Florida

Florida Consultant on Demotech Alternatives Faced Issues in Other States, Reports Show

Published

1 year ago

December 1, 2022

Florida Consultant on Demotech Alternatives Faced Issues in Other States, Reports Show

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A Mississippi-based consulting agency employed to determine Florida’s insurance coverage firm monetary ranking conundrum has confronted scrutiny in different states after audits discovered improper disbursement of funds, lengthy delays in initiatives and different points.

Horne LLP, based mostly in Ridgeland, Mississippi, was employed in Florida in early November after submitting a bid to handle a Division of Monetary Providers research on alternate options to the present provider rankings system. The rankings difficulty arose earlier this yr after the Demotech ranking agency, which scores the steadiness of the vast majority of Florida property carriers, introduced that it was on the cusp of downgrading or withdrawing the rankings for as many as 16 insurers.

That despatched state insurance coverage officers into overdrive, condemning Demotech for what the officers stated was a failure to stick to its personal standards. Regulators started looking for alternate options, and Florida’s Joint Legislative Price range Fee in September put aside $1.5 million to rent a guide to discover choices.

In October, a request for {qualifications} was issued. Two corporations, Horne LLP and Alavarez & Marsal, a world consulting agency based mostly in New York, submitted the one two proposals. The contract was awarded to Horne. Though state officers haven’t supplied particulars on why Horne gained the bid, it’s in all probability as a result of the agency’s charges had been considerably decrease than Alvarez’, these conversant in the method stated.

Since then, stories have surfaced that state auditors in Louisiana and West Virginia have questioned Horne’s involvement with or administration of multimillion-dollar initiatives in these states. The Advocate newspaper in Baton Rouge, Louisiana, reported Nov. 18 that the Louisiana legislative auditor’s workplace has been requested to research whether or not Horne workers improperly acquired a few of the $147 million COVID-19 owners’ reduction fund that the consulting agency was employed to handle.

The audit discovered that one thing didn’t look proper, officers stated.

A Louisiana official advised the Advocate that the Horne workers concerned had been eliminated and that the state is sticking with Horne on the mission.

“We’ve been happy with their efficiency and significantly happy with administration’s response to this downside,” stated Louisiana’s commissioner of administration, Jay Dardenne. “We’re very pleased with their efficiency aside from this one incident.”

Officers with Florida’s Division of Monetary Providers had not responded by late Wednesday to requests for remark about whether or not the information article raises considerations about Horne.

Florida guide Jack Nicholson, the previous chief working officer for the Florida Hurricane Disaster Fund and a member of the Horne workforce that’s engaged on the rankings research, stated he was unaware of the article or the audit.

The corporate had no touch upon the information report, a spokesperson stated.

In West Virginia in 2018, a state auditor discovered {that a} contract with Horne, doubtlessly value as a lot as $18 million, had not been correctly bid, in accordance with a West Virginia information report. The West Virginia governor’s workplace responded that the contract, to supervise a flood-relief program, was let beneath an emergency provision in an effort to hurry up long-delayed disater payouts, and had met state and federal regulatory necessities.

After the controversy broke, Horne was paid $6 million, however additional funds and a contract extension had been halted, the report famous.

And in Alabama, the federal authorities in February of this yr ended up clawing again greater than $42 million from a statewide program managed by Horne. This system was too sluggish in offering the federal COVID-related rental help, in accordance with an Alabama information report. Horne accomplished its $9.4 million contract on the mission however this system had distributed nearly a fourth of the funds that had been out there.

Horne declined to remark to the information outlet, however different Alabama officers stated that many functions had been rejected as fraudulent, and that vetting candidates was a posh, time-consuming course of. At the very least 4 different states had contracted with Horne on comparable rent-relief disbursements, and delays have been reported.

Horne started as an accounting agency greater than 50 years in the past in Mississippi and it has expanded to 11 different states, together with Florida. It got here to be concerned within the bid for the Florida insurance coverage ranking research after Nicholson stated he and others put a workforce collectively.

The preliminary consulting agency was Tallahassee-headquartered Thomas Howell Ferguson, CPAs. After Ferguson’s management determined it didn’t have the depth in that kind of consulting, the mission was transferred to Horne, Nicholson defined.

A part of the state’s directive in issuing the RFQ was that the guide ought to survey all Florida P/C insurers, in addition to ranking corporations and the secondary mortgage lenders – Fannie Mae and Freddie Mac.

However the survey despatched by Horne to carriers already has met with opposition from some insurance coverage executives who fear that their solutions could possibly be made public beneath Florida’s broad open-records legal guidelines.

“If I had been a provider I wouldn’t reply it,” stated one insurance coverage business govt.

The SurveyMonkey questionnaire asks insurance coverage firm officers if that they had acquired a letter from Demotech in June suggesting they’d quickly be downgraded; if they’re happy with Demotech; what they consider DFS’ plan to establish an alternative choice to Demotech; amongst different issues.

A preliminary report from Horne is due Jan. 7, Nicholson stated. That report could preserve survey responses nameless, but it surely’s potential that an open information request may finally produce insurers’ responses and emails, with names of firm respondents, some have recommended.

The response from insurers has to date been underwhelming, business activists stated.

One focus of the rankings difficulty research, in accordance with the survey and Nicholson is to look at the viability of a state-run ranking company, maybe overseen by DFS or the state Workplace of Insurance coverage Regulation. The burning query there’s, “What is going to it take for Fannie Mae and Freddie Mac to just accept the credibility of such an company?”

The mortgage-purchasing corporations usually require that federally backed mortgages be insured by carriers which can be favorably rated by a acknowledged ranking agency, reminiscent of Demotech, AM Finest or KBRA. It’s not clear what Fannie and Freddie would consider a nacent company run by a state authorities that arguably has a vested curiosity in maintaining extra insurers in enterprise.

Nicholson stated Wednesday that Horne was nonetheless working to safe a gathering with Fannie and Freddie officers.

A few of the Horne suggestions will rely upon what actions the Florida Legislature takes at a particular session on insurance coverage and property taxes, set for Dec. 12-16. If lawmakers take additional steps to restrict claimants’ legal professional charges and scale back insurers’ litigation prices, it could be potential that “ranking businesses will have the ability to give them a ranking based mostly on their actual energy,” with out the burden of tens of millions of {dollars} in authorized bills which have been proven to be far higher in Florida than in different states, Nicholson stated.

Another choice the report could look at: the impact of offering extra state-backed reinsurance, which may doubtlessly fulfill the mortgage lenders. One other: permitting insurers to arrange a 100% pass-through of losses to reinsurers, worldwide corporations that will have already got a sterling monetary ranking, Nicholson stated.

Some critics, together with the Insurance coverage Data Institute’s Mark Friedlander, have known as the thought of exploring alternate options to Demotech a waste of money and time. Different ranking corporations are simply as prone to downgrade struggling insurers, given Florida’s litigious setting, and Fannie Mae and Freddie Mac are unlikely to just accept a state-run ranking scheme, he stated not too long ago.

Former Florida Insurance coverage Commissioner Kevin McCarty additionally weighed in on the criticism of the Demotech rankings.

“The truth is that many Florida insurers are presently liable to being downgraded,” McCarty wrote in an opinion piece within the South Florida Solar Sentinel in September. “That will be true no matter which ranking firm was evaluating their monetary situation.”

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Florida AG files lawsuit against ACC in FSU case

Published

3 hours ago

April 25, 2024

Press Room

Florida AG files lawsuit against ACC in FSU case

Apr 25, 2024, 05:20 PM ET

TALLAHASSEE, Fla. — Florida’s attorney general sued the Atlantic Coast Conference on Thursday in an attempt to receive the media rights contracts with Florida State University as part of an ongoing dispute as FSU seeks to leave the conference.

Attorney General Ashley Moody said the ACC has failed to turn over the contracts despite a public records request she made in January. She argues that the contracts are public records because they involve an agreement with a government-run university.

The university and conference are suing each other as FSU seeks to leave the ACC and explore a more lucrative landing spot. The Seminoles are challenging an agreement that binds the school to the league for the next 12 years with more than half a billion dollars in fees for leaving.

On Monday, a judge ordered the two sides into mediation.

FSU had been signaling discontent for a year about the ACC falling further behind the Big Ten and the Southeastern Conference in payouts, even while raking in record revenues.

The ACC’s revenue increased to nearly $617 million during the 2021-22 season, with an average distribution of nearly $39.5 million per school for full members. Still, that leaves ACC schools receiving about $10 million a year less than SEC schools even though ESPN is partnered with both leagues in broadcast deals.

Clemson, another ACC school, has joined FSU in challenging the ACC’s right to charge hundreds of millions of dollars to leave the conference.

Neither Clemson nor Florida State has filed formal notice to withdraw from the ACC.

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Vice President Kamala Harris to visit Florida to talk about abortion rights

Published

10 hours ago

April 25, 2024

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Vice President Kamala Harris to visit Florida to talk about abortion rights

TALLAHASSEE — Vice President Kamala Harris will campaign in Florida on the day the state’s six-week abortion ban is set to take effect, according to the Biden-Harris campaign.

Harris will travel to Jacksonville on May 1 and will “discuss the harms inflicted by state abortion bans” and will argue that former President Donald Trump is at fault for the abortion restrictions in the state and across the country, the campaign said in an email. Her visit follows on the heels of President Joe Biden’s abortion-focused campaign event in Tampa earlier this week.

Florida voters in November will get to decide on a proposed constitutional amendment to protect abortion rights.

The Biden campaign has seized on the issue, calling Florida “winnable” and heavily targeting Trump through advertisements that critique his role in appointing three of the U.S. Supreme Court justices that voted to overturn Roe v. Wade. Gov. Ron DeSantis and Florida lawmakers passed the six-week abortion ban in the wake of that Supreme Court decision.

Florida isn’t the only state where the Biden-Harris campaign is leaning on abortion as an issue they hope will motivate voters. The May stop in Jacksonville will be part of Harris’ Fight for Reproductive Freedoms tour.

This will be Harris’ 12th visit to the state since becoming vice president. Harris last visited Florida in March, when she discussed gun violence prevention in Parkland.

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4,800 Claims Handled by Unlicensed Adjusters in Florida after Irma, Lawsuit Says

Published

17 hours ago

April 25, 2024

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4,800 Claims Handled by Unlicensed Adjusters in Florida after Irma, Lawsuit Says

Two south Florida lawsuits against property insurers argue that two major carriers have employed a business strategy of hiring inexperienced or even unlicensed claims adjusters after storms, practices that have led to “lowball” damage estimates that fall below deductibles.

In one of the suits, brought by a Miami condominium association, the plaintiffs produced records that they said showed that after Hurricane Irma, almost 4,800 claims for Heritage Property & Casualty Insurance Co. were handled by unlicensed adjusters. Of almost 35,000 Heritage claims after Irma and Hurricane Michael, in 2017 and 2018, some 14% were handled by unlicensed adjusters, potentially in violation of state laws and regulations, according to the lawsuit filings.

The Samari Lakes East Condo Association vs. Heritage suit resulted in an $18 million judgment against Heritage in 2023. A subsequent bad-faith suit was settled in March of this year for an undisclosed amount.

An Insurance Journal spot check of dozens of the adjusters’ names listed in the lawsuit shows that many of those were not licensed in Florida or other states at the time of the property inspection. Several have since been licensed in Florida or other states.

Heritage has since changed its practice to add its own internal vetting and review process to ensure that independent adjusters assigned to Heritage’s claims are properly licensed in Florida.

Heritage insurance officials and plaintiffs lawyers in the case did not respond to requests for comment about the assertions. But in court pleadings Heritage said it had relied on independent adjusting firms to provide licensed inspectors and “has since changed its practice to add its own internal vetting and review process to ensure that independent adjusters assigned to Heritage’s claims are properly licensed in Florida.”

The complaint suggests that several third-party claims management firms were hired after Irma, but Heritage also sent its own workers, many of whom were not licensed.

In a separate lawsuit, attorneys for the owners of a $95 million mansion near Miami Beach recently alleged that American Home Assurance, part of AIG, American International Group, also made a habit of employing inexperienced and “unqualified” claims investigators. Many of those were overloaded with work and were unable to fully investigate wind and water damage, contends the complaint in Michael Newman vs. American Home Assurance.

The Newman home on Golden Beach, before Irma. (from the complaint)

“This is a classic AIG business model; offer to pay a little now supported by skimpy estimates, in the hope that it will either never have to pay a fair amount or that payment will be delayed for so long that the ‘float’ will offset the amount of the fair payment,” the suit reads.

The adjuster sent by American Home “had never adjusted a claim before,” said Matt Weaver, one of the plaintiff attorneys in the case. “That’s what is happening.”

American Home and AIG officials declined to comment on whether the companies have utilized unlicensed or inexperienced adjusters. In court documents, though, the companies’ attorneys denied that the insurer had followed a “lowball” business practice.

A Miami jury in the Newman case last week found that the insurer had not engaged in bad faith actions, but had violated the state’s Unfair Claim Settlement Practices Act. The jury awarded only interest on the cost of alternative living expenses for the Newman family, who were displaced by the damage after Hurricane Irma. The judge in the case has yet to determine the dollar amount but it is not expected to be much more than $1 million.

Independent adjusters who have worked claims in Florida said the allegations in the lawsuits are not surprising. Insurance carriers have often utilized first-time or young adjusters, ones that may be easily influenced to keep estimates low, or who may be unfamiliar with how seemingly minor damage can lead to major failures later on, said Ben Mandell. Mandell is a veteran independent adjuster who has worked for a number of Florida insurers and is one of several independent adjusters who have charged that some carriers have inappropriately altered their inspection reports.

In the Samari Lakes case, the condo association filed a claim after Hurricane Irma for extensive damage to multiple buildings. An unlicensed adjuster inspected and produced an estimate of $18,000 – just below the policy’s deductible, the lawsuit said. The Florida Department of Financial Services shows that the adjuster was not licensed in Florida until 2022.

The Florida Association of Public Insurance Adjusters contends that using unvetted claims investigators is a serious concern and can create problems for property owners.

“Adjusting insurance claims in Florida without a license violates the trust of policyholders during a time in which they are vulnerable and most in need of professional advice,” FAPIA President John Hornbuckle said in a statement.

In some cases, particularly after catastrophic storms, insurers have so many claims that they bring in adjusters from other states, he explained.

“At times, this includes people who are not licensed in Florida and are unfamiliar with the rules and regulations specific to our state.”

The association leadership said the practice of unlicensed adjusters in Florida “happens more often than it should.”

License requirements for adjusters varies by state. Some Southeast states, including South Carolina, allow out-of-state adjusters on a temporary basis after a storm event, but they must be able to show proof that they are licensed in other states. LINK

Florida regulations allow out-of-state adjusters during an emergency, such as after a hurricane. But those adjusters must first apply to the state Department of Financial Services. And only Florida-licensed insurance companies and independent adjusting firms can submit those applications. Public adjusters need not apply, the department rules note.

Florida statutes generally forbid unlicensed claims adjusting: “Any person who knowingly transacts insurance or otherwise engages in insurance activities in this state without a license in violation of this section commits a felony of the third degree,” one statute reads.

Ironically, it has often been Florida insurers and industry advocates who have complained vehemently about unlicensed adjusters or contractors acting as adjusters through the years, convincing some homeowners to assign benefits, which have led to exaggerated repair costs.

Florida lawmakers in 2023 responded and approved House Bill 1185, which beefed up requirements for adjusters and requires adjusters to keep their licenses with them, available for inspection, while working claims.

Senate Bill 7052, the Insurer Accountability Act, also signed in 2023, underscores the requirement that insurance carriers must assign licensed and appointed adjusters to examine a property when a claim is made.

Top photo: Aftermath of Hurricane Irma in the Florida Keys.

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