Florida Office of Insurance Fines Heritage for Ian Claims Issues

The Florida Office of Insurance Regulation in recent weeks has fined five property/casualty insurers, including Heritage Property & Casualty Insurance Co., which was hit with a $1 million penalty for failing to properly handle hundreds of claims after Hurricane Ian.

Heritage officials have agreed to pay the fine plus $10,000 in administrative costs, according to a May 9 consent order signed by Heritage executives and OIR officials. The violations of state law and regulations were outlined in a market conduct examination report that OIR completed in March.

The fine, reported to be one of the largest in state insurance regulation history, appears to be another sign that Insurance Commissioner Mike Yaworsky is serious about scrutinizing insurance companies in the wake of multiple complaints from consumers about unpaid claims and rapidly rising premiums, and from a few lawmakers who have charged OIR, under the previous commissioner, had missed signs that a number of insurers were facing financial ruin.

The recent market conduct report and consent order also seem to back up charges made in recent lawsuits filed against Heritage, one of which claimed that Heritage had utilized unlicensed adjusters on some 4,800 claims after Hurricane Irma in 2017, which contributed to lowball damage estimates.

The OIR examination found that in 13 of 324 claims examined, Heritage, after Ian in 2022, had utilized adjusters that were not properly appointed or utilized emergency adjusters before a temporary Florida license was issued; in 139 instances, the carrier did not ensure that adjusters provided their license information to policyholders; in another 66, Heritage did not include the names of the adjuster in communication with property owners.

The exams were conducted by The INS Companies, a group of regulatory consultants. They randomly selected the 324 claims of more than 5,500 claims filed after Ian hit.

The team also found:

• In about 30% of claims, Heritage did not acknowledge receipt of claims communication within 14 days, as required by statute.
• In 22% of cases, the carrier did not pay or deny claims within 90 days, as required.
• In 59 of 216 claims closed with payment, Heritage did not accurately calculate interest owed.
• In 57% of the time, the company did not initiate voice contact with insureds within one business day, as required by Heritage’s claims-handling manual.
• But in just about 3% of the claims examined, Heritage did not maintain complete claims records, as required by law.

Heritage officials have not previously responded to requests for comment from Insurance Journal. But CEO Ernie Garateix told the Tampa Bay Times that the company was aware of the issues and has taken action. That includes the creation of a new compliance director position and utilizing new claims management software.

The parent company of Tampa-based Heritage, which reported 169,000 policies in force at the end of 2022, this month reported another profitable quarter, a rebound from 2021 and 2022.

In other cases in the last two weeks, OIR fined four smaller property-casualty insurers for non-willful violations:

• Granada Indemnity Co. agreed to pay $3,000, plus $1,000 in administrative costs, for failing to file its 2023 experience data on time in a data call, according to a consent order.
• Stillwater Property and Casualty agreed to pay $6,000 in fines plus $1,000 in administrative costs for failing to provide claims litigation data for 2023 by the OIR deadline.
• Yel Co. Insurance agreed to pay a $1,000 fine and administrative costs for failing to provide 2022 experience data in a timely manner.
• Lancer Insurance Co. agree to a $3,000 fine and administrative costs for missing the deadline on experience reporting.