Post Loss Underwriting …A Tale of Two Pities!

No doubt Universal Property and Casualty Insurance Company (UPCIC) is thankful its’ fifteen minutes of infamy is almost over.  However, as is typical of some matters involving the media, complete closure may drag on a bit.

Recall that UPCIC agreed to implement changes to its post loss underwriting practices detailed in an OIR Order issued on May 30, 2013.  Also, UPCIC agreed in the Consent decree dated October 4, 2013, to do all of its underwriting within the first 90 days, review 262 previous cases where claims were denied and pay a $1.26 million fine.  

In a series of blogs I became increasingly critical; commencing with a “wait and see” approach and culminating with a post (“UPCIC…Fines & Penalties”)  which concluded that even though it may have acted legally UPCIC “…unnecessarily sullied the entire industry, possibly generating another round of punitive legislation and regulatory oversight…”

First, the usual gaggle of insurance haters used the media to blame the entire industry for the acts of one. Then, after corrective legislation failed during the 2013 legislative session the Insurance Consumer Advocate (ICA), Robin Westcott, conducted public input sessions that added more fuel. Then, her televised claims working group once again spotlighted UPCIC’s activities and, in passing, other carriers.

Now with the ICA’s proposed language the circle’s end is in sight.  You can read the wording yourself (See NOTE #1 below)–refreshingly, it’s not a scatter gun but a rifle shot targeting only the abuse.

No surprise that UPCIC favors the ICA’s draft language. Theoretically, if it doesn’t become law, it would leave UPCIC as the only carrier forced to adhere to the rules outlined in the OIR’s consent decree.

The rest of the industry seems to favor the ICA’s proposed fix, too, and may even include it (or something similar) in an omnibus industry bill.

Reasons for support vary, of course. Some carriers prefer statutory clarity over regulatory subjectivity.  Others may use the new statute to conduct post loss underwriting that does not pertain to matters of “credit history”.  And finally, some simply recognize that voluntarily swallowing a semi-bitter pill always trumps having something worse crammed down your throat.

But, the pitiful part of this tale is the unnecessary blow to the industry’s image caused by defending a technically legal activity that everyone now seems to agree should be illegal.

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The other pitiful tale flowing from UPCIC’s post claims underwriting involves Florida’s trident of abuse: the media, trial lawyers and a barrel of unethical cottage industries.

First, to understand better what I’m talking about  watch the news broadcast by WFTV “Action 9 Investigates Insurance Denials”.

Channel 9’s broadcast contains an overtone that UPCIC was culpable in denying a $180,000 fire loss because of a $50 lien filed years prior.

As the camera pans through a gutted home and then focuses on an indigent claimant who, using broken English, begs for fairness, anchor persons shake their heads in disgust.

The report states “insurance experts are outraged!”  

As is too often the case in Florida’s fraud beleaguered property market, the so called insurance “expert” turns out to be a trial lawyer.

Channel 9’s so called investigative news team appears to have made no attempt to find out the facts beyond the $50 lien.  Even the skimpiest due diligence would’ve revealed that the plaintiff’s case didn’t even make it to trial, having been dismissed for lack of merit on summary judgment.

Have you ever heard of a denied claim for a $180,000 fire loss being upheld by a judge when there is any possible way to force the carrier to pay?

UPCIC can’t comment about the case but, my suspicion is there’s a whole lot more to its denial than a $50 lien. After all, UPCIC didn’t act alone; the court supported its denial! UPCIC revisited it as one of the 262 it was required to review under the OIR’s order and merely agreed with the court!

Shame on Channel 9 for not doing even the minimum to find out whether there may be fraud associated with this claim or circumstances well beyond the seemingly inconsequential lien.

This chapter in our “Tale of Two Pities” shows how easily the media can be duped to support agenda’s of trial lawyers, fake consumer advocates and cottage industries.

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NOTE #1: The ICA’s draft legislation contains the following language regarding post loss underwriting:

“An insurer that uses a credit report or information available in the public record to determine whether there is a misrepresentation or omission in the application for insurance related to the applicant’s credit history must make such determination within 90 days after the policy has been in effect. After such 90 day period, the insurer may not cancel or rescind the policy or deny coverage for a claim based on a misstatement or omission in the application regarding credit history that the insurer could reasonably have discovered by a review of credit history or public record.”

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