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The Consumer Federation of America (CFA) has requested that auto insurers in Michigan further reduce premiums for their customers to account for reduced driving activity and accidents during the COVID-19 pandemic.
Earlier this month, Michigan Governor Gretchen Whitmer and the state’s Department of Insurance and Financial Services (DIFS) ordered all auto insurers to either issue refunds or premium waivers to consumers.
But the CFA believes that insurers can do more to compensate drivers, especially since the pandemic-driven lockdowns have led to drastically reduced driving activity and less roadside collisions – while insurers continued to charge regular rates.
“They are sitting on this coronavirus windfall, and they need to give it back,” CFA national insurance expert Doug Heller told MLive.
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Florida’s state-run Citizens Property Insurance Corp. has joined a chorus of insurance companies accusing the Strems Law Firm of lawsuit abuse. Citizens says it has lost millions of dollars due to an alleged scheme of “sham” claims by the law firm, a public adjusting company and restoration company.
Citizens also alleges a “pattern of racketeering activity in violation of [the Racketeer Influenced and Corrupt Organizations Act] RICO.”
The allegations came in a civil complaint filed against Fort Lauderdale-based The Strems Law Firm; attorney Scot Strems; public adjuster Guillermo Saavedra and his public adjusting firm Contender Claims Consultants (CCC) of South Miami; and All Insurance Restoration Services (AIRS) of Miami, its president Cesar I. Guerrero, and its operations manager Derek Parsons.
“This lawsuit is about what we contend are concerted actions by the defendants to abuse the claims process for their own gain, and to the detriment of both Citizens and our policyholders,” Citizens Spokesperson Michael Peltier told Insurance Journal. “These abuses have made it virtually impossible for Citizens to handle claims efficiently and effectively. We believe we had no choice but to file this suit to address the costs of these abuses that are shouldered by all Citizens policyholders through higher premiums.”
Citizens filed the complaint in the Second Judicial Circuit Court for Leon County, Fla., on June 16. The 26-page document details Citizens’ allegations of how Strems, his firm, CCC and AIRS acted individually and in concert to defraud the insurer into paying for “sham first-party property insurance claims.”
Representatives for Strems, CCC and AIRS did not return Insurance Journal’s request for comment on Citizens’ allegations.
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Most Fla. property owners will likely pay more when their policies renew, as insurers pass along increasing costs of coverage they need to pay claims after a disaster.
FORT LAUDERDALE, Fla. – Florida homeowners, already paying nearly the highest home insurance rates in the nation, should get ready for more sticker shock if and when their policies next renew.
Premiums for most Florida property owners are poised to jump again – sharply – as insurers pass along skyrocketing costs of coverage they need to pay claims after a catastrophic hurricane or other weather event.
That coverage is called reinsurance. It’s insurance that insurers must buy to prevent them from going broke – and to make sure you get paid – after a disaster.
By the June 1 start of every year’s hurricane season, insurers negotiate new reinsurance contracts for the upcoming year. Global capital firms provide the coverage, financed by investors who hope their outlay brings them a higher percentage of profit than if they had left the money in stocks, bonds or other investments.
This year, reinsurance prices increased 20% to 30% in Florida, and averaged 26.1% for companies that cover the most vulnerable catastrophe zones in the U.S., according to a report from artemis.bm, a reinsurance-focused news website.
The increases are the steepest in Florida in more than a decade and are similar to increases that drove up rates for policyholders after the 2005 hurricane season, the report stated, adding that companies hit hardest by claims and lawsuits in recent years faced increases of more than 45%.
Big hikes coming for policyholders
Industry experts say the increases soon will trickle down to Florida property owners who already pay $3,643 on average a year to insure their homes. That’s nearly $1,338 more than the national average
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Global pandemics like COVID-19 have been deemed uninsurable by private insurers. The sheer size and unpredictability of pandemic events makes them nigh on impossible for the industry to apply a standard underwriting practice to. For that reason, most standard insurance contracts around the world include clear policy wording that excludes coverage for pandemic and communicable diseases.
Despite common virus and bacteria exclusions, a significant number of lawsuits and class actions have been filed against US insurers for denying business interruption claims resulting from coronavirus-related losses. The industry has taken a united stance in that they cannot pay claims on insurance policies for which they collected no premiums due to the virus and bacteria exclusions, but that has not stopped some policymakers from suggesting retroactive measures that would essentially force insurers to rewrite contracts and pay out business interruption losses.
The suggestion of retroactive measures has caused major concern in the industry, with executives like Chubb CEO Evan Greenberg suggesting it would “bankrupt the industry”.
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Insurers are opposing the consolidation of more than 100 federal lawsuits filed by companies arguing that they should receive business interruption coverage stemming from COVID-19 shutdowns.
The insurance industry has filed more than 24 briefs opposing multidistrict litigation, following in the footsteps of arguments posed in a brief by two Chubb affiliates that stated consolidation would complicate and prolong the litigation, according to Reuters. The insurers were joined by plaintiffs’ firms, some with MDL experience, who also don’t want their cases moved to a nationwide, multidefendant proceeding.
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On Wednesday (June 3), the U.S. Senate cleared changes to the Paycheck Protection Program that provides more flexibility to small businesses using the relief loans. The changes to the PPP include extending the eight-week period in which funds must be spent for forgiveness to 24 weeks, as well as extending the repayment period money owned from two years to up to five years.
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The number of traffic crashes in Florida dropped by 50% in April compared to the same time last year, according to highway officials.
With residents holed up at home, working remotely and running fewer errands, rush hour traffic has dipped considerably. Shuttered bars and restaurants has meant fewer drunk drivers on the roads. Florida drivers were involved in 16,191 crashes last month compared to 33,692 in April 2019, according to data from the Department of Highway Safety and Motor Vehicles.
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The official start of the Atlantic hurricane season on Monday could signal more steep losses for insurers and reinsurers, already battered by the impact of the coronavirus pandemic on their underwriting and investment positions.
However, recent years of hefty damage from hurricanes and high claims due to the pandemic mean property rates at a key June 1 renewal date are expected to get pushed up by as much as 50%, providing an income boost.
Meteorologists are forecasting that the Atlantic 2020 hurricane season, which officially finishes on Nov. 30, will be above average.
“What we’ve seen over the past couple of years is an increase of (storm) losses from a frequency and severity perspective,” said Susan Fallon, Global Head of Property at Zurich Insurance Group.
“There’s an expectation we will see increased rates.”
The Home Insurance Guru 