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November 18, 2019 • Vol. 97 No. 22


News & Markets

News & Markets

News & Markets

Florida Expands Access to Insurtech Services and Devices

Nesheiwat Appointed as Florida’s First Chief Resilience Officer to Prepare State for Sea Level Rise

Florida Wants Insurers to Settle Hurricane Michael Claims


4 8

10 Carter Appointed Florida

Florida’s New Consumer Advocate Tackles Open Hurricane Michael Claims, Complaints

Insurance Consumer Advocate

11 Patronis Takes Spot on

10 Rivard Appointed Chair

FEMA National Advisory Council

of Florida’s Citizens Property Insurance Board of Governors

Departments 6 People



Florida’s Citizens PostAOB Reform Rates Set to Take Effect


Help for Florida Insurers Drowning in Water Damage Claims

14 Florida Fraud Roundup




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News & Markets Florida Expands Access to Insurtech Services and Devices


n June 28, 2019, Florida Governor Ron DeSantis signed House Bill 301 into law and, in doing so, loosened regulatory By Andrew Marcus restrictions and allowed insurers and their agents to utilize innovative technologies to reduce perils to insureds and the costs to insurers. House Bill 301 situates Florida among a vanguard of states that have promulgated legislation freeing insurers to provide services and devices designed to mitigate risk and control losses. The new law, effective July 1, 2019, covers a broad range of topics, among which is a provision allowing insurance companies or agents to give insureds loss mitigation or loss control services, merchandise, goods, wares, or other items for free or at a discounted price. However, permissible loss control or mitigation must relate to the risks covered under the policy. In general, Florida’s Unfair Insurance Trade Practices Act prohibits paying or providing certain inducements to the purchase of insurance, including payments of rebates, dividends, stock, or other things of value to insureds or prospective insureds. House Bill 301 provides specific exemptions to this Act. The Florida Legislature has allowed exemptions to this Act in the past. For example, health insurers are allowed to give insureds rewards or incentives for participation in wellness or health improvement programs. Last year, the Unfair Insurance Trade Practices Act was amended to allow insurers and their agents to offer loss mitigations services and other items up to $100 per calendar year to insureds, prospective insureds, or others. The new law greatly expands the ability of insurers and their agents to provide loss mitigation services or goods relating to their policies, and states: [The Act] does not prohibit an insurer or agent from offering or giving to an insured, for free or at a discounted price, services or other

merchandise, goods, wares, or other items of value that relate to loss control or loss mitigation with respect to the risks covered under the policy. The language is intended to allow insurers to utilize innovative technology to reduce the severity or frequency of claims or eliminate the risk altogether. For example, a life or health insurer may now provide wearable technology that monitors an insured’s vital signs or activity level, or a property insurer could offer detection systems for fires or flooding. The legislative staff analysis provides the example that such loss control devices could include a sensor that sounds an alarm when the environment around high-value art exceeds set temperature or humidity levels or when a leak is detected. As of July 2019, there is no limit on the value of loss mitigation or loss control services or merchandise which can be given to insureds. What remains unclear, however, is what fits under the scope of the exemption. May an insurer collect data from a loss mitigation device? Can an insurer pay for periodic repairs to insured property as a loss mitigation service? May an insurer give away items like smart phones because the insured could then call emergency services, which would mitigate losses after covered events, like a car accident for an automobile insurance policy or a house fire under a property insurance policy? The extent to what is a value-added product covered under the statute is unclear, leaving legislators or regulators with difficult decisions in the future.

Anti-Rebating Prohibitions Remain Nationwide

However, an insurer looking to provide loss mitigation or loss control devices or services on a nationwide basis should be careful. The anti-rebating laws of most


states still prohibit such gifts, though some states are either seeking to promulgate legislation or clarify existing law to account for beneficial insurtech products. Some states allow gifts of varying values, from $25 to $100 dollars. Other states, including Maine, North Dakota and New Jersey, have drafted guidance declaring that they will not interpret anti-rebating provisions to prohibit loss mitigation or loss control solutions. California eliminated its anti-rebating prohibitions entirely.

Indeed, the National Association of Insurance Commissioners (NAIC) and the National Council of Insurance Legislators (NCOIL) have both taken steps to modernize their approaches to anti-rebating laws. The NAIC’s Innovation and Technology Task Force voted last summer to revisit its Unfair Insurance Trade Practices Model Act, used by many states as a basis for their own such laws. The goal would be to revisit and modernize its anti-rebating provisions, though the process could take years. NCOIL is looking to modernize state anti-rebating laws, discussing ways to allow innovation at its own summer meeting. Despite acknowledgments that regulations remain a barrier to innovation in the field of insurance and that states’ interpretations of anti-rebating laws are inconsistent, insurers and consumers alike have reason to hope things will change. Andrew Marcus is a senior counsel in the Tallahassee, Florida, office of Holland & Knight LLP.


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Federation of Florida (PIFF) has appointed Scott Matiyow

as vice president of Legislative and Regulatory Affairs. Matiyow will serve as a lead lobbyist on property/ casualty insurance Scott Matiyow issues and will develop political strategy for PIFF’s political committee. Prior to joining PIFF, Matiyow worked as a staff member for the Florida Senate Committee on Banking and Insurance for eight years, serving as senior legislative analyst. He was lead analyst for insurance-related policy areas including Citizen’s Property Insurance Corp., the Florida Hurricane Catastrophe Fund, national and private flood insurance, surplus lines insurance, uniform mitigation credits, and automobile financing and salvage. His prior experience also includes work for the Florida Department of Business and Professional Regulation. He began his legislative and political career as an undergraduate, interning for then Rep. Mike Haridopolos and for Senator Bill Posey, and going on to assist various state and federal campaigns. The Personal Insurance Federation of Florida, Inc. (PIFF), represents national insurance carriers and their subsidiaries focused on the personal lines property/casualty insurance industry in Florida. Gulfstream Property and Casualty Insurance Co. has

appointed Lisa B. Thompson to general counsel, vice president of Legal & Compliance. Prior to joining Gulfstream, Thompson Lisa B. Thompson was senior vice president of legal and compliance for Bankers Insurance Co. She began her insurance career in 2001 and became a member of the Florida Bar in 2007. Her expertise includes transactional law with a strong focus on regulatory compliance. Founded in 2004, Gulfstream, a Sarasota, Fla.based insurance company, provides homeowners’ insurance and related services to customers in Alabama, Florida, Louisiana, South Carolina, and Texas. We Insure Group has expanded its executive team with two new hires – Chris Pflueger has joined as chief development officer and Peter Crowe as chief revenue officer. Pflueger will execute strategies Chris Pflueger to drive We Insure’s growth and joins We Insure with more than 11 years of Peter Crowe senior-level franchise experience and 25 years of professional sales expertise. Crowe is We Insure’s first CRO and is responsible for all revenue-generating strategies and nationwide growth. Previously, Crowe served as


executive vice president for RE/MAX and Motto Mortgage franchise brands. We Insure Group consists of nearly 100 retail locations and offers home, auto, and business insurance through more than 150 top-rated carriers with franchise opportunities currently available in Florida and Georgia. Renaissance Alliance Insurance Services, a membership alliance for independent insurance agencies, has hired Anthony Amoruso as senior agency recruitment specialist in Florida. Oscar L. Miniet, Regional executive vice president, made the announcement, saying that Amoruso’s primary role will be to continue expanding and growing agency membership in the Alliance. Amoruso’s background in property casualty insurance spans more than three decades. Most recently, he was Territorial Sales manager in southern Florida for Bankers Insurance Corp. Prior to that he was employed as a Sales and Underwriting manager for Travelers and an underwriter for Aetna. Renaissance Alliance entered the Florida insurance market in May of 2019. There are currently five member agencies in the network: NEA Insurance Group, LLC; Avante Insurance Agency; The Madison Insurance & Financial Group Corp.; Gil & Associates Insurance Consultants; and The Insurance Guy. Founded in 1999, Renaissance Alliance is a membership alliance for independent agencies specializing

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News & Markets

Florida’s New Consumer Advocate Tackles Open Hurricane Michael Claims, Complaints By Amy O’Connor


lorida’s new Insurance Consumer Advocate Tasha Carter has been busy since taking office August 1. With more than 12,000 Hurricane Michael claims still open, according to the Florida Office of Insurance Regulation, one of Carter’s top priorities has been to investigate the reason for the open claims from the devastating Category 5 storm and how the recovery process can be improved going forward. Carter, who has been with the Florida Department of Financial Services for 17 years, said her new role as the state’s insurance consumer advocate is just slightly different than what she did for DFS previously as director of the Division of Consumer Services for nine years. Now, instead of focusing on assisting individual consumers on a one-on-one basis, she said she is looking at opportunities to advocate on behalf of all insurance consumers. Those opportunities will include pro-

posing new legislation and working with legislators to protect insurance consumers, participate in hearings on insurance-related issues with DFS and the Florida Office of Insurance Regulation, and make recommendations to regulators on behalf of consumers. “My new role allows me to more globally represent the interest of insurance consumers as insurance decisions are being made throughout the state at each of those various levels,” Carter said. Carter spoke with Insurance Journal about her priorities, what she thinks the insurance industry could do better when it comes to working with their policyholders, and opportunities for the industry and her office to work together. The interview has been edited for clarity and brevity.

IJ: What are your top priorities as consumer advocate? Carter: I am focused on three primary principles. One, I want to ensure that Florida’s insurance market is balanced


from the perspective that coverage is available and affordable for insurance consumers in the state. ... Secondly, I want to obtain data, review data, [and] analyze it so that I can identify Tasha Carter those trends that are happening in the insurance industry that may impact consumers. And I definitely want to be able to identify trends so that I can attempt to improve the consumer’s experience with their insurance company. ... Thirdly, I want to ensure that I am representing consumers’ interests when it comes to the filing of insurance rates and the filing of forms within our state, because of course insurance rates are going to have a direct impact on consumers and I want to be able to ensure that consumers are represented when those decisions are made. I also want to review the methodology and the actual science

continued on page 12






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News & Markets Rivard Appointed Chair of Florida’s Citizens Property Insurance Board of Governors


lorida Chief Financial Officer (CFO) Jimmy Patronis appointed Bo Rivard as the chair of the Citizens Board of Governors. Rivard has served on the Citizens Property Insurance Corporation Board of Governors since April 29, 2019. He is a part-

Bo Rivard

ner at Harrison, Rivard, Duncan, & Buzzett and previously served as chairman of the Florida Fish and Wildlife Conservation Commission. As an attorney, Rivard has represented both public and private companies including those in the health care, transportation, and other regulated industries. “I am proud to appoint Bo as

chair of the Citizens Board and I know he will continue to serve our state well in this new role as he has extensive experience with statewide boards and commissions,” Patronis said in a statement. “As a Panama City resident, his first-hand knowledge of Hurricane Michael’s impact provides an important perspective on the effects and financial toll of natural disasters our state faces.”

Nesheiwat Appointed as Florida’s First Chief Resilience Officer to Prepare State for Sea Level Rise

Carter Appointed Florida Insurance Consumer Advocate

lorida Governor Ron DeSantis has Opportunity, in addition to local commuappointed Dr. Julia Nesheiwat nities and stakeholders. as Florida’s first Chief Resilience Nesheiwat has more than 20 years of Officer (CRO). The CRO will be tasked with renewable energy and environmental preparing Florida for the environmental, experience focused on water and natural physical and economic impacts of sea level resources as a senior executive in federal rise. cabinet-level agencies, academia and “Developing resilience goals for the as a combat veteran. She has served in state will help to protect our coastal coma variety of positions, including as former Deputy Assistant Secretary of State munities and fortify Florida’s pathway to building the first Energy continued prosperity,” DeSantis said in a statement on the appointment, Resources Bureau working announced in August. “Today, we closely with the Oceans, take the step of appointing Florida’s Environment and Science first Chief Resilience Officer to coorBureau and serving as chief dinate a statewide response to preof staff to Special Envoys pare for the environmental, physical and Under Secretary for and economic challenges facing our Energy, Environment and state.” Sustainability. Julia Nesheiwat DeSantis said Nesheiwat’s more She also managed the than 20 years’ experience operating in resiliency and energy working group on government and academia focusing on the World Economic Forum’s (WEF) Global renewable energy, environmental and Advisory Council and is an advocate on critical infrastructure issues “make her an energy and environmental programs and excellent choice for this position.” critical infrastructure protection (CI), The CRO will report to the Executive power sector sustainability and innovation Office of the Governor and will work in projects. partnership with the Florida Department Nesheiwat previously served as a visiting professor at the Naval Post Graduate of Environmental Protection, the Florida Department of Transportation, the Florida School on Energy & Environmental Security and lecturer at University of Division of Emergency Management, California San Diego & Stanford University. the Florida Department of Agriculture She is a former U.S. Army intelligence offiand Consumer Services, the Florida Fish cer with combat tours in Afghanistan and and Wildlife Conservation Commission Iraq. and the Florida Department of Economic

asha Carter, long-time director of the Florida Department of Financial Services’ (DFS) Division of Consumer Services, was appointed by Florida CFO Jimmy Patronis as the Tasha Carter state’s Insurance Consumer Advocate, effective August 1. The Insurance Consumer Advocate (ICA) works independently from the Florida Department of Financial Services’ and works with insurance consumers and stakeholders to find consumer focused-solutions on insurance matters. Carter joined the Department of Financial Services in 2003 and recently served as the director of the Division of Consumer Services for more than eight years, leading a team of more than 100 professionals who advocate and assist more than 300,000 insurance consumers annually. In this role, Carter worked closely with Patronis to educate and advocate on behalf of all Floridians who have purchased an insurance or financial product. Carter’s professional experience includes more than 19 years of leadership, professional responsibility and experience in regulation, consumer advocacy and outreach.





Patronis Takes Spot on FEMA National Advisory Council


lorida Chief Financial Officer (CFO) Jimmy Patronis has been appointed to the Federal Emergency Management Agency’s (FEMA) National Advisory Council (NAC) by Acting Administrator Pete Gaynor. The NAC is an advisory committee established by federal law to ensure effective and ongoing coordination of federal emergency management activities. It provides advice to the FEMA Administrator through recommendations on all aspects of emergency management. For example, in 2019 the NAC has examined how to continue building financial preparedness, how to structure the Building Resilient Infrastructure in Communities program, as well as how to help close the insurance gap. The NAC consists of up to 35 members, including a diverse cross-section of officials, emergency managers, and emergen-

cy responders from state, local, tribal and territorial governments and non-governmental organizations, and the private sector. Patronis was one of 15 members appointed to the NAC recently. He heads up the Florida Department of Financial Services, which oversees several key agencies including the Florida Office of Insurance Regulation. He was appoint- Bo Rivard ed to the position by former Governor Rick Scott in 2017 and elected to a four-year term in 2018. He said in a statement he is “honored” by the appointment and looks forward to advising FEMA on disaster response and recovery issues, particularly financial and insurance matters.

“As a fourth-generation Floridian, I know the importance of emergency preparedness and management to ensure the safety and success of all Floridians,” Patronis said. “I will continue to advocate for measures aimed at streamlining the reimbursement process of federal assistance to communities impacted by disasters, a vital part of the recovery process. After seeing firsthand the devastating impacts of Hurricanes Irma and Michael, I know that building relationships with our federal partners in Washington is important to ensuring Florida is prepared to recover quickly from the next disaster that takes aim at the Sunshine State.”

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News & Markets continued from page 8 behind the insurance rates to determine if those rates that are being proposed are fair, warranted and appropriate for insurance consumers.

IJ: What are some of the trends you see when it comes to complaints and issues? Carter: I’ll use Hurricane Michael as a very good example. That’s a storm that significantly impacted the North Panhandle of Florida over a year ago. I’ve been working with those consumers since five days after the storm and I’m still working with them. … Some of the feedback that we’ve received specifically related to Hurricane Michael insurance related claims is one, the extensive and prolonged and unnecessary delays in the handling of the claim. Many consumers shared that they filed their claim immediately after the storm and [it was] weeks and sometimes even months before they received any type of feedback or communication or follow up from the insurance company. We’ve also received a lot of complaints about overall communication between the policyholder and the insurance companies where the insurance companies have been nonresponsive. Or if they are communicating with the policyholders, their communication is not clear at times, and their communication is significantly delayed at times as well. … Other complaints that we’ve received is the assignment of multiple adjusters to claims, specifically as it relates to Hurricane Michael claims. There are some consumers who have indicated that they received up to seven to eight adjusters that have been assigned to their single claim. … [Consumers have] become very frustrated with their companies and they’ve lost trust and they’ve lost confidence in their companies. The insurance industry has faced much scrutiny over the number of Hurricane Michael claims still unsettled with lawmakers and state officials questioning the industry and expressing frustration at the situation. For their part, industry representatives say there have been other factors at play leading to claims delays like a contractor shortage and litigation.

Rescue personnel survey the aftermath of Hurricane Michael in Mexico Beach, Fla., Thursday, Oct. 11, 2018. (AP Photo/Gerald Herbert)

OIR has issued multiple data calls to insurers and completed an analysis of claims data that was released near the one-year anniversary of the event. Carter said she has requested data from 22 insurers that represent 75% of the open Hurricane Michael claims to review and analyze why they remain open. The data was due to her office by Nov. 11 and had not been received and analyzed by press time.

Carter: I am anxiously anticipating receiv-

ing those data submissions and having an opportunity to be able to go through and … identify those trends, not only from a company perspective, but also identify a trend from a claims handling perspective, from a business operational perspective, to be better able to determine how policyholders are being impacted and how we can address some of these issues going forward so they are not repeated.

IJ: Once you analyze that data, how do you plan to use it to address issues consumers are having? Carter: Based upon the trends that are identified, I want to be able to determine whether or not there is a potential legislative proposal that could address the trends that I’m seeing that could allow us to implement some additional consumer protections, especially in the aftermath of


a catastrophe. Once I put together the list of those legislative proposals, then I am going to work directly with CFO [Jimmy] Patronis and his legislative affairs team. The CFO is already putting together a consumer protection bill that he wants to submit and be heard in the next legislative session.

IJ: Are some insurance companies doing better than others? Carter: I think there are some insurance companies that are absolutely doing a better job than others of handling their claims and being responsive to their policyholders. I know that there were several insurance companies that sent out communications prior to the storm. Immediately following the storm, they sent out post communication to their policyholders making sure that they had the claims number to file the claims and making sure they understood what the claims process was and how to initiate those claims. Many insurance companies have partnered with CFO Patronis and the department on attending insurance villages … oftentimes those insurance company representatives have the capability to print checks on site as well. And so, as you can imagine, for a typical policyholder whose only opportunity to interact with their insurance company is usually by phone or by email, being able to actually walk into INSURANCEJOURNAL.COM

a room and sit down with your insurance company representative and talk about your claim, ask questions related to your claim, submit additional documentation and then potentially walk away with a check in hand is absolutely beneficial.

IJ: What do you think agents can do to improve the consumer’s insurance experience? Carter: [Agents play an important role] in educating the consumer. Even if a consumer is not sitting down in your office across from you asking questions in order to purchase a policy, even if you’re doing it online, there’s still an agent, a licensed agent, that is behind that policy transaction. So at that point I still think that ultimately there has to be a level of communication with that insurance consumer. Even if the insurance consumer wants to make the decision based upon the price of their premium, the agent still needs to ensure that that policyholder understands the

coverages that they have, the limitations related to those coverages and the exclusions related to those coverages as well.

IJ: Are there opportunities for the industry to assist you in helping consumers? Carter: Absolutely. While my primary focus is advocating on behalf of insurance consumers, I absolutely feel like for all industry stakeholders our goal is the same. And that’s to ensure that we are providing the best possible service to our customers, whether that’s insurance agents, public adjusters, company adjusters, independent adjusters, insurance company representatives. I definitely want to approach it from the perspective of working together. I think that we can work together to advocate at our respective levels for insurance consumers, to ensure that insurance consumers have the information, knowledge, the education that they need in order to make informed insurance decisions, and to ensure that the insurance industry con-

tinues to be a valuable market in our state. I am absolutely looking forward in my new role to working with industry stakeholders at every level. I am open to listening to their feedback and receiving their input as I advocate on behalf of insurance consumers. And I encourage any industry stakeholder to reach out to me directly if they are seeing trends at their level that they want to bring to my attention. If they have suggestions or recommendations from a legislative standpoint that they would like to share with my office, I am absolutely open and willing and very much interested in hearing their feedback and working together with them.

Web Resource To hear the full interview with Florida Insurance Consumer Advocate Tasha Carter please visit

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Florida Fraud Roundup

3 Arrested in Miami in $39K PIP Fraud Scheme

Three people in Miami were arrested last month in an alleged $39,000 personal injury protection (PIP) fraud scheme, according to a statement from the Florida Department of Financial Services. Alean Machado, Barbarito LeyvaClaro, and Yoandra Rodriguez-Pena were charged with insurance fraud, grand theft, patient brokering and organized scheme to defraud for their role in the scheme that was exposed during an undercover operation. DFS said between January 2019 and March 2019, the Bureau of Insurance Fraud conducted an undercover operation into Professional Medical Practice, a Miami physical therapy clinic. Investigators used two cooperating witnesses to pose as vehicle accident victims at which time, it was discovered that clinic owner Machado, with the assistance of Leyva-Claro acting as recruiter, allegedly offered to pay participants $2,500 for their involvement in fraudulent physical therapy treatments. Rodriguez-Pena, a physical therapist, coached the cooperating participants on what to say if ever questioned by their insurance company about therapy treatments that were never provided. As a result of the scheme, Machado fraudulently billed two insurance companies over $39,000 for numerous days of physical therapy treatments that never occurred.

Machado, Rodriguez-Pena and LeyvaClaro were arrested and booked into Turner Guilford Knight Correctional Center (TGK) on Oct. 1. If convicted on all charges, Machado and Rodriguez-Pena face up to 45 years in prison. Leyva-Claro, if convicted on all charges, faces up to 50 years in prison. Individuals charged with a crime are presumed innocent until proven guilty. The investigation was conducted in conjunction with the National Insurance Crime Bureau (NICB) and is being prosecuted by Miami-Dade State Attorney Katherine Rundle’s Office. “These types of clinics are the core elements of any ongoing PIP insurance fraud scam as they exist only to steal, not heal,” State Attorney Katherine Fernandez Rundle said.

Florida Insurance Agent Arrested in $99K Senior Annuity Scam

A Florida insurance agent was arrested for allegedly defrauding a Florida senior of roughly $99,000 in an annuity investment scam, according to a statement from the Florida Department of Financial Services. Florida Chief Financial Officer (CFO) Jimmy Patronis announced the arrest of insurance agent Alberto Soulier after investigators allege that for several years Soulier created fake investment companies and pocketed the annuity premiums of a South Florida senior citizen. An investigation by the Bureau of Insurance Fraud and Division of


Insurance Agent & Agency Services uncovered that licensed insurance agent Soulier allegedly sold fictitious annuity policies to a senior victim with the promise of a better rate of return on the investment. Over roughly four years, DFS said Soulier allegedly presented bogus annuity documents to the victim bearing the names of fictitious companies “MBA Capital Group” and “Trust Preferred Capital Network” and then pocketed the victim’s premiums totaling approximately $99,000. Soulier was booked into Broward County Jail on Oct. 15, 2019, on charges of misappropriated insurance funds, organized scheme to defraud, and grand theft. If convicted, he faces up to 75 years in prison. Immediately upon filing of formal charges, Soulier’s license was suspended. This case is being prosecuted by the 17th Judicial Circuit of Florida. Individuals charged with a crime are presumed innocent until proven guilty. “Defrauding any Floridian is unacceptable but it is especially despicable when scam artists target seniors who have worked their entire lives to build a nest egg,” Patronis said. “My dedicated fraud investigators are working every day to root out fraud and hold bad actors accountable. It’s vital that Florida’s seniors understand the warning signs of fraud and remember that if an offer sounds too good to be true, it usually is.”

9 Insurers Defrauded by Florida Doctor in $500K Accident Clinic Fraud Scheme

A Florida doctor was arrested last month for allegedly defrauding nine auto insurance companies out of more than $500,000 in unlicensed medical billing, according to a statement from the Florida Department of Financial Services. Dr. Celestino Santi was arrested in October after an investigation by DFS fraud detectives revealed that Santi allegedly concealed the ownership of Accident Care Center of Boggy Creek, a motor vehicle accident medical treatment center, to avoid the licensing requirements of the Health Care Clinic Act. Investigations revealed that for approximately five years, Santi was allegedly INSURANCEJOURNAL.COM

acting as a “straw owner” to disguise the identity of the true owner, an unlicensed individual. Unlicensed medical treatments were then billed to various insurance companies under patients’ personal injury protection (PIP) coverage. Santi was booked into Lake County Jail on charges of scheme to defraud of more than $50,000, false and fraudulent insurance claims of more than $100,000, grand theft of more than $100,000, and operating an unlicensed health care clinic. If convicted on all charges, he faces up to 30 years in prison. Additional arrests are expected. Individuals charged with a crime are presumed innocent until proven guilty. “Insurance fraud is estimated to cost Americans more than $40 billion a year and reports show this translates to an estimated premiums increase to the average U.S. family of between $400 and $700 a year,” said CFO Patronis, who oversees DFS. “Scams like this one put people in harm’s way and drives up the cost of insurance.”

Unlicensed Florida Doc Arrested for Treating Auto Accident Injuries, Billing Insurers

A Florida doctor has been arrested for allegedly practicing as a health care professional without a license and fraudulent billing for unlicensed medical treatments, according to a statement from the Florida Department of Financial Services. Ozioma Maduka of Osceola Injury Center, LLC was arrested last month after an investigation conducted by the DFS Bureau of Insurance Fraud detectives revealed that Maduka allegedly practiced as a medical doctor at Osceola Injury Center, LLC in Kissimmee, Fla., without an active, valid Florida medical doctor’s license. Maduka allegedly performed initial examinations, follow-up examinations, diagnosed patients, gave prognosis and created treatment plans for patients who sought treatment related to auto accident injuries. Maduka fraudulently billed two insurance companies more than $4,400 for the INSURANCEJOURNAL.COM

unlicensed treatment of auto accident victims. Maduka was arrested on Oct. 25, 2019 by Portsmouth Sheriff’s Office and booked into Portsmouth City Jail in Virginia before being extradited to Florida. He was charged with practicing as a healthcare professional without a license, a third-de-

gree felony. If convicted, he faces up to five years in prison. Individuals charged with a crime are presumed innocent until proven guilty. “Posing as a doctor without a medical license to purposely deceive and defraud consumers is despicable and can put patients at risk,” Patronis said.


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5/22/18 11:04 AM


News & Markets Florida Wants Insurers to Settle Hurricane Michael Claims By Amy O’Connor


t’s been just over a year since Hurricane Michael made landfall in the Florida Panhandle, devastating the region as a Category 5 storm with 161-mph winds and causing more than $7.2 billion in estimated insured losses, according to the Florida Office of Insurance Regulation. As of Sept. 27, 88.4% of the nearly 150,000 claims related to the storm have been closed, but more than 17,000 claims remain open and lawmakers and regulators say insurers need to do more to get those claims resolved. “As we mark the one-year anniversary of Hurricane Michael, OIR recognizes the tremendous work that still needs to be done to close insurance claims and allow Florida’s Panhandle residents and business owners to rebuild and recover from this devastating storm,” Insurance Commissioner David Altmaier said in a statement on the storm’s one-year anniversary on Oct. 10. A one-year analysis of Hurricane Michael released in early October by OIR stated that 12,145 of the 17,347 open claims are personal residential. OIR said that policyholders have continued to file new claims through its latest data call reporting period, including 1,571 during the 90 days preceding the analysis. It noted that per Florida law, policyholders can claim a loss within three years of the hurricane’s initial landfall or when the windstorm caused the covered damage. The analysis found that more than 82,000 Hurricane Michael claims were closed in the first two months following the storm, and since October 2018 an average of 3,300 claims per month claims have been closed. Of the current 17,347 open claims, 9,330 of those are claims that have been reopened, OIR stated in the report, with 3,313 of those open claims in litigation and 2,996 open with an assignment of benefits. Just 191 of the open claims are both wind and flood claims. OIR said when compared with Hurricane Irma, which affected a much

larger area of the state, Hurricane Michael was a costlier storm in terms of the number of claims versus the amount of paid losses. Irma had more than 1 million claims totaling more than $10.8 billion with an average claims cost of $10,800 while the average claims cost for Michael is around $44,831. Insurers appear to have been quicker to pay Irma losses, according to the OIR analysis. Just over 7% of the 2017 storm’s claims remained open 14 months after Hurricane Irma while 11.6% of Michael claims are still open 12 months later. Lawmakers told Florida Insurance Commissioner David Altmaier at an October committee meeting that they are unhappy with the industry's response to Hurricane Michael claims. “It is extremely important to this committee and to the people of Florida that insurers are handling these claims properly,” Florida Senator Doug Broxson said at a Florida Senate Banking & Insurance Committee meeting on Oct. 15. The committee asked Altmaier to expand OIR’s current investigations into why claims are taking so long to close and requested the office work with the Florida Department of Financial Services and the Florida Insurance Consumer Advocate Tasha Carter to look into consumer complaints and what companies are seeing the most complaints. Carter told the committee one of her first priorities since being appointed last month has been to review, analyze and monitor open Hurricane Michael claims in an effort to gain a better understanding of why so many claims are still open and what is causing them to be delayed. Carter has requested additional data for her office to analyze from the companies that represent 75% of the open Hurricane Michael claims. Panhandle native and Florida CFO Jimmy Patronis, who heads up the


Department of Financial Services, has been outspoken on the insurance industry’s handling of Michael claims over the last year, repeatedly calling on insurers to step up their efforts to help consumers recover. He reiterated that message on the oneyear anniversary of Michael and said the region’s recovery “has been hampered by the more than 17,000 outstanding insurance claims left open a full year after the storm.” The DFS Consumer Services Team held its second Hurricane Michael Insurance Village in Panama City in the span of two months on Oct. 6 as part of its efforts to get claims resolved. Patronis said 30 insurance companies were in attendance with an estimated $1.5 million in claims payments made to consumers who met with their insurance company in person. “While this is great progress in paying out remaining claims, it’s past time insurance companies step up for the consumers who pay their premiums faithfully month after month,” Patronis said. The industry, however, says the reason for so many open claims does not entirely fall on insurers’ shoulders. Many factors have been at play that have stalled claims resolutions for consumers, representatives from the industry told Insurance Journal. “The biggest difference in this storm recovery effort and others is the severe shortage of contractors to perform the work. This has resulted in claims staying open longer than desired,” said Jeff Grady, president and CEO of the Florida Insurance Agents Association (FAIA). “We routinely hear stories of one- to twoyear wait times for roofs/rebuilds in the Panama City area. That obviously means the claims will have to stay open for an extended period of time.” The Florida Property Casualty Association (FPCA), which represents 12 domestic Florida insurers, said in a statement its companies are working to resolve

“It’s past time insurance companies step up for the consumers who pay their premiums faithfully month after month”


An excavator rolls through a street lined with damaged homes from Hurricane Michael in Mexico Beach, Fla, Friday, Jan. 25, 2019. (AP Photo/David Goldman)

any open claims “in an expeditious manner,” including participating in the CFO’s latest insurance village. “Hurricane Michael impacted almost 200,000 structures. Although insurers have adjusted and paid the vast majority of claims, the most difficult claims remain, including those that involve flood damage or are under the control of public adjusters,” William Stander, FPCA executive director, told Insurance Journal. “The Florida Property & Casualty Association’s member insurance companies continue to do their best to help Floridians pick up their lives and rebuild their homes. As Floridians ourselves, we recognize that we are all in this together.” Michael Carlson, president and CEO of the Personal Insurance Federation of Florida (PIFF), said the vast majority of Michael claims are resolved, but noted there are many reasons why some claims INSURANCEJOURNAL.COM

remain open, including a lack of contractors and other tradesmen, and a lack of engineers and other specialists to help evaluate and estimate damages. He said there are also other barriers that may force a claim to go beyond the 90-day “prompt pay” period. “A claim may remain open if the homeowner cannot find a contractor to perform repair work or if they are waiting to pay a vendor,” he said. “In the case where you cannot remain in your home and need living expenses from your insurer while your home is being rebuilt, the claim may remain open.” He stressed insurers are committed to working with consumers in their recovery from Michael. “While the existing open claims are being resolved, we know claim filing does not stop when the wind stops — new claims from Michael may continue to

come in up to three years after the event. We will keep our commitment to rebuilding Northwest Florida. That work will not be complete until every Hurricane Michael claim is resolved,” he said. Regardless of the reasons for the delays, Altmaier said his top priority is getting Hurricane Michael claims closed as soon as possible. “We will review claims handling practices and identify unwarranted claim delays or denials, and take swift action against insurers violating the law,” Altmaier said in a statement. “I understand there is a human story behind every claim and every complaint. I encourage consumers to tell their stories by calling the CFO’s Consumer Helpline at 1-877-693-5236 if they are experiencing any issues whatsoever with their claims. We are committed to making consumers whole to the fullest extent of the law.”


News & Markets Florida’s Citizens Post-AOB Reform Rates Set to Take Effect By Amy O’Connor


itizens Property Insurance Corp. rates approved by Florida’s insurance regulator after assignment of benefits reforms were enacted will take effect next month. The rates are expected to be lower for many policyholders after the insurer resubmitted its rate filing as part of a new law passed by Florida lawmakers in the last legislative session. The Florida Office of Insurance Regulation (OIR) released the newly established rates in July for commercial lines and personal lines, which show significant reductions from the previous filed increases by Citizens as a result of the AOB reforms. The law took effect July 1, 2019. Meanwhile, Citizens has taken several steps internally to comply with the new legislation and track how its costs will be impacted going forward. OIR said the new rates for each line of business “highlight the impact of AOB reform on requested rates.” The overall estimated statewide average rate changes established by OIR for each line of business individually are detailed in the chart. This is an estimate of the rate effect on earned premiums determined using selected changes from the in-force policy distributions and the rates in the order. Prior to the enacting of the new AOB reform law, Citizens filed for rate increases for 97 percent of its homeowners policyholders for this year to offset litigation costs. The overall requested rate increase Citizens requested from OIR in December 2018 was 8.2%. However, the new law stipulated that the insurer may not implement any rate changes this year unless the 2019 rate filing reflected projected rate

savings from the reforms. The effective date of the rate changes for all three accounts (Coastal, Commercial Lines, and Personal Lines) is Dec. 1, 2019. “We are pleased to see that AOB reforms passed by the legislature are already having a positive effect on rates. We will be closely monitoring new rate filings to ensure that costs savings are passed along to Florida consumers,” Florida Insurance Commissioner David Altmaier said in July. Citizens President, CEO and Executive Director Barry Gilway said this month the insurer is already seeing evidence that AOB reform is having a huge impact on the insurer’s costs. Speaking at the Florida Chamber of Commerce’s Insurance Summit in Miami in early November, Gilway said Citizens litigation has dropped from 2,000 suits a month to just over 1,750 a month over the last two months. AOB suits are also trending down. Gilway told attendees that prior to the


reforms being enacted Citizens received about 800 to 900 AOB claims per month. In July, once the reforms took effect, the number was down to 707, followed by 468 in August, 375 in September and 374 in October. “I really believe that we have substantial facts, substantial data – that all the work that was done that came together to pass AOB will have a huge impact,” he said. “We have some initial indication that it is working. The bottom line is we can mine what the next steps might be for first party litigation which is still a huge issue.” Gilway noted that AOB claims have to be compliant with the new AOB statute in House Bill 7065 in order to be considered, which is creating a “two-fold benefit” because there has been a reduction in the number of claims as well as the ability to eliminate those AOB claims that are non-compliant. He emphasized that insurers have to follow the timeline that the bill requires to take advantage of its protections and track the impact on claims. Insurers are also required by OIR to report each residential and commercial property insurance claim paid in the prior calendar year under an assignment agreement through January 2022. “It is going to be absolutely critical for all companies to follow this timeline very, very religiously and make sure all of the components of this bill are tracked and followed to determine the impact,” he said. “If an insurance company doesn’t comply, they will lose the benefits of [HB] 7065.” In fact, Citizens has created a separate unit that just focuses on AOB claims and litigation. “We are tracking every single element of the bill,” Gilway said. INSURANCEJOURNAL.COM

News & Markets Help for Florida Insurers Drowning in Water Damage Claims


n recent years, property insurers in Florida have experienced a proliferation of water loss claims, many the result of By Corey K. Setterlund aggressive advertising campaigns by plaintiffs’ law firms that represent policyholders in actions against insurance companies. These advertisements have targeted allegedly failing cast iron pipes beneath the foundation of homes. As these water damage claims continue to grow, homeowners insurance companies have been forced to craft new policy endorsements which either exclude coverage or limit the amount of insurance available to consumers for property damage caused by water. The goal of these limitations and exclusions is to reduce exposure, combat the rising costs of insuring properties in Florida, and to provide homeowners with more accurate and affordable premiums. However, many policyholders continue to claim these endorsements are ambiguous and do not apply to their particular claims, and they seek venues and judges who might agree. The most prevalent claims at issue involve the demand for full replacement of the cast iron plumbing systems, including the labor to replace the plumbing system itself when its alleged failure causes physical damage to the home. In these cases, homeowners’ attorneys contend the new policy endorsements are ambiguous and do not clearly delineate tear-out and access to the deteriorated plumbing systems as being subject to the endorsements. Recently, Florida judges have been issuing opinions on whether these endorsements are enforceable or ambiguous, as claimed by the plaintiffs bar. With each insurer having its own version of a limitation and/or exclusion endorsement, judges have been forced to analyze each unique situation and determine whether the endorsement, on its face, encompasses all water damages. INSURANCEJOURNAL.COM

For example, most endorsements provide that a sudden and accidental direct physical loss to covered property by discharge or overflow of water or steam from within a plumbing system, is limited to “X” amount of dollars. This includes all damage to covered property provided by the endorsement and is applicable to covered property. Some judges have systematically concluded these endorsements do not apply to the tear-out and access provision, as the property that needs to be accessed or torn-out may not be covered (plumbing system) nor is damaged by water (i.e., tile flooring above the plumbing system). While the covered water damages are included in the endorsement, homeowners have successfully argued that the tear-out of non-damaged or non-covered property falls under the “Perils Insured Against” provision, which is limited under Coverage A policy limits. Other insurers have more expansively addressed the issue by enumerating that additional portions of the repairs fall under the purview of the limitation or exclusion endorsement. Some examples of this additional language include: “this limit includes the cost of tearing out and replacing any part of the building necessary to repair the system from which the discharge occurred” or “including the cost to tear-out and replace any part of a building, or other structure, on the

‘residence premises’” or “this limitation includes but is not limited to the cost to repair or replace any non-damaged part of the building or its components to match the damaged property and the cost of tearing out and replacing any part of the building necessary to repair any damaged property.” Plaintiffs’ attorneys have begun to concede such language covers the tear-out and access for replacement of the plumbing system. Alternatively, some courts have been successfully persuaded to rule in favor of the carrier that the said language includes any tear-out and access for replacement costs. It appears clear that the more detailed the endorsement as to exactly what aspects of the water damage claim will be covered, the more likely Florida judges will agree the endorsements are unambiguous and will enforce the provisions. If an insurer’s endorsement is vague and non-specific, it opens the door to policyholders’ attorneys arguing in favor of expansive coverage due to ambiguities in the endorsement. Courts will construe those ambiguities in favor of policyholders despite the intent to be excluded or limited. Corey K. Setterlund is an insurance defense attorney in the Jacksonville office of Marshall Dennehey Warner Coleman & Goggin, and a member of the law firm’s Professional Liability department. She may be reached at


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Profile for Insurance Journal

Insurance Journal Florida Supplement - 2019-11-18  

Special Supplement: The Florida Issue

Insurance Journal Florida Supplement - 2019-11-18  

Special Supplement: The Florida Issue