Charles Elmore – April 18, 2013
Florida’s insurance consumer advocate is calling for the state’s top regulator and legislators to send a clear message that property insurers should not be allowed to deny claims and cancel policies based on consumer credit information more than 90 days after taking a policy.
“This practice is reprehensible and should cease immediately,” Robin Westcott said.
As The Palm Beach Post reported last month, a growing number of customers say that is what is happening at the state’s largest private insurer, Universal Property and Casualty Insurance Co. of Fort Lauderdale. They say the company took premiums for years but canceled policies when they filed claims.
Delray Beach customer Michael Wyman described as “horrible” Universal’s decision to void his policy after he reported more than $10,000 in water damage because he neglected to disclose a paid-off tax lien in another state from years before.
One Gainesville woman lost her house to a fire that Universal wouldn’t cover because her husband had, unknown to her, been considered responsible for debt long since resolved with an elderly family member, Westcott said.
Universal is Florida’s biggest insurer after state-run Citizens with 550,000 customers, with more in Palm Beach (66,373) than any other county, records show.
In a letter this week, Westcott told Florida Insurance Commissioner Kevin McCarty she believes the practice violates current law but seeks a clear statement — such as by amendment to pending legislation — to make “crystal clear” such information should not be used to deny claims.
Westcott has been trying to get the amendment added to legislation such as SB 1046, now in the appropriations committee.
On Thursday a spokeswoman said McCarty’s office supports the concept.
“The Office is well aware of the allegations of post-claim underwriting in the homeowners market and has thoroughly and comprehensively been inquiring into the matter,” spokeswoman Amy Bogner said. “The Office supports the responsibility of companies to appropriately underwrite policies within the first 90 days of the policy period and for legislation that would provide stronger protections for consumers.”
A Universal spokesman said Thursday, “The insurance underwriting process inherently depends on applicants providing accurate information in their insurance applications. This is the case in the substantial majority of applications received by Universal Property & Casualty Insurance Company, and the company believes its underwriting process allows it to serve its customers in a cost-effective manner for the benefit of all Floridians.”
Universal’s parent company reported profits rose 50 percent to $30 million last year.
Last November, Universal CEO Sean Downes wrote to regulators, “We are not insensitive to the adverse impact on consumers when inaccurate statements or omissions result in our decision to rescind coverage.” The company has “chosen to trust our applicants and react only when that trust is breached,” he wrote.
A panelist at a Post insurance roundtable last month backed tougher action.
“We need some stronger regulation, from the insurance commissioner and (Chief Financial Officer) Jeff Atwater — the Legislature needs to do something, “said William “Chip” Merlin, president of Merlin Law Group, which represents policyholders against insurers and has offices in Tampa and West Palm Beach.
Westcott said using information from credit reports or public records can be appropriate at sign-up, but unjust and “heart-wrenching” if used to deny claims later.
“Florida consumers deserve protection from this unfair practice,” Westcott said.
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