Local insurers penalized as regulators intensify oversight actions.

In the aftermath of Hurricanes Ian and Idalia, eight property insurance companies operating in Florida—three local, and one linked to a regional entity—have violated state regulations regarding claims processing and payment.

The Florida Office of Insurance Regulation (OIR) issued charges last week, encompassing administrative issues such as the failure to provide essential disclosure statements and neglecting to pay interest when due.

One company exhibited error rates exceeding 60% for Hurricane Ian and over 80% for Hurricane Idalia by failing to include required disclosure statements. Additionally, multiple companies neglected to pay or deny claims within the mandated 90-day timeframe.

The fines imposed on these companies total $2.07 million, with the OIR’s Market Conduct Unit continuing its investigations, which may lead to additional penalties.

According to OIR’s statement, these fines serve as a warning that state regulators are prepared to act during storms to ensure compliance with proper claims handling standards.

Storm front

OIR’s enforcement actions are rooted in recent insurance reforms designed to stabilize Florida’s property insurance market. These reforms provide the regulatory authority necessary for increased compliance enforcement.

Mark Friedlander, senior director of media relations at the Insurance Information Institute, emphasizes the industry’s responsibility to assist customers in quickly recovering from disasters.

The state’s role is to ensure that insurance carriers adhere to Florida statutes in processing storm claims, holding them accountable when they fail to do so, according to insurance commissioner Mike Yaworsky.

In the fiscal year 2023-2024, OIR’s Market Conduct Unit secured $8 million in restitution and imposed over $2.8 million in fines, with $660,450 in restitution secured in the current year’s first quarter.

Yaworsky states he is ready to deploy OIR examiners to ensure claims management practices are efficiently and properly executed.

He notes that particular scrutiny will be applied to any companies with troubling performance histories.

The latest review encompassed ten companies, with eight found to engage in “several findings of misconduct” during the storms. Two examinations remain pending.

The locals

Among the eight fined companies, two hail from St. Petersburg—American Coastal Insurance Co. and American Mobile Insurance Exchange—while Centauri Specialty, now branded as Lilypad, is based in Lakewood Ranch. Ocala-based TypTap Insurance Co., fined $150,000, is a subsidiary of HCI Group in Tampa.

Of the eight findings against American Coastal, the OIR found that the company failed to pay or deny initial, supplemental, or reopened claims in 34 of 167 reviewed cases, and used improperly appointed adjusters in 36 of those claims.

This company, which did not respond to requests for comment, was fined $400,000, while American Mobile also received a $400,000 fine.

American Mobile was found to not provide required disclosure statements for 148 out of 241 claims examined and employed non-appointed adjusters in 54 cases.

Additionally, the examiners found that American Mobile improperly provided a disclosure statement with a payment that was not the complete settlement for 36 claims, an error rate of 14.9% that violated Florida statutes.

American Mobile did not respond to requests for comment.

Centauri Specialty incurred a $100,000 fine, with findings indicating it failed to use properly appointed adjusters in 168 of 272 claims reviewed and neglected to include required disclosure statements in 141 instances.

Ricardo Espino, president of Lilypad Insurance, noted that the regulatory actions pertained to claims practices predating Lilypad’s acquisition of Centauri last year.

Espino emphasized that since the acquisition, significant operational and compliance upgrades have been implemented, reaffirming their commitment to fair claims handling and high service standards.

Key Information

• Eight Florida property insurance companies charged with regulatory violations post-Hurricanes Ian and Idalia.
• Combined fines total $2.07 million; OIR continues investigations.
• Common violations include failure to pay or deny claims within 90 days and lack of required disclosures.
• OIR aims to enhance compliance in Florida’s insurance market following reforms.
• Focus on ensuring companies adhere to Florida statutes in claims processing.