State insurance regulators are finished for now with the state’s largest private property insurer. The Legislature should take it from here.
Universal Property and Casualty Insurance signed a consent order last week agreeing to a fine of $1.26 million after allegations that it cancelled policies after homeowners had filed a signficant claim. The company suddenly would discover a minor credit issue that it claimed voided the policy, even after years of accepting premiums. A Delray Beach homeowner got dumped after making a $10,000 claim for water damage. The Office of Insurance Regulation actually issued the fine last spring, but Universal last week agreed not to contest it.
In addition, the consent order requires the company to change roughly a dozen business practices, notably the “post-claim underwriting” that drew so much criticism. From now on, the company is supposed to tell homeowners within 90 days of issuing the policy if there is a problem.
As it happens, that 90-day rule is one that Sen. Joe Negron, R-Stuart, wanted to put into state law during last year’s legislative session. It didn’t happen. Despite the consent order, Sen. Negron said in an interview that he intends to bring back the proposal next year.
“Ninety days is probably a reasonable number,” Sen. Negron said. “But I want to get it in state statute because this is an administrative ruling,” meaning that a future Office of Regulation could reverse the decision.
Then there’s the matter of the fine. Universal made $30 million in 2012. As The Post’s Charles Elmore reported, combined compensation for two Universal executives was nine times the amount of the fine. When The Post Editorial Board asked about the fine in June, an Office of Insurance Regulation spokesman said state law limits what the fine could be. True, but regulators also found no “willful” violations, for which the fines can be four times larger.
To Sen. Negron, the fine “seems a little low. Based on the accusations, you don’t want something that a company can write off as a business expense.” He wants the Legislature to consider revising the laws covering fines. One also wonders how the Office of Insurance Regulation could look at Universal’s denials of claims and conclude that none of it was “willful.”
We understand that regulators don’t want to cripple a company with nearly 550,000 policies that aren’t in state-run Citizens. But a private policy means nothing if the company bails on the homeowner. Florida’s insurance regulators must strike a better balance than Florida’s utility regulators.
Still, Sen. Negron mentioned one potentially helpful development from the coverage of Universal. “I’ve had quite a few companies call to distance themselves” from the company’s practices. “So there could be an ameliorative effect.” The effect will be enhanced if those practices are against the law.
for The Post Editorial Board