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March 4, 2019 • Vol. 97 No. 5
Contents
News & Markets
News & Markets
Idea Exchange
Will 7th Time Be the Charm? Industry Makes Big Push for AOB Reform in 2019
AM Best Revises Outlooks to Negative for Florida-Based Universal North America
Commentary: How Florida AOB Crisis Is Impacting Florida’s Independent Agents
Industry Awaits Florida Supreme Court Decision on Post-Loss AOB Policy Language
Florida Insurance Commissioner Altmaier Elected VP of the NAIC
AM Best Upgrades Credit Ratings of Auto Club Insurance Co. of Florida
How Forensic Meteorologists Are Assisting with Florida First-Party Property Cases
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13 17
18
Departments 14 Florida Fraud Roundup
4 | INSURANCE JOURNAL | FLORIDA MARCH 4, 2019
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16 People
INSURANCEJOURNAL.COM
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News & Markets
Will 7th Time Be the Charm? Industry Makes Big Push for AOB Reform in 2019 By Amy O’Connor
T
he push for assignment of benefits (AOB) reform in the 2019 Florida legislative session is in full swing, and the insurance industry and consumer advocates have pulled out all the stops to emphasize their contention that abuse of a policyholder benefit has led to a full-blown insurance crisis in the state. Whether their efforts will be enough this year after six years of failed reform attempts remains to be seen. Lawmakers are weighing legislative options, but a 6 | INSURANCE JOURNAL | FLORIDA MARCH 4, 2019
of Florida (PIFF), which represents perbill backed by the industry stalled in the sonal lines insurers in the state. Senate Banking & Insurance Committee in mid-February. The AOB problem in Florida stems from unlicensed water remediation and roof The industry isn’t giving up on what ing contractors who have homeowners is its top issue in the 2019 session, which sign over their insurance policy rights in begins March 5. exchange for repairs to their homes. The “We remain hopeful of the process contractors, typically working with an and that members of the [Florida] Senate attorney, file inflated or fake claims and and House will work through the various then pursue lawsuits against insurers issues that have been raised and will land on a piece of legislation that will be helpful when those claims are disputed or denied. Florida’s one-way attorney fee statute, for consumers and that actually address which the insurance industry, consumer these issues,” said Michael Carlson, president of the Personal Insurance Federation advocates and the state’s insurance regulaINSURANCEJOURNAL.COM
tor agree is driving the AOB abuse, leaves insurers footing the bill for the inflated claims and the attorney fees if the insurer is found to have underpaid the claim by any amount. “After six or seven years of this campaign to make changes and having looked at this issue from several different vantage points and a lot of data, the industry has concluded this is an attorney fee-driven cottage industry,” said Carlson. The current remedy supported by the industry and Florida’s insurance regulator was introduced by Florida Senator Doug Broxson, who chairs the Senate Banking & Insurance Committee. Senate Bill 122 would continue to allow policyholders and beneficiaries to recover attorney fees under Florida’s one-way attorney fee statute but would prohibit assignees from obtaining attorney fees. In several meetings of the Senate Banking & Insurance Committee before the start of session, lawmakers saw AOB litigation and rate data from Insurance Commissioner David Altmaier and heard stories from homeowners who were victimized by AOB scammers. They also listened to testimony by contractors who maintain that there is no pressing need for AOBs. “The explanation that contractors have to obtain an AOB [and] they have to sue the insurance company in order to get paid does not seem to be reflected in the insurance complaint information we have available to us,” Altmaier told the committee on Jan. 22. Altmaier said he supports SB 122 to control attorney fees that are the number one driver of AOB abuse, which in turn is driving up rates and reducing coverage for consumers. “Many people will tell you this is an issue between insurance companies and trial attorneys – [but] at the end of the day, this is really an issue that impacts Florida’s insurance consumers, and at the moment, it’s impacting Florida’s insurance consumers in adverse ways,” he said. He noted 70 percent of the litigated claims Citizens Property Insurance Corp. experienced in 2018 had an AOB associatINSURANCEJOURNAL.COM
ed with them. “It appears based on this information that the purpose of obtaining an AOB is for certain individuals in our marketplace to obtain the benefit of one-way attorney fees and enter into litigation with our insurance companies,” he said. Citizens, the state-run insurer of last resort, has borne the brunt of the AOB abuse. CEO Barry Gilway warned the committee the issue is worsening statewide. “It was primarily a south Florida problem until 2015 to 2016, but now it’s exploding across the state,” he said. Gilway said the 8.2 percent rate increase Citizens requested for 2019 is far below what the insurer’s actual rate indication is because of costly AOB litigation. The insurer cannot request rate increases of more than 10 percent statewide because of the statutorily required glide path. “What’s extremely important to understand is that while the increase we filed was 8.2 percent, the actual rate need – all driven by litigation … is 25.2 percent – that’s what we need,” he said. Altmaier underscored the ramifications of the problem if it continues to be left unchecked. "Rate increases are the best-case scenario consumers can hope for without resolution to this issue. We are hearing from many insurance company executives who claim the rate increases they receive are not enough to continue offering their products in our state,” Altmaier said.
Bill Status
Despite the testimony and agreement by lawmakers that something needs to be done, SB122 was tabled at the Feb. 11 committee meeting after several committee members expressed concern over the bill, with one referring to it as a “nuclear option.” Sen. Jeff Brandes, a committee member who supports the legislation, successfully moved to postpone the bill with the hope that lawmakers could come to a consensus on how to move forward. “There is no perfect bill to resolve [AOB] – this is a great attempt. We should support this bill. We should continue to hone
From left: Citizens CEO Barry Gilway, Florida Insurance Commissioner David Altmaier and CFO Jimmy Patronis testifying before the Senate Banking & Insurance Committee on Jan. 22 on the need for AOB reform.
and refine and work on this bill,” he said. He emphasized to his fellow lawmakers that he believes something has to be done this year. “What we are hearing is this is a pandemic that is slowly spreading across this state. This is not sustainable,” he said. Broxson said SB122 was the 18th bill filed since 2013 with 15 different banking and insurance chairs hearing the issue and zero legislation addressing the issue passed to date. “We are going to deal with this issue this session – if we have to spend every committee meeting to vet this problem – we’re not going to hurry through this,” he told the committee at its first meeting Jan. 22. “We have got to own this issue once and for all.” SB122 was not heard by the Senate Banking & Insurance committee’s meeting on Feb. 19 but was added to its March 4 agenda on Feb. 25.
So, Will 2019 be the Year?
The industry says it is not giving up on reform. “Despite the setback in [the Senate Banking & Insurance] committee, I think we still have a better than even chance in getting meaningful reform passed this year,” said Carlson. Logan McFaddin, Southeast regional manager of industry trade group APCIA, said there is frustration among the industry about what exactly lawmakers need to hear to make reform happen because the clear data from the state’s regulator, victim stories and contractor expertise are “just not resonating with current legislators.”
continued on page 9
MARCH 4, 2019 INSURANCE JOURNAL | FLORIDA | 7
Idea Exchange: Florida AOB
Commentary: How Florida AOB Crisis Is Impacting Florida’s Independent Agents
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lorida’s “oneway attorney fee” statute enacted to protect Florida policyholders from large insurance companies has instead spawned By Jeff Grady a huge industry of assignment of benefits (AOB) predators who take advantage of policyholders and threaten the livelihood of hundreds of independent insurance agencies and the agents they employ. As lawmakers return to the Florida Legislature for the 2019 Legislative Session, Sen. Doug Broxson (R-Gulf Breeze), an independent agent and member of the Florida Association of Insurance Agents (FAIA), has introduced a bill supported by the industry to reform a law that is being abused by attorneys and unscrupulous contractors. The current law provides that a policyholder who sues an insurance company for underpaying or denying a claim will not have to pay the insurance company’s attorney fees should the company win. In theory, it levels the playing field for consumers who don’t have the financial resources to compete with a large insurance company. In practice, it creates an environment ripe for abuse. Here’s an example of how it works: A water remediation company directs the policyholder to sign a work authorization contract assigning their policy benefits to the company. This allows the policyholder not to have to pay up front for repairs 8 | INSURANCE JOURNAL | FLORIDA MARCH 4, 2019
while waiting for reimbursement from their insurer. But what policyholders may not understand is that they have signed away all of the policy benefits, including the right to sue the insurance company. In effect, the vendor (and its attorneys) are the policyholder after an assignment. The abuse takes the form of unnecessary repairs, tacked on “fees” and prices higher than the market will bear. Vendors wait to file a claim until after the work is done, leaving the insurer’s claims adjuster with nothing to adjust. If the insurer denies the claim or pays something less than the inflated amount, the vendor sues. Since they don’t have to pay the insurer’s attorney fees (remember, the vendor is the policyholder now), they have nothing to lose and much to gain. That’s why AOB lawsuits have spiked. Over 120,000 AOB lawsuits were filed last year alone. Water-loss claims are a huge and growing segment of AOB abuse. According to the Florida Office of Insurance Regulation, the skyrocketing frequency and severity of water losses from bursting pipes or leaking toilets will double some homeowner insurance premiums in less than five years. And that’s on top of rates that are already twice that of the national average. Agents near areas where the abuse is the worst now face debilitating underwriting restrictions with entire neighborhoods declared off limits for new business. That leaves Citizens Property Insurance, Florida’s residual property market, the only option, which often comes with higher premiums for homeowners and reduced commission for agents.
Many agents with voluntary markets face rising loss ratios that reduce or eliminate contingency commissions; some have had their carrier contracts terminated. Most carriers are also reducing coverage for losses that are prone to AOB abuse, which increases the likelihood of an agency E&O claim and affects agency customer retention. Then, there are the moral hazards on the periphery. One example is within the water remediation industry. Thousands of new remediation companies have cropped up to take advantage of the huge profits and low risks associated with AOB. Unregulated and unlicensed, these firms pay exorbitant referral fees — some as much as $2,500 — to plumbers who are first on the scene of a water loss, all eventually paid by an insurer on an inflated invoice. Plumbers caught up in such schemes create opportunities to make more referral fees by loosening pipes and performing other actions that will result in a repeat visit. Research from OIR shows such plumbing leaks have risen 60 percent in some parts of the state. This year, Sen. Broxson chairs the Senate Banking and Insurance Committee where previous reforms have often stalled. His proposal, SB-122, makes one, and only one, statutory change — it limits the one-way attorney fee statute to the homeowners it was intended to benefit. FAIA supports SB-122 and thanks Sen. Broxson for taking this stand and hopefully making 2019 the year that Florida puts an end to this insurance abuse plaguing our state. Florida agents can join the team from FAIA at "Capitol Days" on March 19-20 to show support for AOB reform. During the two-day event, agents will learn about issues and legislation that could affect their business and the industry's future. Agents will have the opportunity to meet with their legislators about AOB reform. Agents can register online at faia.com/capdays. Grady is the president and CEO of FAIA, a nonprofit trade association with the mission to serve the needs of Florida independent agents and consumers by promoting a healthy and competitive insurance environment. INSURANCEJOURNAL.COM
News & Markets continued from page 7 “For some reason, it’s falling on deaf ears for certain legislators. I think that’s the most frustrating thing – it’s like what else can we bring to the table that’s really going to be telling enough to change their mind? It’s hard to put your finger on it to try to come to some sort of solution and strategy,” she said. However, she said there is plenty of time during the 60-day session to find a compromise. “I’m not ready to throw in the towel yet. And I don’t think the majority of the insurance industry is either,” she said. There’s the possibility that reform options that have been considered during past sessions could be again this year, but the consensus among all stakeholders is that any reform must address the one-way attorney fee statute. “The current one-way attorney fee statute incentivizes abuse and excessive litigation. OIR recommends narrowing the current one-way attorney fees statute relating to litigation involving an AOB agreement to disincentivize AOB abuse while maintaining consumer protections,” Commissioner Altmaier said in an e-mail to Insurance Journal. Altmaier said OIR will remain a vocal proponent of measures that increase consumer protection within the use of AOB agreements, monitor any legislation aimed at curbing AOB abuse and continue the fight to hold consumers harmless. “We greatly appreciate Senator Broxson’s leadership on this issue and believe that the one-way attorney fee provision addressed in SB 122 should remain a central part of ongoing discussions,” he said. Florida CFO Jimmy Patronis, who oversees the Department of Financial Services, will also continue the fight, telling lawmakers Jan. 22 that doing nothing this year is not an option. “My job is to make sure we keep attention and pressure on this issue and that something gets done this legislative session because doing nothing is disrespectful, dishonorable to the citizens we serve, because ultimately, all that is going to do is drive up rates – right now, if
we do nothing, it’s going to drive up rates,” he said. In the meantime, Altmaier said agent communication with OIR, carriers and their customers is essential to stemming the abuse, particularly in the aftermath of major catastrophes like Hurricane Michael.
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MARCH 4, 2019 INSURANCE JOURNAL | FLORIDA | 9
News & Markets Industry Awaits Florida Supreme Court Decision on Post-Loss AOB Policy Language
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s Florida lawmakers weigh reform for the state’s assignment of benefits crisis, the insurance industry By Andrew Marcus and regulators are closely monitoring a case addressing post-loss policy language that is currently before the state’s high court. Initial briefs are being filed in the case of Restoration 1 of Port St. Lucie vs. Ark Royal Insurance Company, (SC18-1624) after the court agreed to hear the case at the end of 2018 in response to the plaintiff’s appeal of the Florida’s Fourth District Court of Appeal decision finding an insurer’s anti-assignment provision
was not prohibited. On Feb. 11, 2019, attorneys for Restoration 1 of Port St. Lucie filed their initial brief in the case, arguing that the Fourth DCA was incorrect in allowing insurers to require the consent of all insureds and mortgagees to assign benefits under a homeowner’s insurance policy post-loss. The case will have far-reaching implications on how insurers can limit the use of an assignment of benefits, a practice that insurance regulators and the industry contend is being abused by attorneys and contractors. In this case, the homeowner’s insurance policyholders were husband and wife who contracted with a water restoration company to fix water damage to
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their insured home. The home also had a mortgage. The wife, without the consent of her husband or the mortgagee, also agreed to “an assignment of benefits agreement assigning ‘any and all insurance rights, benefits, proceeds and any cause of action under any applicable insurance policies’” to the water restoration company. The policy at issue contained a condition that “[n]o assignment of claim benefits, regardless of whether made before a loss or after a loss, shall be valid without the written consent of all ‘insureds,’ all additional insureds, and all mortgagee(s) named in the policy.” In September, the Fourth DCA sided with insurer Ark Royal, finding that a homeowner's insurance policy may conINSURANCEJOURNAL.COM
tain a provision requiring the consent of other insureds and the mortgagees before a valid assignment of benefits may be made. The Fourth DCA found that the prior case law from the Florida Supreme Court prevented the insurance company from conditioning an AOB upon the insurer’s consent, but not the other insureds’ or mortgagee’s consent. The court found that an assignment restriction was not prohibited if it required the consent of all the insureds and all of the mortgagees named in the policy, stating that the insureds and mortgagees have a vested interest that a reputable, legitimate third-party contractor perform repairs on the home. On Dec. 27, 2018, the Florida Supreme Court accepted jurisdiction in the case, INSURANCEJOURNAL.COM
certifying conflict between the Fourth District Court of Appeal and the Fifth District Court of Appeal, which ruled in 2017 in the case of Security First Insurance Co. vs. Florida Office of Insurance Regulation (OIR) that similar policy language was prohibited. The Fifth DCA found that Security First could not require that another homeowner or the mortgagee consent to the assignment of proceeds from the policy to a third party after a loss. In its brief, Restoration 1 argues that the Florida Supreme Court should adopt the Fifth DCA’s stance and reject the Fourth DCA’s decision. Restoration 1 relies heavily on OIR’s treatment of other carriers’ attempts to file language similar to Ark Royal’s filing, with OIR denying those attempts. In the past, OIR has disapproved of insurance policy forms that restrict an insured’s post-loss assignment of benefits. However, in 2012, OIR allowed carriers to submit “informational filings,” — meaning the forms were not subject to review for approval or disapproval — if the insurer certified that the policies conformed with Florida law. Ark Royal filed such an informational filing with the restriction. Restoration 1 argues in its brief that the court should reject the language because OIR has disapproved of policies with similar language from other carriers. However, in the Fourth DCA’s opinion on the matter it found that OIR has never taken steps to retroactively disapprove Ark Royal’s specific policy, even though it had that ability. Restoration 1 points to cases cited by OIR and the Fifth DCA when they refused to allow anti-assignment provisions. Primarily, the Fifth DCA relied on a footnote in a 2008 Florida Supreme Court case, Continental Casualty Co. v. Ryan Inc. Eastern. The footnote paraphrases the 1917 Florida Supreme Court decision in West Florida Grocery Co. v. Teutonia Fire Insurance Co., the seminal case on the issue. The Continental Casualty Co. footnote read, when quoting West Florida Grocery, that “it is a well settled rule
that [anti-assignment provisions do] not apply to an assignment after loss.” The Fourth DCA found that that the language was misquoted and overstated the holding in West Florida Grocery, with the original West Florida Grocery quote stating that it is a “well-settled rule that the provision in a policy relative to the consent of the insurer to the transfer of an interest therein does not apply to an assignment after loss.” Restoration 1 also argues that only one insured is necessary to assign benefits under an insurance policy and that it is not necessary or practical for any other insureds to consent to the assignment. Ark Royal must now submit a reply to Restoration 1’s initial brief. What is decided in the case could have far reaching effects in what many contend has become a fraud scheme over the last decade targeting Florida homeowners who have been the victim of practices by dishonest contractors which result in fake or exaggerated claims. The contractors have homeowners, often unknowingly, assign their benefits under an insurance contract to the contractor. The contractor may then escalate the scope and cost of remediation or repairs beyond the actual damage and bills the insurance company for the inflated claim. Should the insurer not pay the inflated claim, vendors then sue the insurer. If the vendor prevails the vendor is awarded their attorney’s fees under Florida’s one-way attorney fees statute. This practice has led to a dramatic rise in claims and insurance rates. According to Florida OIR, claims associated with an assignment of benefits are 85 percent more expensive than claims without one. Andrew Marcus is a regulatory lawyer in Holland & Knight’s Tallahassee, Fla. office. He focuses on insurance and administrative law. He is the former deputy director, life and health product review - legal affairs, and assistant general counsel at the Florida Office of Insurance Regulation. Holland & Knight LLP represents the Florida Justice Reform Institute in the preparation of an amicus curia brief in this case. However, Marcus has played no role in that matter.
MARCH 4, 2019 INSURANCE JOURNAL | FLORIDA | 11
News & Markets AM Best Upgrades Credit Ratings of Auto Club Insurance Co. of Florida
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M Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the LongTerm Issuer Credit Rating to “a-” from “bbb+” of Auto Club Insurance Company of Florida (ACICF), headquartered in Tampa, Fla., and AAA’s Florida-based insurer. The outlook of these Credit Ratings remains stable. According to a statement from Best, the ratings reflect ACICF’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM). The rating upgrades reflect the company’s improving balance sheet strength on a catastrophe stress-tested basis as demonstrated by solid surplus growth in most of the past five years, Best said. Following a modest loss of surplus
in 2017, driven primarily by Hurricane Irma losses, ACICF’s surplus rebounded in 2018. The company’s balance sheet remains strong with sound liquidity measures, favorable underwriting leverage ratios and historically redundant reserve development. The ratings also recognize the implicit commitment provided by its ultimate parent, Auto Club Insurance Association (Dearborn, Mich.), for which ACICF receives rating enhancement. Best noted that ACICF’s operating performance is strong as reflected by its five-year average pre-tax and total returns on revenue and equity that compare favorably with the composite. In addition, the company’s five-year average combined and operating ratios outperform the composite. As a single state writer in Florida, the company is exposed to hurricane events, as well as
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judicial, economic and regulatory concerns. As a result, its business profile is deemed limited. However, the company adheres to a formalized comprehensive ERM program that identifies major risks to the organization while correlating mitigation strategies to offset these risks, Best said. In addition, the company maintains adequate reinsurance coverage to insulate policyholder surplus from significant weather events. ACICF provides protection to over 64,000 families in Florida, bundling home, auto, and umbrella coverage into one policy. AAA members can also receive additional savings on select auto coverages, based on the tenure of their membership. In a statement on the announcement, Thomas J. White, Florida executive vice president, AAA - The Auto Club Group,
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said the credit rating upgrade provides reassurance to Floridians after three major hurricanes hit the state in the past three years. It noted that more than 8,000 households filed hurricane-related claims with ACICF from the three storms. “Floridians can take comfort in knowing we are a financially strong and viable
organization that has the ability to pay claims, despite the risks presented by the Florida market,” White said. “This updated credit rating should reassure Floridians that we will be there, through the good times and bad.” The Auto Club Group (ACG) is the second largest AAA club in North America. ACG and its affiliates provide member-
ship, insurance, financial services and travel offerings to over 9.8 million members across eleven states and two U.S. territories including Florida, Georgia, Iowa, Michigan, Nebraska, North Dakota, Tennessee, Wisconsin, Puerto Rico and the U.S. Virgin Islands; most of Illinois and Minnesota; and a portion of Indiana.
AM Best Revises Outlooks to Negative for Florida-Based Universal North America
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M Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Universal North America Insurance Co. (UNAIC), headquartered in Sarasota, Fla. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of Universal Insurance Co. (PR) (UIC) (Guaynabo, PR). The outlook of UIC’s Credit Ratings (ratings) is stable. The ratings of UNAIC reflect its balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect the implicit support received from UNAIC’s ultimate parent, Universal Group, Inc. The revised outlooks to negative largely reflect the decline in UNAIC’s operating performance in the most recent years, which has placed pressure on AM Best’s current assessment of adequate. While the operating performance has been impacted by recent hurricane activity (2017 and 2018), the negative outlooks also consider the underlying performance, which has been impacted unfavorably by other weather-related losses, such as wildfires in California. The company has implemented a number of initiatives to improve underwriting performance, including rate increases, non-renewal of unprofitable accounts and investing in new technology, Best said. INSURANCEJOURNAL.COM
UNAIC’s balance sheet assessment is supported by its strong level of risk-adjusted capitalization, its conservative investment portfolio, stable loss reserving trends and comprehensive reinsurance program. These positive factors are offset partially by the company’s high underwriting leverage and its significant catastrophe exposure, as evidenced by the weather events in 2017 and 2018. AM Best’s assessment of UNAIC’s business profile reflects the company’s solid geographic spread of risk and range of personal property products. Weather-related events continue to be UNAIC’s primary risk, and part of its ERM program has been centered appropriately around mitigating this exposure through a comprehensive reinsurance program, strategic placement of coverage and strict underwriting guidelines. The ratings of UIC reflect its balance sheet strength, which AM Best catego-
rizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. UIC’s balance sheet strength is supported by its strongest level of risk-adjusted capitalization, stable loss reserving trends, and solid liquidity measures that are enhanced by positive operating cash flows. Partially offsetting these positive factors, Best said, are UIC’s high-ceded leverage and ongoing stockholder dividend payments. The company has produced solid operating earnings over the long term, primarily driven by strong investment earnings, and other income coupled with variable underwriting results. UIC’s business profile reflects the company’s market leader position in the personal auto space in Puerto Rico. The company continues to enhance its formalized ERM program, which includes, for example, revising risk assessment across the organization.
MARCH 4, 2019 INSURANCE JOURNAL | FLORIDA | 13
Florida Fraud Roundup
Unlicensed Adjuster Arrested Over Theft of $14K from Homeowners After Irma
An unlicensed insurance adjuster has been arrested over unlicensed public adjusting activities and the filing of false and fraudulent liens on individuals’ homes following Hurricane Irma, according to a statement from the Florida Department of Financial Services. Chief Financial Officer (CFO) Jimmy Patronis reported Mary Bruce is accused of stealing $14,000 in total from homeowners. Following Hurricane Irma in September 2017, DFS investigators discovered that Bruce approached roofing companies and homeowners in Central Florida and falsely identified herself as a “claims manager.” Bruce is alleged to have told homeowners she could increase prior hurricane insurance claim settlements up to $30,000, but would require homeowners to sign a Power of Attorney document in order to do so. Once signed, Bruce submitted an adjusted claim to the insurance company, doubling the original cost estimates
submitted previously. If the insurance company refused to pay the increased adjusted amount, Bruce would then place a lien on the homeowner’s property. Bruce was arrested and booked into the Volusia County Jail on charges of unlicensed public adjuster and filing of false and fraudulent lien. If convicted, Bruce faces up to 10 years in prison. “After a hurricane, Florida families are incredibly vulnerable and my fraud teams ensure that scammers who take advantage are found and thrown in jail,” Patronis said. “If you need repairs to your home and an offer sounds too good to be true, it probably is. Report these incidents so we can get these criminals off the streets and deter others from committing these crimes.”
Miami Clinic Owners Arrested for Stealing Over $45K in Accident Scheme
Owners of a clinic in Miami-Dade County were arrested in January for their alleged involvement in orchestrating and executing a car accident scheme to exploit personal injury protection (PIP)
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benefits by filing fraudulent insurance claims, according to a statement from the Florida Department of Financial Services. Chief Financial Officer (CFO) Jimmy Patronis announced the arrests of Pedro Sanchez, Jorge Enrique Martinez, Ivelis Garcia, Yanisbel Rodriguez Ocana and Victor Manuel Meneses Salina on Jan. 17 after an investigation by the department’s Bureau of Insurance Fraud Investigators. On May 19, 2017, investigators discovered clinic owners Sanchez, of Sanchez Therapy Center, and Martinez, of Hialeah Quality Diagnostics, allegedly offered to pay participants Rodriguez Ocana and Meneses Salina for their involvement in a car crash as part of a PIP fraud scheme. Once the staged accident occurred, the police were called to the scene and a crash report was generated. Days after the staged accident occurred, the participants went to Sanchez and Martinez's clinics acting as injured accident victims to receive treatment. Garcia, office manager of Quality INSURANCEJOURNAL.COM
Diagnostics, allegedly coached the participants on what to say to the insurance company regarding any therapy services. Garcia also provided the participants with blank therapy treatment forms to sign when no therapy services were ever provided by the clinics. Both clinics submitted fraudulent billing on behalf of the participants to United Auto Insurance Co. and GEICO Insurance Co. totaling $85,631, of which $45,145 was paid by the insurance companies. Sanchez, Ocana and Salina were arrested on January 11, and Martinez and Garcia surrendered to law enforcement at Turner Guilford Knight Correctional Center on January 15. All parties face charges of staged accident, insurance fraud, false claims, grand theft, organized scheme to defraud and patient brokering. If convicted, they face up to 15 years in prison. “Committing fraud for personal gain is appalling and raises insurance premiums for hardworking Floridians. My office will continue to hold scam artists accountable and send them to jail,” said Patronis.
Florida Woman Arrested in $68K Hurricane Irma Scam
A Florida woman previously arrested for scamming homeowners in January was arrested again for alleged unlicensed practice of public adjusting and grand theft related to Hurricane Irma, according to a statement from the Florida Department of Financial Services. Mary Bruce is accused of attempting to steal more than $68,000 in fraudulent insurance claims. This is Bruce’s second arrest for insurance fraud this year. She was bonded out of jail in January and was arrested again on separate charges. DFS investigators claim Bruce approached homeowners whose home sustained roof and interior damages from Hurricane Irma in September 2017. Bruce allegedly told the homeowners that she was an “independent claims adjuster” that could negotiate settlements with insurance companies. Bruce required the homeowners to pay $3,500 INSURANCEJOURNAL.COM
and to sign a power of attorney. Bruce, however, is not a licensed attorney, a public adjuster, or a general contractor. Bruce then submitted fraudulent cost estimates for roofing work to the insurance company. In total, she submitted $68,000 in fraudulent insurance claims to the homeowner’s insurance company. Bruce was arrested last month and booked into the Brevard County Jail and charged for rendering services as an unlicensed public adjuster, as well as for grand theft. If convicted, Bruce faces up to 10 years in prison. Her previous arrest was on charges of unlicensed public adjusting and filing of a false and fraudulent lien in Orange County. “It never ceases to amaze me the lengths these scam artists will go to steal your hard-earned money,” CFO Jimmy Patronis, who oversees Florida DFS, said. “My detectives caught this criminal once, and they have arrested her again. I promise you this: If you commit insurance fraud, we will find you, and you will go to jail.”
Florida Deputy Arrested for Filing False Auto Claim with GEICO
A deputy with the sheriff’s office in Orange County, Fla., has been arrested after he allegedly filed a false and fraudulent automobile insurance claim with GEICO Insurance Co., according to a statement from the Florida Department
of Financial Services (DFS). Fraud investigators with DFS revealed that on July 6, 2018, Wadih Ojeil struck a deer with his 2012 Ford Mustang, causing damage to his personal vehicle. After the incident, Ojeil contacted his insurance company to add comprehensive coverage to his existing automotive policy. He did not report any existing damage when he added the comprehensive coverage and specifically asked GEICO if the added insurance covered deer collision. The new coverage did not go into effect until July 9, three days after the incident. Once the coverage went into effect, Ojeil contacted GEICO to file a claim for $2,230 on July 10, claiming he hit a deer causing damage to his vehicle. During a recorded interview with fraud detectives, Ojeil admitted he filed a fraudulent insurance claim and that he added comprehensive coverage to his policy, knowing the vehicle had already been damaged. “Not only is filing false insurance claims illegal, but it drives up insurance rates for hardworking Floridians. This deputy swore to uphold and protect the law, but instead he committed fraud for personal gain,” CFO Jimmy Patronis said. Ojeil was arrested on Feb. 15, 2019, and booked into the Orange County Jail. He was charged with filing a false and fraudulent insurance claim. If convicted, Ojeil faces up to 5 years in prison.
MARCH 4, 2019 INSURANCE JOURNAL | FLORIDA | 15
People
Kevin McCarty
Sonja Larkin-Thorne
The Florida Association for Insurance Reform (FAIR), a non-partisan insurance consumer advocacy association, has elected former Florida Insurance Commissioner, Kevin McCarty as the chair of its board of directors and Sonja Larkin-Thorne, retired insurance executive from The Hartford, as the board’s co-chair. McCarty, who joined the board of directors in November 2018, served as Florida’s first appointed insurance commissioner from 2003 to 2016 and president of the National Association of Insurance Commissioners (NAIC) in 2012. After leaving the Florida Office of Insurance Regulation in 2016, he founded Celtic Global Consulting. The firm serves state, national and international clients, providing comprehensive services focused on insurance issues and trends. Larkin-Thorne also joined the FAIR board of directors in November 2018. She retired from The Hartford as vice president of Government Affairs and has over 30 years of experience in the insurance industry. She was responsible for managing The Hartford’s regulatory and legislative activities in 14 states and providing counsel on underwriting practices, market conduct examinations, urban issues, con-
Max Staplin
sumer complaints and use of insurance credit scores, natural disasters and financial services legislation. Additionally, Larkin-Thorne served as a member of the NAIC consumer board of trustees and an NAIC funded consumer representative from 2009 until her retirement. FAIR is a non-partisan, non-profit educational organization that advocates for fair, stable and affordable insurance markets for Florida consumers, through leadership, education and robust competition. FAIR works with all constituencies to facilitate ongoing dialogue and transparent communications. Jacksonville, Fla.-based Brightway Insurance has added Max Staplin as its in-house counsel and member of its executive leadership team. In this new role, Staplin will oversee all legal and compliance matters for the company. According to Brightway Co-Founder and CEO Michael Miller, Staplin was previously an associate at the law firm that provides Brightway’s legal counsel for all franchise-related matters for six years. He comes to Brightway with eight years of legal experience, much of which is in franchise law. Brightway also made two promotions in the company. Chinikqua Maddox, who joined Brightway a year ago as the
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Chinikqua Maddox
Mark Introcaso
company’s Strategic Initiatives leader, has been promoted to vice president of Strategic Initiatives. Maddox has led development and execution of the highest-priority strategic initiatives across Brightway and supervised Brightway’s Information Technology, Systems Administration and Business Analytics teams. In this new position, she has joined the Brightway executive leadership team and will expand her responsibilities directing key initiatives that advance the company’s longterm growth plans and profitability. Prior to joining Brightway, Maddox was an independent insurance consultant who performed product development, project management and general consulting services for clients such as Brightway. She held senior management roles at Citizens Property Insurance Corp., The Hanover Insurance Group, The Hartford and IBM. Scott Pollard, who joined Brightway in September 2018 as an agency development consultant, has been named director of Agency Development. In this role, Pollard will focus on building and executing sales best practices with a focus on franchisee profitability. Pollard brings with him to this role 30 years’ property/ casualty insurance manage-
ment experience, starting as a personal lines customer service representative and later manager in an agency in Darien, Conn. He has held a wide variety of sales process, management and executive roles at Safeco for 16 years, and executive roles at Kemper, Citizens/Hanover and UPC Insurance. He replaces industry veteran, Mike Gleghorn, who previously held the role until his retirement in December 2018. As a national property/ casualty insurance distribution company, Brightway is focused on providing a platform that helps business people become insurance entrepreneurs. In turn, they build their local brand and serve people in their communities by offering choice in insurance companies coupled with local, in-person expert counsel. Orchid Underwriters Agency LLC, a specialty underwriter of catastrophe exposed property insurance, has hired Chris Bardusch as chief technology officer, a new position within the company. Bardusch is now responsible for Orchid’s technology strategy and the implementation of all key enterprise-wide initiatives. He will work closely with internal business units to continue to improve software applications, data management, infrastructure and other IT operations. INSURANCEJOURNAL.COM
Bardusch comes to Orchid with more than 20 years of experience in software development, technical architecture, infrastructure management, strategic planning and general IT management with a focus in property/casualty insurance. Prior to Orchid, Bardusch held senior positions as the vice president and chief technology officer at Sompo International Insurance and chief architect of Financial Services at Computer Sciences Corp. Prior to that, he spent the first half of his insurance career at Fairfax Financial Holding, Ltd. Founded in 1998 and based in Vero Beach, Fla., Orchid spe-
cializes in providing specialty insurance products for homeowners and small businesses throughout the United States and the Caribbean. The company’s product offerings include both personal and commercial property insurance, including wind and wind only, general and excess flood, earthquake, builder’s risk and others. Keyes Insurance, the insurance division of the Keyes Company, has hired Mark Introcaso as chief operating officer. Introcaso brings more than 37 years of experience in the insurance industry, most recently with Peoples Trust
as the director of Business Development South Region. In 1995, Introcaso founded a South Florida-based agency which grew to more than 80,000 policies and a team of 70 members. In 2012, the company merged with Brown and Brown, and Introcaso became vice president of Personal Lines. While there, he managed and grew the personal lines book in Florida. Keyes Insurance plans to relocate and expand its headquarters in response to the company’s rapid growth. Completion is expected in May 2019. Independently-owned and operated since its founding in
1926, Keyes specializes in luxury residential real estate. Overall, Keyes generates more than $6 billion in annual revenue from their real estate service lines. Independently-owned and operated since 1926, the Keyes Company specializes in the real estate industry. Keyes completed a merger with Illustrated Properties in July 2016. Following the merger, Keyes has 58 offices, more than 3,000 Associates and nearly $6 billion in annual real estate sales and services. Keyes’ offices are distributed throughout six counties – Miami-Dade, Broward, Palm Beach, Martin, St. Lucie and Volusia.
Florida Insurance Commissioner Altmaier Elected VP of the NAIC
F
lorida Insurance Commissioner David Altmaier has been elected by members of the National Association of Insurance Commissioners (NAIC) to serve as vice president of the organization. Altmaier joins other 2019 NAIC officers including: NAIC President and Maine Insurance Superintendent Eric A. Cioppa, NAIC President-Elect and South Carolina Director of Insurance Raymond G. Farmer, and Secretary-Treasurer and Idaho Insurance Commissioner Dean L. Cameron. “It is my distinct honor and privilege to join such a distinguished group of individuals as an officer of the NAIC,” Altmaier said. “Florida plays a significant role in the national and international insurance community and has INSURANCEJOURNAL.COM
paved the way for innovative, consumer-oriented regulatory approaches. I plan to help thoughtfully guide the NAIC through the challenges of globalization and technological innovation while promoting state-based regulation and the same consumer-oriented principles that will continue to serve as Florida’s regulatory framework.”
'Florida plays a significant role in the national and international insurance community.' Altmaier was appointed as Florida’s Insurance Commissioner in 2016 and leads a 292-member team at the Florida Office of Insurance Regulation (OIR), overseeing a complex insurance market-
place in a state with one of the highest catastrophe exposures for hurricanes. In addition to Altmaier’s new role, he will remain in his capacity as Florida’s insurance commissioner. The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the David Altmaier District of Columbia and five U.S. territories. the collective views of state Through the NAIC, state regulators domestically and insurance regulators establish internationally. NAIC members, together with the central standards and best practices, resources of the NAIC, form conduct peer review, and the national system of statecoordinate their regulatory based insurance regulation in oversight. NAIC staff supports the U.S. these efforts and represents MARCH 4, 2019 INSURANCE JOURNAL | FLORIDA | 17
News & Markets How Forensic Meteorologists Are Assisting with Florida First-Party Property Cases
E
very day the impact technology has on our daily lives increases. The legal profession is not immune to the By John S. Riordan inundation of technological advances. A prime example of the collision of law and technology is how forensic meteorology impacts first-party property insurance cases. First-party property cases are on the rise, especially in Florida. With the recent hurricane activity in this state, there is no shortage of business for both the attorneys representing the homeowners and the defense attorneys representing the insurance carriers. Now, more than ever, these attorneys are turning to forensic meteorologists as experts to assist with their case analysis. Much like a crime scene investigator, a forensic meteorologist is a weather investigator that evaluates the impact weather has on the alleged damage to the person or property. These experts use weather modeling, weather records, atmospheric data, weather re-enactment simulations and eyewitness accounts to confirm or corroborate weather conditions on a specific date and time. Forensic meteorology has been around for many years. One of the earliest instances of the law intersecting with weather dates back to the 1800s. The case involved a neighbor who brought suit against a minister for praying for rain during a drought and alleged that the neighbor’s barn was struck by lightning during the rainstorm and burned down. Ultimately, the case was dismissed, but this lawsuit started a trend. Evaluations by forensic meteorologists can be used to confirm a specific weather event, the location of the event and to evaluate the severity. In fact, in some instances, forensic meteorologists can provide the exact strength of wind gusts at a particular address. This kind of pinpoint accuracy is incredibly useful to
attorneys on both sides of first-party property claims. For example, if a homeowner reports damage to his or her home from a hailstorm, the homeowner’s insurance carrier may retain a forensic meteorologist as part of the carrier’s investigation. The forensic meteorologist, through various pieces of data, can corroborate if hail impacted the homeowner’s specific address. Forensic meteorology is not confined to first-party property cases alone and can be used in a multitude of legal matters such as murder cases, traffic accidents, airplane accidents, boating accidents, slip and fall incidents, and arson cases, among others. Equally as diverse are the types of weather events that can be evaluated by the forensic meteorologist for use in court. Forensic meteorologists provide analysis of all-weather events — from snowstorms to hurricanes, floods, droughts, rain, hail storms, tornadoes and ice storms — which can be evaluated for location, duration and intensity. The breadth of the insight that is provided by a forensic meteorologist is invaluable to attorneys in a variety of fields to help prove, or disprove, allegations in a case. Most forensic meteorologists typically have a Bachelor of Science degree in meteorology or atmospheric science and have worked in a capacity as a meteorologist, or in some other weather-related field to develop the needed experience to accompany their degree. For the more experienced forensic meteorologists, the accolade of a certified consulting meteorologist (CCM) is obtained through the American Meteorological Society. According to the American Meteorological Society, this designation requires passing a rigorous written examination and a verbal exam admin-
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istered via a panel of the applicant’s peers. Once a forensic meteorologist obtains the CCM designation, that individual is considered an expert in the application of weather information. In a trial, forensic meteorologists have regularly testified as experts. As with any expert witness in Florida, the forensic meteorologist is now subject to the Frye standard (see DeLisle v. Crane Co., et al., No. SC 16-2182), which makes the scientific community the gatekeeper of the admissibility of the testimony, or evidence, as determined by Frye v. United States, 293 F. 1013 (D.C. Cir. 1923). The basic principle of Frye is whether other experts generally accept the expert testimony in the particular field in which it belongs; or, in other words, whether the procedure, technique or principle in question is generally accepted by a significant proportion of the relevant scientific community. The trend currently seems to be that forensic meteorology meets Florida’s Frye standard and is admissible in a trial; however, the final determination will be based upon the specific credentials of the expert witness. Riordan is a partner in the West Palm Beach office of Kelley Kronenberg, a business law firm. An AV-rated and highly experienced civil trial attorney, he focuses his practice on first-party property matters, complex civil matters, automobile liability, personal injury protection, and premises liability defense. Riordan recently presented on the topic of forensic meteorologists at the 2019 Windstorm Insurance Conference. He may be reached at (561) 684-5956 or jriordan@ kklaw.com.
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