Florida politician, and head of the Florida Department of Financial Services (DFS), Jeff Atwater shocked the state when he announced in February he would step down as Chief Financial Officer at the end of the 2017 legislative session to become vice president of strategic initiatives and CFO for Florida Atlantic University (FAU). As Florida’s CFO, a position he has held since 2011, Atwater has worked closely with the insurance industry. DFS oversees the Florida Office of Insurance Regulation (OIR), as well as the office of the Florida Insurance Consumer Advocate, who assists Florida residents with insurance-related questions or concerns. DFS is also home to the Division of Investigative and Forensice Services, which handles all insurance fraud-related investigations. One of Atwater’s biggest priorities since he took office, and no doubt one of his legacies after he leaves, has been his commitment to rooting out fraud that he says drives up the cost of insurance for all Floridians. Before he departed DFS, Atwater was adamant about completing a mission he began three years ago: passing legislation to put a comprehensive system in place to track and prosecute insurance fraud. And this past session, his work paid off when HB 1007 and HB 1009 were passed by state legislators (see page 9). Atwater said he worked first-hand with the insurance industry during his 25 years working in the banking industry, though on a much smaller scale than over the last six years as CFO. But he said he has always understood the importance of insurance and the role that it plays in economic development. “For a growing economy, you need investment. For investment, you need risk takers.
Risk takers must mitigate that risk, and insurance is what mitigates that risk,” he said. Shortly before departing from DFS, Atwater spoke with Insurance Journal to discuss his experiences with the insurance industry as CFO, including what about the industry has surprised him and frustrated him through the years, and how he thinks the industry could improve its customer relationships and gain support in its fight against insurance abuse. The following interview has been edited for brevity.
IJ: Did you have any
personal opinions on the industry before you began this position? Atwater: I certainly did. I would say that from the standpoint of being a banker, and when you have a portfolio the size of portfolios that we would hold in the banking institutions that I was a part of, there is going to be events that would ultimately require that the insurance policy itself might well have been a source of repayment — a fire; a hurricane; a tragic accident. I saw players perform and I saw players that did not perform well. … Regrettably, I think we acknowledge that almost in any industry — and insurance might well be at the top of that list — the poor performance of the few is going to create a perception and a narrative that could be detrimental to the perception of the entire industry …
“What has surprised me is the magnitude of the fraud that exists in the marketplace”
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that occurs in all industries. The insurance industry has not been immune from that fact [and] when local television and local media gets a hold of a story where a player has underperformed, there is no sympathy for an insurance company that has accepted premiums, made promises and then, for whatever reason, has not fulfilled those promises. Sometimes, it may be a real legitimate dispute. But that narrative is rarely covered equally in the communication that the media will bring to the story.
IJ: What have you learned about the industry that you didn’t know before? What has surprised you the most? Atwater: What has surprised me … is the magnitude of the fraud that exists in the marketplace across virtually every line of insurance that is available to
continued on page 14
JUNE 5, 2017 FOCUS ON FLORIDA | INSURANCE JOURNAL | 11
FOCUS ON FLORIDA
14 Arrested in Miami Assisted Living Facility Insurance Fraud Scheme
A year-long investigation led by insurance fraud investigators with the Florida Department of Financial Services ended with 14 arrests of assisted living facility owners in the Miami area, according to a statement by Chief Financial Officer Jeff Atwater. According to the statement, investigators uncovered an alleged fraud scheme in which an assisted living facility (ALF) in Miami intentionally misrepresented its business activities in an attempt to obtain an inadequate but cheaper insurance policy. ALFs are long-term care residences that offer various services such as health and medicine management, transportation and meal services in an effort to support seniors and developmentally or physically disabled members of our local communities. When an insurance policy
| Fraud Round-up
is knowingly secured under false pretenses, the insurance carrier oftentimes reserves the right to deny claims for loss or injury, the statement says. The company’s insurance carrier, Citizens Property Insurance Corp., first discovered the fraud following the filing of a claim for a broken pipe in 2014. During the processing of the claim, Citizens suspected that the ALF had intentionally misrepresented its business activities in an attempt to secure a cheaper, residential insurance policy rather than the required commercial policy. Citizens referred its findings to the DFS’ Bureau of Insurance Fraud. The case ultimately initiated a larger series of investigations that took place between June 2016 and May 2017 which investigators said identified a trend of misrepresentation taking place within the ALF industry. The department, with support from Citizens and the
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National Insurance Crime Bureau, identified a total of 14 ALF operators in MiamiDade County who allegedly defrauded their insurance carrier. Those arrested include: • Jose Perez - Living Well, Miami • Aida Salguiro - Amor Y Esperanza Home Care, Hialeah • Gilberto Peralta - Angel’s Home, Miami • Thelma Waite-Blake - B & B Home Care Service, Miami • Idalberto Brito - Brito Home Corp., Miami • Odalys Amaro & Eduardo Rodriguez - Loving Hands ALF, Miami • Anna Kaplan - Flamingo Care LLC, Miami Beach • Teresita Leon - Teresita Home Care, Inc., Miami • Guillermo Jesus Mendez La Casita Nuestra Home II, Miami • Barbara Plaza - Cornell ALF, Miami • Jorge Pulido - La Casita Nuestra Home II, Miami • Leonel Burmudez Bermudez Senior Care, Miami Additionally, investigators arrested an insurance agent, Alina Fernandez, after she was found to have forged another insurance agent’s name on two fraudulent ALF insurance applications for Jorge Pulido. She was also found to have been acting without the proper license. Fernandez was transported to Turner Guilford Knight Correctional Facility and was charged with acting as an unlicensed agent, ID fraud, and organized fraud. DFS’ insurance licensing
unit revoked her license and banned her from working in the insurance industry. The remaining 13 subjects arrested were transported to Turner Guilford Knight Correctional Facility and have been charged with one count of application fraud, a third-degree felony. These cases will be prosecuted by the Miami Dade State Attorney’s Office and if convicted, those arrested face up to five years in prison.
Florida Woman Caught Faking Workers’ Comp Injury Gets Probation
A South Florida woman was convicted of fraud on May 3 and must serve 18 months of probation after she was caught hitting herself in the head with a ceiling sprinkler at work. The incident happened in October 2015 at CinqueáTerre Energy Partners in Fort Lauderdale. WPTV in West Palm Beach reports surveillance video showed a sprinkler head falling from the ceiling onto Sheyla White ’s desk. White hit herself in the forehead with the sprinkler and then tried to collect workers’ compensation benefits for an “on-the-job’’ injury. Records show White told her employer the sprinkler bounced from her desk onto her head. However, the employer’s insurance company had doubts and asked for an investigation. White was arrested in 2016 and faced up to five years in prison. Copyright 2017 Associated Press. INSURANCEJOURNAL.COM
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continued from page 11
Floridians, personally and in a commercial nature. That has been an eye opener. I was aware of fraud, just not aware of how many really organized crime rings there were designed specifically to exploit opportunity. … I think it was learning the depths of both the true fraud that is taking place within the market and where individuals who have developed — again, I would call it organized crime, without question — who have developed business practices that while yet might not be identified as illegal should be because they are clearly exploiting portions of Florida law to make money. Some might call it overutilization, but I think that’s awfully generous and I think they’ve created their own cottage industries.
IJ: Do you think that the abuse of
assignment of benefits (AOB) and per-
sonal injury protection (PIP) is making consumers more aware of how fraud impacts their insurance rates and coverage? Atwater: I think that consumers are becoming aware, but I still think there is a significant void from consumers understanding the magnitude of that fraud. Therefore, I would say that there is still tremendous rate sensitivity by the consumer market in Florida that is unfamiliar with the magnitude of what fraud might be loading into those rates.
IJ: How could the industry help consum-
ers better understand? Atwater: I think that the industry could go a long way by communicating the actual evidence that it has in its databases that could show the magnitude of the losses that are occurring that are being built right back into the rate formula.
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It’s not coming from disputes over attorney’s fees, etc., it’s coming from these claims. These are the losses that we are now experiencing from these claims and we want the public to see this and really focus on communicating that this is an issue. [Saying] we want to work with you on developing the policies that could, and should, be able to still offer a fair product with a very rapid response to a consumer when there’s a legitimate claim filed, but does not allow a collection of individuals to exploit the opportunity to make money. Let’s work at this hand-in-hand. Instead, it becomes a number of lobbyists that take on the challenge. ... The conversation takes place in the halls of the state capitals and the consumers are just seeing rates go up, rates go up, rates go up. … I think consumers believe that the INSURANCEJOURNAL.COM
rates that come [are because the] insurance company just wants more rates and the government just keeps giving it to them. I don’t think that, again, most consumers, without the right public communication, understand that these losses are required to be built into the rate filing. And they’re going to be granted. When the public does understand it then they turn back and they say, “What is the insurance company doing to help me fight this fraud? They know the data. They know the bad actors. They know the trends before everybody else does. Why aren’t they fighting this target?” I think that’s a question for the industry to answer. Atwater said the industry came together more than ever this session to encourage legislation against AOB abuse, though that didn’t turn out to be enough as no AOB bills were passed. Atwater said the industry’s pushback in sharing information that would help consumers to understand the magnitude of fraud taking place in Florida is partly to blame, and hasn’t just occurred with recent AOB legislation.
Atwater: There are some players in the
industry that believe any bit of data that they hold is proprietary and it’s a trade secret, and they’re not going to help … [but] my fraud investigators can only begin to act when a referral is made. … I do believe there is more that the industry could do in the development of strategic initiatives, the sharing of data in trend lines, the identification of the outbuyers, seeing where the abuses are taking place, and acting faster; than for us to be trying to collect that from referrals of neighbors who saw somebody get a whole new roof or possibly a referral from someone who heard someone say that that guy got a big water claim and got a new kitchen out of it. That’s hardly the trend line in data that the insurance industry itself holds. I would hope that they would be excited and desiring to work together and to work with our division in helping proINSURANCEJOURNAL.COM
vide data on trends and narrowing our search to go after the bad actors. That would be very helpful.
IJ: Let’s talk about the anti-fraud leg-
islation that just passed. Why did the industry fight this legislation? Atwater: There have been, over the last three years, players within the industry that just said, “No. We don’t want to have to provide more information to you all. We don’t want to have to be held in any kind of account of sharing that data. This is our proprietary data. This is our business model. Everything we do is a trade secret.” There are others within the industry who said, “We are not concerned in the least.” Regrettably, the industry itself was not altogether onboard.
IJ: Looking back at your
during these past two storms that hit Florida. We really believe people were trying to do their best and, knowing that if they did their best, they could probably take care of the claim in a fast and efficient way, which is what the expectation of their client would be.
IJ: What advice would you give your
successor in working with the industry? Atwater: When I look back on what we have done working with the industry, I’m incredibly proud and happy. … We haven’t always been on the same page, but I would tell the individual that would step into this role to work to build the relationships with these players in the industry; that the industry has the first sense of what’s going right and what’s going wrong and to be able to work with them to try, even though sometimes it’s difficult. Get your hands upon the best data that can help you make the case for public policy change. That’s important. And to stay mindful that the insurance industry is providing one of the most key ingredients into the economic success of the state of Florida. Again, without insurance, people don’t buy a home. The bank is not going to take that risk. Without insurance, they’re not going to make the loan for the small business. Without insurance, the developer isn’t going to build the building. It is incredibly important to be able to build these relationships, to be able to speak frankly and know that inside that frank conversation is tremendous respect. It’s not built in a day, but it’s built over time and it’ll serve both the people of Florida well and this process of public policy making.
“When I look back on what we have done working with the industry, I’m incredibly proud and happy”
time as CFO and your experiences specifically with the insurance industry, what has really stood out to you? Atwater: We just had a hurricane season last year, where we had two named storms, both that caused hundreds of millions of dollars in damage. I was impressed with the reaction time that I saw from most of the industry, how quickly they were onsite, calling upon those who had reported a claim, as well as those who were in the same general vicinity who had not reported a claim, to try to be on their game and trying to serve their client. I was impressed and glad to see that kind of self-motivated initiative to quickly get in there and address those claims. I would say that was a really pleasant experience. There’s always going to be a case, no matter what industry you’re a part of, where someone makes a mistake on a loan file, on an application or on a claim. It happens in every industry. Our responsibility is to see that nothing systemic begins to take place by any particular carrier. We did not see any of that
On the Web To listen to the full interview with CFO Atwater, please visit InsuranceJournal. tv.
JUNE 5, 2017 FOCUS ON FLORIDA | INSURANCE JOURNAL | 15
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| News & Markets
$8M Recovered in Q1 Through Insurance Consumer Helpline
I
nsurance specialists working to assist Floridians through Florida’s insurance consumer helpline recovered nearly $8.1 million in the first quarter of 2017, according to a statement from Florida’s Chief Financial Officer Jeff Atwater. Recoveries included insurance claim payments and premium refunds that consumers sought the Florida Department of Financial Services’ help collecting. The helpline assists Floridians with financial and insurance-related matters including disaster preparation and insurance fraud as well as questions and complaints regarding auto, home, health, life and small business insurance. DFS said that between Jan. 1, 2017, and March 31, 2017, the helpline’s insurance specialists answered 70,634 calls and opened nearly 5,000 assistance requests. More than $8.1 million was recovered on behalf of 866 consumers. “The insurance claims process can be stressful, and sometimes Floridians feel that they don’t get a fair shake from their insurance company,” said Atwater. “When consumers feel that their claim was handled unfairly, or if they have questions
about the process, we’re available to assess the situation and often can offer assistance in resolving their concern. Floridians may not need our number right now, but with hurricane season quickly approaching, I encourage all Floridians to save our tollfree number so they have it on-hand if it’s needed.” Recent examples of how consumers were helped by helpline specialists, according to DFS, include: A Miami-Dade County consumer was left without transportation following an April 2016 auto accident that totaled her car. The insurance company took possession of the inoperable car in June 2016, but the consumer never received a claim payment. After unsuccessful attempts at resolving the issue herself, the consumer contacted the helpline. Upon working with the consumer’s insurance company, helpline insurance experts determined that a documentation breakdown caused the significant payment delay. Her payment was promptly issued and the company apologized to the consumer. A Broward County consumer faced nearly $25,000 in mental health care costs
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that her insurance company was refusing to pay even though mental health care was covered under her policy. After finding the company unwilling to address what she felt was a mistake, the consumer contacted the helpline. After helpline insurance experts contacted the company on her behalf, all of her claims were reprocessed and paid. After an unexpected trip to the emergency room, a Sarasota County consumer was admitted to the hospital, but her resulting medical claim was denied for lack of prior authorization. She contacted the helpline and insurance experts worked with her company, which admitted they had mistakenly denied the claim, and paid the consumer nearly $40,000 to cover the hospital stay. Floridians can contact the insurance consumer helpline toll-free by calling 1-877-MY-FL-CFO (1-877-693-5236). Chief Financial Officer and State Fire Marshal Jeff Atwater, a statewide elected official, oversees the Department of Financial Services, serves as Florida’s State Fire Marshal, and is a member of the Florida Cabinet. INSURANCEJOURNAL.COM
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which it cited the case Sarasota Citizens for Responsible Gov’t v. City of Sarasota. That case explained that Sunshine Law protections extend to formal and informal meetings only when two or more members of the same board or commission meet to deal with a matter on which action will be taken in the future. “Thus, under the plain and ordinary meaning of the terms ‘committee’ and ‘meet,’ Rosen, in his individual capacity, does not act or ‘meet’ as the statutory rate-determination committee contemplated by [statute],” the court wrote. The appeals court further stated that the trial court was incorrect in finding that the NCCI’s peer review team, meetings between Rosen and his staff, and the meetings between NCCI and OIR constituted committee meetings that would be subject to the Sunshine Law. “The Sunshine Law does not apply because none of the other participants,
other than Rosen, had any authority to determine the workers’ compensation insurance rate to be proposed to OIR,” the court wrote. As to the plaintiff’s assertion that NCCI had violated the Sunshine Law because OIR had delegated its authority over rate filings to NCCI therefore NCCI should be considered a government body and not a private entity, the court also disagreed. It said NCCI didn’t have authority to carry out an agency function required to be performed “in the sunshine.” “OIR approves and disapproves rate filings; it does not make rate filings. Conversely, NCCI and individual insurers have no authority to approve or disapprove rate filings; rather they are under a statutory mandate to file such proposals,” the court wrote. The appeals court also disagreed with the trial court’s rulings that NCCI had violated the Florida Public Records Act by
not providing the plaintiff (Fee) access to certain records. It ultimately concluded that the trial court erred in declaring OIR’s final order void and reinstated its Oct. 5, 2016 final order increasing workers’ comp rates by 14.5 percent. OIR expressed satisfaction with the court’s ruling, saying in a statement to Insurance Journal, “We’re aware of the ruling and pleased by the outcome.” Justin Parafinczuk, an attorney in Fort Lauderdale, Fla., said he wasn’t surprised by the ruling and doesn’t expect any fallout from the decision given it was a “unique and nuanced case.” He added, however, he expects NCCI to make internal changes to its ratemaking process. “I would expect NCCI to change some of its rate setting protocols to avoid litigation over this issue in the future,” Parafinczuk said.
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FOCUS ON FLORIDA
NOAA Forecasters Predict Atlantic Hurricane Season to be ‘Above Normal’ By Jennifer Kay
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arm ocean waters could fuel an above-normal Atlantic hurricane season, while storm-suppressing El Nino conditions are expected to be scarce, U.S. government forecasters said at the end of May. The National Oceanic and Atmospheric Administration forecast calls for 11 to 17 named storms, with five to nine hurricanes. Two to four hurricanes are expected to be “major’’ with sustained winds of at least 111 mph. Forecasters expect warmer-than-average waters across the tropical Atlantic Ocean and Caribbean Sea, weaker-than-average wind shear and a weak or nonexistent El Nino, said Ben Friedman, acting NOAA administrator. El Nino is the natural warming of parts of the Pacific Ocean that changes weather worldwide and tends to reduce hurricane activity in the Atlantic. Climate models show considerable uncertainty, but “there’s a potential for a lot of Atlantic storm activity this year,’’ Friedman said. The long-term season averages are 12 named storms, with six hurricanes and three major ones. Tropical storms have sustained winds of at least 39 mph, and hurricanes have winds of at least 74 mph. A new weather satellite will help forecasters see developing storms in greater detail, especially when it moves later this year into a permanent position over the East Coast with a view over the continental U.S. and tropical waters where hurricanes form, Friedman said. High-resolution hurricane model upgrades also are expected to provide “much improved’’ forecast guidance this year, said Mary Erickson, deputy director of the National Weather Service. The National Hurricane Center in Miami is adding advisories highlighting specific storm hazards: Storm surge watches and warnings will be issued when U.S. com-
munities are at risk for life-threatening flooding. The “uncertainty cone’’ showing a storm’s projected path will be updated to show how far damaging winds can reach.
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An experimental “time of arrival’’ graphic will show when tropical storm-force winds are expected to start hitting certain areas. Copyright 2017 Associated Press.
5/11/17 1:30 PM
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FOCUS ON FLORIDA
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U.S. Supreme Court Rejects Appeal by Florida Floating Home Owner
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he U.S. Supreme Court rejected a Florida man’s latest appeal in a landmark case involving the seizure and destruction of his floating home. The justices denied without comment Fane Lozman’s petition asking them to enforce their 2013 ruling by ordering the city of Riviera Beach to pay him about $365,000 for the home’s value and legal fees. Lower courts also ruled against Lozman, and this was his last appeal. “I am disappointed that the lower courts were allowed to ignore the clear ruling by the U.S. Supreme Court in my case without any corrective action being imposed,’’ Lozman said in an email. The 2013 ruling set a new standard for floating homes and other structures. It meant strict federal maritime law could no longer be applied to disputes involving
floating structures that have no traditional characteristics of a vessel, such as an engine, rudder or sails. The decision affected thousands of floating homes and business owners across the U.S., including floating gambling casinos docked on rivers. Justice Stephen Breyer, writing for the court’s 7-2 majority, said the decision comes down to a simple proposition: “Not every floating structure is a vessel.’’ “To state the obvious, a wooden washtub, a plastic dishpan, a swimming platform on pontoons, a large fishing net, a door taken off its hinges, or Pinocchio (when inside the whale) are not “vessels,’’’ Breyer wrote.
The dispute began after Lozman started living at a Riviera Beach marina in 2006. He became involved in a public battle with the city over its plans to turn the marina over to a developer, which later led to the seizure and destruction in 2010 of his floating home under maritime law. Riviera Beach argued that it shouldn’t be forced to pay Lozman because it was acting in good faith under the applicable law at the time, before the Supreme Court decision. Now Lozman will focus on building a floating stilt home community on 25 acres (10 hectares) of mostly submerged land north of West Palm Beach. Copyright 2017 Associated Press.
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47 th LAAIA Annual Convention August 2-5, 2017 Diplomat Resort & Spa Hollywood Education. Trade Fair. Connect.
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Allianz Ends Sponsorship of Florida Golf Event Amid Holocaust Survivor Protests By Terry Spencer and Curt Anderson
H
olocaust survivors celebrated the end of German insurance giant Allianz’s sponsorship of a Florida pro golf tournament at the end of April, saying it may boost efforts to collect some $2.5 billion in policies issued to Jews that they say were unpaid. Survivors, their heirs and Jewish groups for seven years have protested the company’s sponsorship of the PGA senior tour’s Allianz Championship in Boca Raton, saying it failed to pay off policies of Holocaust victims and other Jews who died under Nazi rule. They say the company has demanded death certificates, which the Nazis didn’t issue to
concentration camp victims, and copies of policies lost during wartime. David Schaecter, president of the Holocaust Survivors Foundation – USA, said Allianz has refused to pay off a policy he is sure his parents bought because he couldn’t provide paperwork. His father was arrested by the Nazis in 1940. He, his mother, two younger sisters and older brother were forced from their Slovakian farm in 1941 and taken to Auschwitz, where his mother and sisters were executed. He and his brother, Jacob, spent nearly two years at Auschwitz and then were sent to Buchenwald and forced to clean the railcars that transported other Jews. His brother died
in 1944. His father had spent the war doing forced labor at an Austrian salt mine and died in 1945 after being liberated. “Survivors everywhere are relieved that our voices have been heard, and in at least one place, Allianz will no longer be able to pretend it has acted honorably,’’ said Schaecter, 87. His group led the tournament protests, which included about 200 people last February. Allianz said the protests had nothing to do with it no longer sponsoring the tournament. The company has acknowledged collaborating with the Nazi regime in the 30s and
40s, but has said it paid off most policies through the International Commission on Holocaust Insurance Claims and will pay legitimate claims. Hollis Cavner, CEO of tournament organizer Pro Links Sports, said Allianz told his firm years ago it would not renew its contract when it expired after the 2017 tournament. Florida politicians have unsuccessfully pushed legislation that would allow survivors to sue Allianz in U.S. courts. Survivors are currently blocked by an international agreement limiting claims to the Holocaust insurance commission, an accord upheld by the U.S. Supreme Court. Copyright 2017 Associated Press.
Florida Hurricane Cat Fund Ready for Storm Season
Arsonists Blamed for 320 Florida Wildfires in First Part of Year
he Florida fund that helps private insurers pay out claims after a hurricane continues to be in strong shape ahead of storm season. Estimates prepared by Raymond James show the Florida Hurricane Catastrophe Fund will have $17.6 billion available this year. This marks the second year in a row that
lorida officials said arsonists had ignited about 320 wildfires through early May of this year, burning more than 20,000 acres across the state. Agriculture Commissioner Adam Putnam said severe drought conditions have increased the wildfire threat statewide, but arson causes many blazes. In a statement on May 5, Putnam’s office said arsonists started 400 wildfires in Florida in all of 2016. The Ledger reports that Florida Forest Service investigators suspect arson in a 700-
T
the fund has more money than it would need to pay out if storms racked the state. The estimates were formally approved in May by a panel overseeing the fund. The financial health of the fund is important because the state can impose a surcharge on most insurance policies to replenish it if the money runs out. Some critics have called the surcharge a “hurricane tax.’’ The fund has grown because Florida has avoided major hurricanes since 2005. Copyright 2017 Associated Press.
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acre fire that damaged homes in a Polk County development in April. Several homes in the same Indian Lake Estates development were destroyed by a February blaze that burned 5,600 acres. University of South Florida criminology professor Bryanna Fox said some arsonists set fires to commit insurance fraud or cover up another crime, while others suffer from psychological disorders and enjoy setting and watching fires. Copyright 2017 Associated Press. INSURANCEJOURNAL.COM
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