Florida’s Insurance Industry: Vital to Recovery
TALLAHASSEE, Fla. (Tuesday, Oct. 22, 2024) – Floridians are still grappling with the devastation left behind by Hurricanes Helene and Milton, trying to restore their lives, homes and communities. For many, the damage feels relentless, with some still rebuilding from previous storms like Debby (2024), Idalia (2023) and Ian (2022). In the aftermath, time, resources and a coordinated effort will be essential for full recovery. Property insurers play a critical role in this recovery process, actively working with homeowners to evaluate, process and pay claims as swiftly as possible.
“Unfortunately, recent media stories and self-interested statements by some critics of the insurance industry have created confusion, leading consumers to believe that property insurers are unjustly denying claims,” said Personal Insurance Federation of Florida (PIFF) President Michael Carlson. “The narrative being created, based partly on an article citing data from Hurricane Ian claims, overlooks a key issue: much of the damage from Ian was caused by storm surge, which is generally not covered by a standard homeowners insurance policy. The result is that consumers are being misled into believing flood claims are covered and are being denied by insurers without proper justification.”
Reasons a Claim Might be Closed without Payment
There are several valid reasons why a claim may be closed without payment (OIR CRF 24.01.A). One of the most common reasons is that the cost of the claim falls below the deductible amount, which is the portion of the insurance that is the homeowner’s responsibility. If the damages cost less than the deductible amount, the insurer does not have an obligation to pay for those damages. A second common reason is when there is no coverage for the losses claimed – for example, some insurers exclude pool cages from coverage. If a homeowner files a claim for damage not covered by the policy, the claim will be denied and closed without payment.
There is a timely and even more important reason why a property claim may be closed without payment: if the claim is for damage caused by storm surge or local flooding, it is generally not covered. Many consumers do not know that their standard homeowner’s policy excludes flood damage. If they file a claim for damages caused by flood, it will be appropriately denied and the claim closed without payment.
Unfortunately, says PIFF, several recent storms – Ian, Debby, Helene, and Milton – have caused significant flood damage, resulting in a higher volume of claims closed without payment. This is exacerbated by a federal requirement that must be met for a storm victim to seek emergency assistance from the Federal Emergency Management Agency (FEMA).
The Role of Claim Denials in FEMA Assistance
After major hurricanes, FEMA provides disaster assistance to those affected. However, to qualify, homeowners must file a claim with their insurer first, even if they know the damage is from flooding and not covered by their policy. The denial of the claim is required for FEMA to step in and provide financial assistance. This requirement ensures that homeowners can receive the aid they need, but it also leads to an increase in the number of claims closed without payment.
To make matters worse, explains Carlson, most homeowners do not buy private flood insurance or insurance from the National Flood Insurance Program (NFIP), and they are not protected from damage caused by storm surge and localized flooding from a storm. The numbers are alarming: According to NFIP data, 8 out of 10 households are not protected by flood insurance.
Insurers are required by law to treat consumers fairly and to honor the terms of the insurance policy. If an insurer has a pattern of closing claims without payment, the Office of Insurance Regulation (OIR) has the authority to conduct a market conduct exam of that company to determine whether its practices meet legal requirements. If OIR determines that an insurer has violated Florida law, it can impose a range of penalties, including high fines and even suspend the insurer’s business license.
Seek Reliable Information
Carlson said PIFF urges consumers who have suffered hurricane damage to contact their agent or insurer as soon as possible, to review their home and auto policies and to be ready to navigate the claims process. Insurers are required by law to treat consumers fairly and to honor the terms of the insurance policy. The Florida Office of Insurance Regulation enforces consumer protections, and Florida law provides grounds for legal action by a consumer if they feel that their insurer has violated the law.
“The misinformation campaign about claims closed without payment increases stress for homeowners who are trying to rebuild after recent storms,” added Carlson. “Critics of the insurance industry should apply their efforts to educating consumers on the importance and value of flood insurance and to providing information that will enhance recovery efforts. PIFF members remain dedicated to their role as financial first responders, standing by their commitment to help customers recover and rebuild after a storm.”
Indicators of Market Health
Florida continues to see signs of market health improving in the wake of historic legislative reforms aimed at restoring competition and increasing consumer choice. These changes aimed at improving the insurance market were drafted to apply to future claims, not past claims. As a result, improvements to the market will take time to have their desired effect. But there are already signs the market is improving.
Insurance Commissioner Michael Yaworsky recently announced additional encouraging developments related to the state’s strengthening property insurance market, adding that he was, “extremely pleased to share these announcements, as they point to continued strengthening of Florida’s property insurance market, which is contrary to the narrative that has been circulating about our industry in recent months.”
For more information on the impact of reforms and the health of the marketplace, visit PIFF’s latest Market Pulse at PIFF.net.
About PIFF:
The Personal Insurance Federation of Florida, Inc. (PIFF), is a leading voice for the personal lines property and casualty insurance industry in Florida. PIFF represents national insurance carriers and their subsidiaries, including many of the state’s top writers of private passenger auto and homeowners multiperil insurance. Together, PIFF members write more than $13 billion in premium in the state. PIFF advocates for a healthy and competitive insurance marketplace for the benefit of Florida consumers. Follow us @PIFFNews. Visit PIFF.net to learn more.
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Contact: Allison Aubuchon, APR | 850.766.5255
