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16 Nabbed in Florida Sting Operation for Failing to Get Workers’ Comp Coverage
A sting operation in Manatee County, Florida, has led to the arrest of 16 men who were working without a contractor’s license and without securing workers’ compensation insurance on their employees.
The sting was led by the Manatee Sheriff’s office in cooperation with the Florida Department of Financial Services and the Department of Business and Professional Regulation, authorities said.
Details about the operation were not released, but a spokesman for DFS said it was probably similar to a number of other stings in recent years: Authorities advertise for bids on home renovation work; when the contractors show up to take a look, investigators check for a contractors’ license and for workers’ comp coverage.
At least 16 people who looked at the “dummy house” property failed the test and were charged last week, the sheriff’s office said.
Florida law requires that all businesses with four or more employees secure comp insurance. All construction companies with one or more employees must carry coverage for all workers, although company officers can apply for exemptions, according to DFS.
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Investors Are Increasingly Interested in a Novel Type of Weather Insurance
Interest in startups trying to shake up the insurance industry is on the rise as weather catastrophes worsen. The latest sign: New York-based Arbol has raised $60 million in a Series B funding round.
Founded in 2018, Arbol specializes in a niche but fast-growing form of indemnity known as “parametric insurance.” Unlike traditional insurance products that link a claim with actual losses, payouts are triggered by a predetermined parameter.
For instance, farmers and the insurer could agree that 3 inches of rain falling in an hour is the threshold that would lead to payouts. The simplified claim process enables farmers to restart crop planting straightaway, rather than waiting for weeks or longer for a loss assessment.
The challenge for insurers is creating models that price weather perils accurately. Arbol leverages artificial intelligence technology to process large amounts of climate data and simulate interactions between different weather factors, says Siddhartha Jha, the startup’s founder and chief executive officer.
A former commodities trading strategist at Citadel, Jha has also used his Wall Street background to design a diverse product portfolio, primarily underwriting six climate-related risks including temperatures, soil moisture and solar radiation, and operating in more than 15 countries mostly in Europe and North America. That diversity, according to Jha, reduces the company’s risk exposure while improving profitability.
That strategy seems to be working. While Arbol’s business centers on insuring against weather perils, which have grown in frequency and severity under a changing climate, Jha says that the six-year-old startup is profitable.
Arbol transacted $250 million in gross written premiums last year, up from $2 million in 2020 when it began offering parametric insurance services, according to the company.
The investment, announced Tuesday and co-led by London-based Giant Ventures and the venture capital arm of French financial powerhouse BNP Paribas, came after Arbol booked a nearly 50% increase in revenue in 2023 from a year ago. Other investors in the new round include Mubadala Capital, a sovereign wealth fund backed by the government of Abu Dhabi.
The fundraising announcement is the latest in a growing list of investments in the parametric insurance sector. In 2022, French insurer Descartes Underwriting completed a fundraising round of $120 million, while Puerto Rico-based Raincoat also raised millions of dollars from venture investors. Floodbase, a New York public benefit corporation, is also working on a pilot of its parametric insurance product in Africa.
“The world is starting to wake up to climate coverage gaps” in insurance, Jha says. “That is going to start becoming a big focus.”
While agricultural businesses, energy infrastructure operators and reinsurance clients — that is, insurers who buy protection from other insurers to hedge their risk — currently make up the lion’s share of Arbol’s user base, Jha says that the fresh funding will help the startup make a foray into other markets. Earlier this month, Arbol launched a subsidiary that began offering home insurance for coastal communities in the US, where state-backed “insurers of last resort” are taking on trillions of dollars in risk.
As economic damages from natural catastrophes mount, more insurance companies have pulled out of high-risk areas such as California and Florida. The remaining insurers are raising rates in response to rising climate-induced threats. A recent analysis predicts that the average premium for homeowner insurance in Florida will approach $12,000 by the end of 2024, while the national average is on course to hit a record high of $2,522, following a roughly 20% increase over the past two years.
While parametric insurance has limitations — when a weather peril doesn’t cross the trigger point, for instance, policyholders won’t receive payouts even if damages occurred — the product is gaining traction as businesses scramble to protect themselves from the increasingly severe impacts of climate change. Data from Allied Market Research shows that globally, parametric insurance grew into a nearly $12 billion business in 2021 and is expected to more than double its size by 2031.
Photo: A worker holds a soybean plant at a drought-affected farm in Argentina. Photographer: Natalia Favre/Bloomberg
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Fla. Regulators’ Effort to Remove Insurer Execs May Not Pass Constitutional Muster
Current and former leaders with Florida property insurers have had some strong reactions to state regulators’ recent efforts to oust company executives who previously helmed now-insolvent carriers. Some have called the unprecedented regulatory action unfair, misguided and impossible to substantiate, while others have said an accounting of Florida’s “revolving door” of insurance execs is long overdue.
The Florida Office of Insurance Regulation’s flurry of letters to seven property insurers and two health insurance firms may amount to little, however, if the companies decide to challenge the law that the removal actions are based on.
“Off the top of my head, I can think of at least four reasons why (Statute) 623.4073 is unconstitutional,” said Robert Jarvis, a law professor at Nova Southeastern University in Fort Lauderdale.
Click on the chart above for an enlarged view.
He pointed out that the 2002 law violates insurance company officers’ due process rights, which are guaranteed by the state and U.S. constitutions. The bedrock documents, for example, establish a right to trial by jury and note that no person may be deprived of property, including a job, without due process of law.
The Florida statute that bars insolvent carrier executives from hiring on with other Florida insurers has never been fully reviewed by any appeals court, Jarvis noted. Sawgrass Mutual Insurance Co. briefly raised the constitutional issue in a 2018 challenge to the state’s move to place the firm in receivership and bar its executives from the Florida insurance industry. But an appeals court merely upheld a trial judge on the matter and did not provide an opinion.
Two Florida-based insurance company officials told Insurance Journal that, as of Monday, they have not decided if they will challenge the law or OIR’s actions in court, a legal move that would probably require first going through the state Division of Administrative Hearings.
The story about the OIR letters broke last week when the Tampa Bay Times reported on it. The article noted that OIR, under the direction of Insurance Commissioner Michael Yaworsky, began sending letters out to multiple insurance carriers in 2023, asking them to show how the executives were not responsible for the financial troubles of several now-insolvent insurers
The agency provided Insurance Journal with 30 letters, follow-up notices and orders posted in the last 12 months. American Coastal Insurance received OIR removal letters on 12 officers – more than any other carrier. American Coastal, Florida insurance veterans will remember, was merged into United Insurance Holdings, the parent company of United Property & Casualty Insurance Co., in 2016 and remained a subsidiary insurer. When UPC was deemed insolvent in 2023, UPC rebranded itself as American Coastal and signed up several executives from UPC.
Peed
Those executives named by OIR for removal from office include Robert Daniel Peed, known as Dan, the former CEO of United.
“Due to Robert D. Peed being an officer and director of an insolvent insurer, the Office requires additional information to ensure that Robert D. Peed meets the criteria for appointment,” reads the 2023 OIR letter to AmCoastal.
A follow-up in February of this year goes further: “Based upon Robert D. Peed having previously served as an officer or director of United Property & Casualty Insurance Company…, an insurer that became insolvent,” he may not serve in his current position at AmCoastal.
The letters cited Statute 624.4073, which reads: “Any person who was an officer or director of an insurer doing business in this state and who served in that capacity within the 2-year period before the date the insurer became insolvent, for any insolvency that occurs on or after July 1, 2002, may not thereafter serve as an officer or director of an insurer authorized in this state or have direct or indirect control over the selection or appointment of an officer or director through contract, trust, or by operation of law, unless the officer or director demonstrates that his or her personal actions or omissions were not a significant contributing cause to the insolvency.”
If the insurers do not prove why the execs were not responsible and fail to remove them from the company, the carriers could face the loss of their certificates of authority, OIR explained. The named officers could be forced to leave the insurance industry or work in another state.
Several of the carriers have provided OIR with written responses, arguing against removal of their officers. But those responses are confidential until investigations are completed, an OIR spokesperson said Monday.
American Coastal did not make Peed and the other officers available for comment. But the company did provide a statement to the news media:
“A confluence of natural disasters, from Hurricanes Irma, Laura, Delta, Michael and Zeta to Hurricane Ian led to the insolvency of United P&C. The actions of executives were not the contributing cause of the insolvency of United P&C, and they did everything in their power to return United P&C to profitability,” reads the statement.
Financial statements also show that Peed, who was previously with AmCoastal, did not join UPC until the merger in 2016, as the Florida market woes deepened, raising the possibility that trouble had begun before he arrived.
Others in the Florida insurance industry said the officer-removal law, often called “no-fly list” law, is ill-conceived. It makes it nearly impossible for executives to disprove that they were responsible for financial failures, especially in the wake of several years in which the industry blamed runaway litigation and fraudulent roof claims for a market that fell into crisis.
“You’d be proving a negative,” one industry leader said. “There’s no way to do that.”
Yaworsky’s sudden enforcement of the law may be as much about optics, some argued, after Florida regulators were criticized for failing to effectively police insurers before 11 insolvencies became unavoidable in the last three years. Florida lawmakers also were chastised for passing insurer-friendly legislation in 2022 and 2023 that was designed to limit frivolous claims lawsuits by ending assignments-of-benefit agreements and one-way attorney fees.
Yaworsky
But industry leaders agreed that whatever the reason for the enforcement, the OIR actions should not be taken lightly.
“The commissioner looks like he is committed to enforcing the law and holding insurers accountable. That’s the correct thing to do,” said Michael Carlson, president of the Personal Insurance Federation of Florida, which represents some of the largest property insurers in the state.
Other industry heavyweights said that scrutinizing leadership of failed companies is long overdue.
“Some of the companies were formed and they didn’t really know the business,” said Barry Gilway, the longtime director and CEO of the state-created Citizens Property Insurance Corp. who stepped down in early 2023.
He said that some of the carriers that went bust had, in fact, made terrible financial decisions that crippled their performance. One company, for example, focused heavily on writing older mobile homes that did not have to meet modern tie-down and building codes, making them highly vulnerable to total losses.
“OIR has an obligation to question those decisions,” Gilway said. He also argued that the regulatory agency could have done more under the previous administration to bird-dog warning signs and the leadership of struggling carriers.
Removing a large number of executives from office may prove to problematic, if it comes to pass. Gilway and others in the industry said that Florida has historically had a limited number of people with expertise in the business and the unique demands of the Florida market. That has led to a “revolving door,” in some cases, of executives moving from one company to another, Gilway said.
The proposed actions against the insurers and executives named by OIR are still pending, for the most part. Only two, regarding officials with health care insurance firms, have reached the final-order or consent-order stage.
The regulators are reviewing company information and will make determinations on a case-by-case basis, said Samantha Bequer, communications director for OIR.
Burt
The statute is much less severe than it could have been, explained Locke Burt, chairman and CEO of Security First Insurance Co., based in Ormond Beach. The original bill, requested by the Florida Department of Financial Services’ rehabilitation division in 2002, would have barred officers of insolvent companies for life.
“I didn’t think that was fair,” said Burt, a former state senator who was chairman of the Senate Judiciary Committee at the time.
The final bill approved that year was a compromise and allowed officers a hearing to make their case before facing removal from office.
Burt’s Security First received one of the OIR letters last month, about an employee who was previously with Lighthouse Insurance, which went insolvent in 2022. That accounting officer is actually employed with Security First’s managing general agent, not with the insurance company, Burt explained. But in hopes of bringing him on board Security First, the carrier months ago had asked for an OIR review of the matter, a review that is still pending.
Burt and Melissa Burt DeVriese, president of Security First, both said they did not know why OIR had decided to take the enforcement actions at this time.
“We have complied with the law and have communicated with OIR,” DeVriese said. She noted that the OIR’s actions have left insurers, their officers and the officers families in limbo, for months in some cases, while regulators review the circumstances.
Rabb is Southeast Editor for Insurance Journal. He is a long-time newspaper man in the Deep South; also covered workers’ comp insurance issues for a trade publication for a few years.
Please call Lee from USAsurance Powered by WeInsure. 954-270-7966 or 833-USAssure at the office. My email is lee@myUSAssurance.com. I am Your Insurance Consultant about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer.
Florida’s governor has signed two bills that will provide more matching grants for homeowners and condominium associations to fortify properties against the growing threat of windstorms.
Senate Bill 7028 will send an additional $200 million to the My Safe Florida Home program, a popular program that provides up to $10,000 in matching grants for qualified homeowners who retrofit their roofs, doors and windows, in return for lowered premiums. House Bill 1029 will set up a pilot program to allow up to $1,000 for condo associations to be inspected and retrofitted with wind-mitigation measures.
Gov. Ron DeSantis signed both bills into law April 24. Similar fortification programs are now in place in a number of coastal states and have been called a vital step in limiting insurance costs as home and condo owners face more powerful hurricanes as the planet warms.
“A proven way to prevent hurricane damage and property loss is to fortify homes against storms,” Michael Carlson, president of the Personal Insurance Federation of Florida, said in an email.
Condo associations also have applauded the move but have said much more funding will be needed in coming years. The managing director for for Hilb Group of Florida, a major insurance broker for condos, said the law will give some much-needed assistance to associations facing expensive roof repairs and replacements.
“I hope the money is all used up in two weeks,” so that lawmakers can see the dire need for more funding, Clarkson said.
Funding for both programs will come from the state’s general revenue fund.
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Insurers Get Green Light to Pay Less Than Billed Charges in Florida PIP Cases
The Florida Supreme Court has given auto insurers more flexibility in reducing payments for medical services under the state’s no-fault auto insurance law and may have finally put to rest years of questions about the much-debated statute.
In answering a certified question from a federal appeals court, the Florida justices said that the no-fault law does not force insurers to choose between paying 80% of the maximum reimbursement allowed by Medicare or paying the full amount of the charges submitted by a medical provider. The insurer may, if the policy gives notice, choose to pay 80% of the charged amount, even if that amount is less than the maximum, the court decided.
“Allstate correctly characterizes this 80% of reasonable expenses requirement as the ‘overarching mandate’ of the PIP statute,” the justices wrote in the April 25 opinion.
The court’s decision is the long-awaited result from a 2019 class-action lawsuit brought by Revival Chiropractic in Altamonte Springs, Florida, and others against Allstate Insurance Co. The chiro practice had treated two Allstate policyholders involved in auto accidents, and took exception when Allstate would not pay the full bill. More than 28,000 other medical claims were similarly underpaid, the initial lawsuit noted.
“This adds clarity on the PIP law,” said Michael Carlson, president of the Personal Insurance Federation of Florida, which filed an amicus brief in the case. “This, along with the end to attorney fees should really help reduce costs in auto.”
The chiropractors argued that the wording of Florida’s Personal Injury Protection act (the PIP or no-fault statute), allowed the insurer to reduce its payout only when it chooses to adhere to the maximum reimbursement method, based on Medicare or, in some instances, the state workers’ compensation fee schedules.
A federal district court agreed with the health care providers. Allstate appealed and the 11th U.S. Circuit Court of Appeals said that multiple courts had reached differing conclusions on the confusing PIP statute.
In its answer to the federal court’s certified question, the Florida Supreme Court found that Revival Chiropractic had misunderstood the law.
“Revival’s position is that Allstate’s election to limit reimbursements based on the schedule of maximum charges effectively provided an exception to the statutory provision limiting reimbursements to 80% of reasonable charges,” the high court noted. “But Revival’s understanding is based on a misreading of the provisions of both section 627.736 and Allstate’s PIP policy.”
The PIP statute is permissive, not mandatory, the court said. It provides that an insurer may pay 80% of the maximum, but that reasonableness of fees is the overriding thrust of the law.
“… Revival contends that the policy reflects an election to exclusively proceed pursuant to the statutory provisions governing the schedule of maximum charges,” the justices wrote. “Revival’s approach subverts the manifest purpose of both the PIP statute and Allstate’s PIP policy by ignoring the clear terms of both texts.”
The court explained the fees at the heart of the litigation: The maximum on the fee schedule for the medical procedure was $115; 80% of that would be $120. Revival had submitted a charge of just $100, believing that Allstate would have to pay that amount. But the insurer elected to pay 80% of that charge, or just $80. That practice had deprived medical providers of more than $5 million, from 2014 to 2019.
The Supreme Court had settled a similar question in late 2021, in its opinion in MRI Associates of Tampa vs. State Farm Mutual Automobile Insurance. That decision found that State Farm was not bound by the 80%-of-maximum” rule but could utilize its own, hybrid reimbursement schedule that paid less than what the medical provider billed for.
But the Revival case was in litigation when the MRI Associates decision was handed down, and at least two other recent Florida appellate court rulings have conflicted on key issues. Those state cases had been undermined but not fully repudiated by the MRI ruling, the 11th Circuit said in explaining why the Supreme Court’s definitive opinion was needed.
The state justices tweaked the certified question to read:
“Under a PIP policy providing notice that the insurer (a) will pay 80% of reasonable expenses for medically necessary services, (b) may limit payment pursuant to the statutory schedule of maximum charges and other statutory limitations, and (c) will pay 80% of a submitted charge if that charge is less than the amount reimbursable under the schedule or other statutory provisions, may the insurer pay 80% of the charge submitted by a medical provider, even if the charge submitted is for less than the amount reimbursable under the schedule?”
The answer is yes, the justices agreed.
The Revival case now goes back to the 11th Circuit for final consideration.
In light of the ruling, some Floridians may wonder what is to stop providers from simply charging the fee-schedule maximum every time, going forward. For one thing, not all medical procedures are covered by the Medicare and workers’ comp maximum reimbursement schedule. And the PIP law requires that reasonable medical charges be in line with customary fees charged to most patients.
“… Such a charge may not exceed the amount the person or institution customarily charges for like services or supplies,” the no-fault statute reads. “In determining whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment, or supply.”
The Supreme Court opinion can be seen here. The initial complaint by Revival Chiropractic can be seen here.
Rabb is Southeast Editor for Insurance Journal. He is a long-time newspaper man in the Deep South; also covered workers’ comp insurance issues for a trade publication for a few years.
Please call Lee from USAsurance Powered by WeInsure. 954-270-7966 or 833-USAssure at the office. My email is lee@myUSAssurance.com. I am Your Insurance Consultant about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer.
A new report claims that Florida’s property insurance market is full of “low quality insurers,” especially those Florida-based companies that write the bulk of the 7.5 million homeowners and condo insurance policies. It casts aspersions on Demotech, the rating agency that reviews their financial stability.
Former Florida Deputy Insurance Commissioner Lisa Miller sat down with Demotech President Joe Petrelli to get the other side of the story that the report didn’t. She also learned that it wasn’t low capital and surplus that led to seven company insolvencies, as the report claims, but instead targeted technology-enabled claim instigation.
Show Notes
The report, When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets was written by researchers at Columbia University, Harvard University, and the Federal Reserve Board and published online prior to being peer reviewed. The report’s abstract describes it as a study of how homeowners insurance markets respond to growing climate losses and how this impacts the home mortgage markets.
“Using Florida as a case study, we show that traditional insurers are exiting high risk areas, and new lower quality insurers are entering and filling the gap. These new insurers service the riskiest areas, are less diversified, hold less capital, and 20 percent of them become insolvent. We trace their growth to a lax insurance regulatory environment. Yet, despite their low quality, these insurers secure high financial stability ratings, not from traditional rating agencies, but from emerging rating agencies.”
Joe Petrelli, President of Demotech. Courtesy, Demotech
The report specifically targets rating agency Demotech, which provides Financial Stability Ratings (FSR) for most of the 50 or so Florida-based property insurance companies, including six of the recent eight carriers to enter the market. The report claims Demotech’s ratings “are high enough to meet the minimum rating requirements” of Fannie Mae and Freddie Mac, which back many home mortgages, but that most of those insurance companies wouldn’t meet government requirements if rated by AM Best, suggesting the companies are financially weak.
“I think the thing to keep in mind is the report is based on what are called counterfactual AM Best ratings of Demotech-rated companies,” said Joe Petrelli, President of Demotech, who described counterfactual methods as those based on “what-if” scenarios. “So I think that, in and of itself, should have alerted people that this was not based on anything real or actual. It was based on counterfactual information. It’s like rewinding the world, changing a few crucial details, and then hitting play to see what happens. It’s essentially a simulation,” said Petrelli.
Petrelli is an actuary and a 55-year veteran of the insurance industry. He and wife Sharon co-founded Demotech in 1985 and today the agency reviews and rates 460 insurance companies across America. It is registered with the U.S. Securities and Exchange Commission as a nationally-recognized statistical rating organization for insurance companies. Florida regulators approached Demotech in 1995 to become the very first ratings company to review and rate independent, regional and specialty companies that filled the gap left by legacy property insurance carriers that fled the state after losses from 1992’s Hurricane Andew. Demotech has been rating Florida-based companies and others ever since. Under state law, an insurance company’s finances must be reviewed every five years, regardless of its size. On top of that, “Every company we work with gets an inquiry or a letter periodically, especially when there’s financial information to be reviewed,” he said.
Lisa Miller, Host of The Florida Insurance Roundup podcast
Petrelli said one of the report’s authors contacted him by email in June of 2023 to request information. He said he replied with his mobile number and an invitation to call, but never received a call or reply. He found out about the report in March 2024, three months after its listed publish date. “That’s even more puzzling that you, Demotech, and any of your emissaries were not given the opportunity to have a sit-down discussion with these academicians who wrote this 60-some-odd page report,” said host Miller, who added that “another troubling feature” was the report being made public prior to peer review.
The report said the lower level of capital and surplus of Florida-based companies compared to larger national legacy carriers led to insolvencies of seven of them in a 14-month period in 2022 to 2023. While capital and surplus levels are important, said Petrelli, they overlook the real reasons for those seven companies going insolvent and closing.
“Those Florida-based companies were being targeted through tech-enabled claim instigation. They were being targeted by artificial intelligence platforms,” said Petrelli. “We’re talking about litigation financing, we’re talking about litigation marketing firms who would help find claimants, and we’re talking about search engine optimization being used online. With their tiny market share of Florida, those seven companies in 2021 had double the number of new litigated claims than the entire state of California had that year in its $12 billion homeowners insurance market.”
The report found it unusual that Florida-based companies purchase the large amount of reinsurance they do and what they spent for it. “That was the other fascinating thing to me in the report,” said Petrelli. “I kind of think that’s a good thing in a catastrophe prone area. More reinsurance is always better than less if you’re an insurance company in Florida.”
Host Miller noted that due to hurricanes, Florida has the highest catastrophic risk of any state in America. The accompanying higher reinsurance costs translate to high property insurance costs for consumers. “Add in a lawsuit-happy environment, where at last count, Florida had just under 15% of the homeowners insurance claims in the country yet nearly 71% of the homeowners insurance lawsuits filed, and you have a recipe for a very challenging marketplace,” said Miller.
Miller said the past three years of insurance market reforms passed by the Florida Legislature and signed into law by Governor Ron DeSantis are showing encouraging results now:
Florida-based property insurance companies collectively showed a positive net income in 2023 for the first time in seven years;
Those companies reported lower loss reserve development at year-end 2023 than in 2022 by nearly 45%;
Reinsurance costs have moderated;
Litigation is easing, but still outpaces the U.S. average in legal defense costs; and
The rate increases sought by companies are smaller, with one company recently announcing a 2% average statewide rate decrease for homeowners and condominium policies.
Eight new companies have come into Florida in the past 12 months to begin writing homeowners insurance. They are helping fill the gap left by the seven companies that became insolvent.
“That’s how you attract capital. You give them a chance to make money,” said Petrelli, of the eight new companies in the market writing homeowners policies. “I think all these reforms have been exceptional and beneficial to consumers as well as to the insurance companies, and ultimately the reinsurance community will see that,” he added.
While there may be modest rate decreases by some insurance companies down the road as legislative reforms take full effect, Petrelli said market stabilization to him means more modest rate increases. “We should all remember that the price of tar paper goes up, the hourly wages of the skilled craftsmen that fix our houses go up, the cost of rugs is going up, roof shingles is going up, and glass is going up. So we should expect in the long run, moderate increases. But if you get a rate decrease now and again, enjoy it.”
** The Listener Call-In Line for your recorded questions and comments to air in future episodes is 850-388-8002 or you may send email to LisaMiller@LisaMillerAssociates.com **
Please call Lee from USAsurance Powered by WeInsure. 954-270-7966 or 833-USAssure at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer.
Facing a crippling bill to repair flood damage to their homes, board members of an Orlando condo community sued their contractor this week for inflating his cost estimates — just weeks after that same contractor was arrested in Lee County for alleged overbilling.
The arrest and lawsuit — along with a companion legal filing against former board members for awarding the contract — marked the latest chapter in the horror story gripping residents of the Dockside at Ventura Condominium. Suffering some of the region’s most dramatic flooding from Hurricane Ian, the residents were hit with as much as $1,000 a month in assessments for repairs, leading to an uprising that deposed the condo board.
No sooner did a new board take over than residents became aware of the legal troubles faced by the principal owner of SFR Restoration, who was allegedly hired on a no-bid contract by the previous board and is seeking $27 million in repair bills and interest — a bracing total considering there are 266 units in the condo complex.
“Last year I was paying $483 in regular HOA fees, and then the special assessment for my size unit was $1,001,” said Elizabeth Leuven, 74. “That’s about the regular HOA if you live in Manhattan with a 24-hour concierge.”
The two suits were filed Monday in Orange County Circuit Court. The condo board is seeking relief from a judge for the contract with SFR Restoration.
The condo association also sued three former board members, who were recalled and eventually removed from their posts last year. The lawsuit alleges that Richard Pannullo, Ronaldo Loyo and Niya Loyo breached their fiduciary duty in rewarding the contract, and also that they received improper personal benefits for doing so.
Reached by phone, Pannullo said he had no comment. The Loyos couldn’t be reached.
In addition to a ruling on the validity of the construction contract, the filing against the contractor seeks an injunction on the firm’s $18 million loan to Dockside at Ventura condominiums in east Orlando. In essence, the loan allows the residents to pay off their debt to the contractor over time, and lets work proceed without waiting for an insurance settlement, but it also balloons the total bill to about $27 million including interest.
Dockside filed that lawsuit against several affiliated companies involved in the work and loan: SFR Services LLC, Southern Florida Restoration, LLC, and South Florida Real Estate, LLC. The three companies are based in Stuart and managed by Ricky McGraw, the principal of SFR.
Last month Florida Chief Financial Officer Jimmy Patronis announced McGraw’s arrest in Lee County, accused of felony charges of grand theft and insurance fraud following an investigation by the Florida Department of Financial Services. The arrest was “for his alleged involvement in intentionally inflating and overbilling a roof replacement claim to defraud Tower Hill Insurance Companyout of more than $214,000,” according to a Dec. 5 news release.
McGraw declined to comment on the lawsuit’s allegations this week, and he previously declined comment to the Insurance Journal about his arrest.
Dockside’s lawsuit alleges that SFR’s $27 million estimate “contains millions of dollars of interior work that would ordinarily be the responsibility of individual unit owners (rather than Dockside itself),” and that because it exceeds 5% of the association’s budget, the prior board should have sought multiple bids.
The community also alleges that remediation and reconstruction should have been “priced and completed for less than $10 million” and that the inflated costs were to seek a greater insurance award.
The 266-unit condo neighborhood is off Curry Ford Road just east of Semoran Boulevard in Orlando.
When Hurricane Ian blew through Central Florida in 2022, the retention pond in the middle of the community spilled over, sending floodwaters into first-floor units, and destroying vehicles in the parking lot.
Many residents were rescued by airboats after the storm.
Today most of the first floor units remain under construction, stripped down to the studs and uninhabitable for their owners.
The loan came with monthly assessments ranging from $650 per month to more than $1,000 per month depending on the unit size, stoking fears from the community of seniors and young families that they wouldn’t be able to afford to stay there. Residents began paying the new charge in October.
In the wake of the upheaval, Leuven helped organize a recall effort of the former board, which proved successful as they were ousted by an arbitrator late last year.
With the new board in place for weeks, Leuven said she and her neighbors are tired, and just want to their community back to normal.
“We need to get people back home again,” she said. “We just want to get back to how we were.”
Please call Lee from USAsurance Powered by WeInsure. 954-270-7966 or 833-USAssure at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer.
April 11, 2024
Florida authorities have charged a public adjuster and a rental property tenant with fraud after they allegedly falsified documents, filed a false claim and received a check from Scottsdale Insurance Co., a Nationwide surplus lines subsidiary.
The Florida Department of Financial Services said Wednesday that a public adjuster named Soraya Keber, of No Risk Claims Adjusters in Miami, worked with renter Yaneiris Cepeda in 2020 to file a claim over a burst pipe. Keber submitted a public adjusting contract with the property owner’s name and a $47,000 damage estimate, DFS explained.
The owner later said that he had never signed the paperwork and did not initiate the claim.
Scottsdale eventually settled the claim and made a payment of more than $10,000 to Keber, the property owner and the mortgage company, the office said. Keber cashed the check, deducted her percentage and wrote a check to Cepeda for the remaining amount.
DFS did not explain how the alleged fraud was uncovered, or how the scheme advanced to the point of a settlement payment. Investigators began looking into the matter in 2023 after a complaint was received.
DFS online records show that Keber is an all-lines public adjuster, appointed since 2007. She could not immediately be reached for comment Wednesday evening at her claims adjuster office phone or email.
If convicted of the charges, the two alleged perpetrators could receive up to 25 years in prison, DFS noted.
Florida authorities have brought fraud charges against public adjuster Soraya Keber, alleging her role in a complex scheme involving falsified documents and a bogus insurance claim for damages supposedly caused by a burst pipe.
Along with the property’s renter, the duo stands accused of orchestrating an elaborate scheme involving the falsification of documents and the submission of a fraudulent insurance claim for damages supposedly caused by a burst pipe. This audacious plot was brought to light by the diligent investigation carried out by the Florida Department of Financial Services (DFS).
It has been revealed that Keber, who is employed by No Risk Claims Adjusters in Miami, collaborated with the tenant, Yaneiris Cepeda, back in 2020 to fabricate and submit the claim. The deception included a forged contract utilizing the property owner’s name and an estimated damage cost of $47,000.
The insurance company ultimately settled the claim and issued a payment exceeding $10,000 to Keber. Seizing the opportunity, Keber brazenly cashed the check and went on to write a check to Cepeda for the remaining amount.
Both Keber and Cepeda find themselves facing a potential maximum sentence of 25 years in prison. And unfortunately the implications of these charges are far-reaching, as such fraudulent activities can lead to an increase in insurance premiums, as insurance companies often pass on the cost of fraudulent claims to their customers. Ultimately, honest and law-abiding homeowners bear the burden of the increased costs caused by fraudulent claims.
Please call Lee from USAsurance Powered by WeInsure. 954-270-7966 or 833-USAssure at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer.
St. Johns County warns residents of contractor scams following yesterday’s tornado that touched down in St Augustine near Samara Lakes and Trailmark
As the county begins to assess the damage from a tornado that touched down in the vicinity of Samara Lakes and TrailMark subdivisions at approximately 11:40 a.m. on Thursday, officials are warning residents to be wary of contractor scams.
To avoid falling prey to scam artists, the county released the following tips:
Speak with your insurance agent before signing any contracts.
Use caution when hiring someone who approaches you unsolicited.
Be wary of hiring anyone offering a discount to fix repairs with materials “leftover from another job.”
Request multiple estimates.
Verify a contractor’s license from the Department of Business and Professional Regulation.
Request references. Contact the Florida Attorney General’s Office to verify if any complaints have been filed against the company or contractor.
Validate current insurance policies and/or bonding information.
Never pay the complete bill in advance and use caution with the amount used for deposits.
Ensure proper permitting prior to all construction/repairs. For questions concerning whether a repair requires a permit, contact the St. Johns County Building Department.
Read the entire contract, including the fine print, before signing.
Every contract must include a “buyer’s right to cancel” within a three-day window.
Make sure that the property is void of any liens from suppliers or subcontractors who were not paid by the contractor.
Insist on releasing all property liens from subcontractors before making final payments.
Do not sign a certificate of completion or pay in full unless you’re completely satisfied.
Click here for more information on St. Johns County Building Department and click here for information from the St. Johns County Emergency Management Department.
Please call Lee from USAsurance Powered by WeInsure. 954-270-7966 or 833-USAssure at the office. My email is lee@myUSAssurance.com . I am Your Insurance Consultant about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance, Mortgage protection, Financial Products, Business & Commercial Policies, & Group Products for business owners to give Employees benefits at no cost to the employer.
As time passes after hurricanes, new analysis by Stanford University researchers shows perception of personal risk, including the likelihood of injury and home damage, decline.
The findings suggest that programs and policies that aid households to think beyond stocking up on food and medical supplies and invest in longer-term protections will help overcome the risk perception gap and supporting adaptation to rising climate-related threats.
In Texas and Florida, during the five years when hurricanes Harvey, Irma and Michael ripped through the Gulf Coast, many households took steps to prepare for the approaching storms.
According to research published April 9 in PNAS Nexus, people who took these initial steps too often went on to misjudge their vulnerability to impacts from future hurricanes.
“It totally makes sense that the more things you do to protect yourself, sensibly, your personal risk should be going down,” said lead study author Gabrielle Wong-Parodi, assistant professor of Earth system science in the Stanford Doerr School of Sustainability. “In reality, climate change is intensifying hurricanes and future risk of property damage and injury is generally going up in many Gulf Coast communities. All of our findings paint a picture that’s worrisome,” Wong-Parodi said.
Programs and policies encouraging households to invest in longer-term protections are needed to overcome this risk perception gap and help people adapt to rising threats over time, according to Wong-Parodi and co-authors Daniel Relihan of University of California, Irvine, and Dana Rose Garfin of University of California, Los Angeles. This applies not only in hurricane country, they said, but also in areas facing increasing risks from wildfires, droughts and other climate-related phenomena.
The research expands on a 2022 study from Wong-Parodi and Garfin that found people in Florida and Texas who had experienced major hurricanes first-hand tended to perceive greater risks from an impending above-normal hurricane season, and to say they were taking steps to safeguard their households.
The new study, built upon more extensive surveys, looks at how risk perception and actual actions shifted over time based on how recently survey participants had experienced a big storm.
Both studies are part of a growing effort to understand the complex relationship between risk perceptions and behavior as a way to inform programs and policies that can help people adapt to the impacts of climate change and reduce human suffering.
“We need to understand what motivates people and offer solutions that resonate with their realities,” Wong-Parodi said.
The new research is based on analysis of five surveys of 2,774 residents of Texas and Florida between 2017 and 2022.
Residents were asked about their perception of risk from hurricanes, and how they adapted to those risks, whether by putting together an emergency supply kit, installing hurricane shutters, developing and practicing an emergency plan or purchasing flood insurance.
Respondents most commonly reported putting together emergency kits or learning about ways to prepare.
As time passed after hurricanes, the new analysis shows, survey participants’ perception of personal risk, including the likelihood of injury and home damage, declined.
“People tend to be adopting those behaviors that are low-hanging fruit, like getting an emergency supply kit, rather than purchasing flood insurance or getting more durable goods that actually may help them with intensifying events,” said Wong-Parodi, who is also an assistant professor of environmental social sciences.
Intertwined threats
The researchers discovered that people living in Florida, and people without a college degree were more likely to report feeling at high risk of home damage and injury from future hurricanes.
The study authors suggest this may be partly because those with less education may not have as much access to resources and existing power structures, and that they may be more vulnerable to hurricanes and other disasters.
“As hurricanes and other threats fueled by climate change grow more complex, more intertwined, and bigger, more of us are going to be experiencing the dangers of storms, wildfires, and droughts in the future,” said Wong-Parodi.
When looking at why people may misperceive their risks for climate change-related threats, she points out, it’s important to also take into account their other life stressors.
“People are facing compounding threats, such as the pandemic, political instability, and economic constraints, that they are also grappling with in their lives,” she added.
Wong-Parodi underscores the need for collaborative efforts between scientists and health practitioners to develop effective policies and investment programs.
She urges partnerships at the local, state, or federal level to enact long-term solutions, such as programs that offer funding to help people and communities to adapt and prepare for oncoming storms, especially for those groups with fewer resources.
“We need to prepare communities, not just support them during and after events,” she said.
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