Florida OIR Wants More Data, Warns Insurers about Concurrent Causation Denials

As consumer complaints have apparently mounted over unpaid hurricane losses, Florida’s top insurance regulator and some lawmakers are signaling new scrutiny on insurance carriers’ claims-handling and other practices.

Florida Insurance Commissioner Michael Yaworsky late last week posted a memo, demanding more data from carriers and warning insurers that improperly handled storm claims involving concurrent causation – those denied due to the presence of both wind and flood damage – “will result in administrative action and restitution to the consumer.”

“While the office recognizes case law surrounding concurrent causation and anti-concurrent causation policy language, it is not a mechanism to handle claims poorly,” Yaworsky said in the memo.

He noted that the state Department of Financial Services has received “a significant number” of consumer complaints related to delayed or underpaid flood claims. DFS did not provide the number of complaints fielded in 2024.

Yaworsky and the Office of Insurance Regulation, in response to follow-up questions from Insurance Journal, did not name the insurers that he or the complainants are referring to. But people in the Florida insurance industry said the memo appears to be targeting “write your own” companies that provide National Flood Insurance Program policies.

“The way I read it, the additional information requirements are for WYO companies,” said Melissa Burt DeVriese, president of Ormond Beach-based Security First Insurance Co.

Wright Flood, headquartered in Clearwater, is one of the largest write-your-own companies, providing NFIP flood coverage in Florida and around the country. A spokesman for Wright said Friday that the genesis of the concerns is a mystery to the firm.

“With us being a flood-only company, we follow all FEMA rules and regulations and pay every dollar available under the flood insurance policy,” said Robert Langrell, senior communications manager for Wright Flood. The Federal Emergency Management Agency administers the NFIP.

Langrell added that Wright does not utilize anti-concurrent causation clauses in flood policies. For 2024 hurricanes, the company also is 25% ahead of the claims-closing pace seen in previous storms, he noted. Further, the NFIP does not appear to be slower in paying flood claims than in previous years.

The NFIP has reported that as of Feb. 6, it had received more than 57,400 flood claims resulting from Hurricane Helene, which brought storm surge in Florida and unprecedented rainfall to parts of Appalachia last September. The exact number of claims that have been paid was not available from FEMA.

In Florida, the OIR data show that about half of all claims, including wind and private flood claims in Helene and Milton, have been closed with payment as of mid-February. The OIR does not track NFIP claims, but the data show that private flood insurers – not WYO firms – have closed about 22% of Milton claims with payment and 33% of Helene flood claims with payment.

Flood-versus-wind-damage has often been an issue for property owners, some of whom may not realize that most property policies do not cover flood damage, or that storm surge damage is often excluded from wind-coverage policies. For policies with anti-concurrent causation language, insurers may deny coverage if any excluded peril plays a role in the loss, even if a covered peril also contributed, the OIR noted.

To help sort out what claims may have been handled improperly, OIR is asking for more data from carriers by March 6. This includes:

• Written confirmation if the insurer has contractual arrangements to write and provide claims-handling services for NFIP WYO policies. If the insurer does not write NFIP WYO policies, written confirmation is sufficient, and the points below may be disregarded.
• Names of all entities with which the insurer has an active contract to provide claims-handling services on behalf of the insurer for NFIP WYO policies. Responses must also include the inception date of the contractual arrangement.
• A copy of any claims-handling manual as well as the NFIP Claims Manual, if applicable.
• A written statement that explains weaknesses and setbacks the insurer and claims-handling organizations have identified in the NFIP’s claims handling process.

Langrell, of Wright Flood, said the company’s compliance team is evaluating the request.

DeVriese, of Security First, said it’s unclear what’s behind the other part of Yaworsky’s memo, the section warning Florida insurers to follow the law.

“I don’t have any idea why the Commissioner added that part,” DeVriese said. “We stress to everyone involved in the claims process the importance of following the law and the policy terms of the homeowner’s insurance contract. I would expect that my competitors do the same.”

She noted that Security First has not received a large number of complaints, but has won more 5-star Google reviews than it has consumer complaints.

The commissioner’s warning came just days after Florida lawmakers began pushing bills that appear to be consumer friendly, likely in response to complaints from policyholders facing higher premiums in recent years. But some of those measures could significantly shake up the property insurance world and undo part of the 2022 legislative insurance reforms.

Sen. Don Gaetz, R-Pensacola, this month introduced Senate Bill 554. It would require insurance companies to disclose executives’ compensation packages and would establish a sliding scale for insureds’ attorney fees in claims litigation.

That threatens to unwind the 2022 legislation that barred one-way attorney fees and multipliers in most situations. Insurers had blamed the fee allowance for fueling excessive lawsuits by plaintiffs’ attorneys, so much that it forced a number of carriers into insolvency from 2020 to 2022.

“This bill goes backwards and puts the sliding scale back in place,” which could escalate loss adjustment expenses for insurers and prompt reinsurers to raise their prices, said B.G. Murphy, director of government affairs for the Florida Association of Insurance Agents. He spoke Friday at an FAIA webinar on the upcoming Florida legislative session, which begins in earnest March 6.

Another measure, SB 790, would bar insurers from canceling wind policies after flood damage, at least until renewal date or until repairs have been completed.

Part of the reason behind consumer complaints and national news stories about unpaid claims may have to do with the fact that three hurricanes hit Florida in 2023-2024, leading to large numbers of damaged homes. Complaints are not uncommon after storms. After Hurricane Michael hit the Florida Panhandle in 2018, Florida Chief Financial Officer, Jimmy Patronis, posted a bulletin that the number of complaints from insureds had far outpaced the number fielded after Hurricane Irma, a much larger storm.

Also, adjusters and insurers have pointed out that many consumers, facing higher costs, have raised their deductibles significantly in recent years, and many recent hurricane claims have fallen below those deductible levels, resulting in no payouts. The OIR data show that for Hurricane Milton, about 42% of all claims closed without payment fell below the insureds’ deductibles.

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