Three local insurers fined as regulators increase enforcement effort

In the years following Hurricanes Ian and Idalia, eight property insurance companies doing business in Florida — three local, with a fourth connected to an area company — violated state rules on how claims were to be processed and paid.

The charges, leveled last week by the Florida Office of Insurance Regulation, ranged from the administrative, such as not providing certain disclosure statements, to failing to pay interest when it was owed.

In one case, the unit identified error rates of over 60% for Hurricane Ian and over 80% for Hurricane Idalia for a company that did not include disclosure statements. In several other cases, it found companies failed to pay or deny claims within 90 days.

The office fined the companies a combined $2.07 million and says it’s Market Conduct Unit is continuing examining companies and more fines could be on the way.

The fines, OIR says in a statement, are a warning to companies that state investigators are ready to deploy during storms to make sure the claims handling process is meeting proper standards.

Storm front

OIR says its enforcement is a result of insurance reforms passed in the past few years aimed at stabilizing the state’s property insurance marketplace. These reforms include a “greater ability to enforce regulatory authority and take action to increase market regulation compliance.”

“The role of the property casualty industry is to be a financial first responder to help their customers recover from catastrophes as quickly as possible,” says Mark Friedlander, senior director of media relations with the Insurance Information Institute, an industry organization.

And the state’s role “is to ensure insurance carriers follow Florida statutes when handling storm claims. When they don’t, the insurance commissioner will hold them accountable.”

OIR says the Market Conduct Unit secured $8 million in restitution and issued more than $2.8 million in fines in fiscal 2023-2024. In the first quarter of this year, it secured $660,450 in restitution.

The state’s insurance commissioner, Mike Yaworsky, in the statement, says he is “fully prepared to deploy OIR examiners to make sure claims management practices are efficient and handled appropriately.”

“We will be paying particularly close attention to any company who has had concerning performance behavior in the past.”

As for the most recent findings, OIR looked at 10 companies during its examination, eight of which, according to the statement, had “several findings of misconduct for business practices” during the two storms.

There are two examinations still pending.

The locals

Of the eight companies fined, two are from St. Petersburg — American Coastal Insurance Co. and American Mobile Insurance Exchange — and one, Centauri Specialty, a predecessor to what's now called Lilypad, is from Lakewood Ranch.(Ocala-based TypTap Insurance Co., which was fined $150,000, is a subsidiary of Tampa-based HCI Group.)

Among eight findings against American Coastal, the OIR says the company did not pay or deny initial, supplemental or reopened claims as required by law in 34 of the 167 cases the unit reviewed. And the unit found that in 36 of the 167 claims the company used adjusters that were not properly appointed.

American Coastal, which did not respond to a request for comment for this story, was fined $400,000. American Mobile was also fined $400,000.

The report, meanwhile, says that among the 12 documented findings against American Mobile, the firm did not provide a disclosure statement with a preliminary or partial estimate of damage as required in in 148 of the 241 claims reviewed. And American Mobile used adjusters who were not appointed by the company as required by the state in 54 of 241 claims reviewed, the report contends.

The examiners determined that in 36 instances out of 241 claims reviewed, which is an error rate of 14.9%, American Mobile provided a disclosure statement with a payment on a claim that was not the full and final payment. That did not comply with the requirements of Section 627.70131(6)(b), F.S.

American Mobile did not respond to a request for comment.

Centauri Specialty in Lakewood Ranch was fined $100,000.

Ricardo Espino, president of Lilypad Insurance, writes in an email to the Business Observer that the “the regulatory action announced by the Florida Office of Insurance Regulation pertains to claim practices that occurred prior to Lilypad’s acquisition of Centauri Insurance.”

Lilypad bought Centauri last year. Espino was an executive at both firms, and co-founded Centauri in 2012.

The OIR report says Centauri, among nine findings, did not use properly appointed adjusters in 168 of the 272 claims reviewed. And the inspectors found that the company did not include the disclosure statement required by law in 141 instances of the 272 claims reviewed.

“Since the acquisition, Lilypad has implemented significant operational and compliance enhancements across the organization,” Espino writes. “We remain fully committed to fair and timely claims handling, and to maintaining the highest standards of service for our policyholders.”