House Insurance and Banking Subcommittee Hears Presentations from State Regulators

On Wednesday, February 3, 2021, the Florida House of Representatives Insurance and Banking Subcommittee heard presentations from the Department of Financial Services (“DFS”) and the Office of Insurance Regulation (“OIR”). The DFS Director of Consumer Services Greg Thomas discussed the complaint process at DFS and provided the committee with statistics about consumer complaints made to the DFS. Insurance Consumer Advocate Tasha Carter explained her role in advocating for consumers. Finally, Insurance Commissioner David Altmaier told the subcommittee how the market conduct investigation and examination process works and how the OIR deals with complaints forwarded to it by the DFS.

Thomas briefed the subcommittee on the role of the Division of Consumer Services. He said the DFS consumer helpline received over 248,000 calls in 2020 and 13,391 of those related to homeowners or automobile insurance. 7,319 of those calls led to the DFS providing additional assistance to consumers, which could include requesting a response from an insurer or agent. He said that agents and companies have a 20-day timeline to respond to inquiries from the Division. If a consumer files a complaint, the DFS can forward the complaint to the OIR if the complaint relates to insurers or to the appropriate division within DFS if it is within the DFS jurisdiction.

He said there was a difference between the type of complaints the DFS received after Hurricane Irma compared to Hurricane Michael. After Irma, 29% of the complaints were related to claim handling or adjuster delays while 59% of the complaints after Michael were related to claim handling or adjuster delays. After Michael, 39% of the complaints were related to claim denial or underpayment while 69% of the complaint after Irma were related to claim denial or underpayment. Thomas did not explain why there was a difference between the two storms.

Thomas noted a large disparity between the number of complaints against insurers compared to the number of litigated cases. In 2020, the DFS received 27,369 civil remedy notices related to homeowners claims and 38,309 notices related to automobile cases. However, the DFS only received 13,391 consumer calls related to homeowners or automobile insurance.

Insurance Consumer Advocate Tasha Carter gave a summary of her office and its history. She works independently of the DFS and reports directly to CFO Patronis. She sees assisting consumers as an important part of her job. She held a consumer roundtable after Hurricane Michael and heard from consumers who complained about unsatisfactory settlement offers from insurers, a lack of communication from insurers, unreasonable delays in settling claims, and unreasonable denials of claims. She said those situations lead many consumers to hire attorneys or public adjusters.

She said insurance fraud and inflated claims are a significant problem in Florida. She said that non-medical insurance fraud costs $40 billion per year and costs the average family $400 to $700 per year in increased insurance premiums. She also explained that there has been an increase in insurance litigation over the last seven years. There were 27,416 lawsuits in 2013 and 85,007 in 2020.

Carter told the subcommittee that increased litigation, increased water claims, and increased catastrophe claims impact the insurance market. She said there were over one million claims from hurricanes Michael and Irma and that Florida’s 3-year time limit to file claims make it difficult for insurers to “effectively and adequately” adjust claims when claims are filed so long after the loss. The increased litigation and increased losses have led to increased reinsurance costs and insurers withdrawing from high-risk areas. She said there are some areas in the state where Citizens is the only option for insurance consumers.

Commissioner Altmaier said that complaints received by DFS relating to insurance companies are forwarded to the OIR. The OIR can review the complaints to determine whether the complaint is a “one-off” or whether there is an issue that requires further investigation by the OIR. In some situations, the OIR will conduct an examination to determine whether the complaints are a result of a bigger problem at the company. He said there are currently ten open examinations related to Hurricane Michael.

The slides from each presenter can be found here beginning at page 26: