How will the insurance bills that passed in the recently completed 2024 Florida legislative session compliment past marketplace reforms? Is a property insurance market marred by carrier insolvencies in recent years and ongoing double-digit rate increases starting to stabilize?

Former Florida Deputy Insurance Commissioner Lisa Miller talks with two legislators about the new laws expected to impact Florida’s property insurance and real estate markets, reinsurance prices, condominium affordability, and their joint belief in bipartisanship for finding workable policy solutions.

Show Notes

Florida State Representative Tom Fabricio (R-Miami Lakes) sits on the House Insurance & Banking Subcommittee and Chairs the House Ethics, Elections & Open Government Subcommittee. He is a former insurance defense attorney whose practice now focuses on commercial and real estate litigation, including real estate transactions.

Florida State Senator Nick DiCeglie (R-St. Petersburg) is Vice Chair of the Senate Banking and Insurance Committee, Chair of the Senate Transportation Committee, and a former Chair of the House Insurance & Banking Subcommittee. He is President and CEO of Hope Villages of America, a Tampa Bay area nonprofit organization addressing hunger, homelessness, and domestic violence.

Both lawmakers discussed their motivation for entering the Florida Legislature and their vision for Florida’s homeowners insurance marketplace and by extension, the state economy. Topics included the admitted insurance market (those companies whose rates and policy forms are approved by state regulators) and the surplus lines companies (those whose rates and forms are largely unregulated, and who often insure risks admitted companies don’t), along with reinsurance companies, who provide catastrophe insurance for insurance companies. Among the bills and issues discussed on the podcast with host Lisa Miller:

• HB 1503 authorizes surplus lines insurance companies to take out policies (“takeouts”) from the legislatively-created and state-backed Citizens Property Insurance Corporation’s non-homesteaded residential properties, such as second homes, among other risks. “I think surplus lines are important (for) it allows other free market competition,” said Rep. Fabricio. “Because ultimately, with Citizens having a population of over 1.2 million to close to 1.3 million policies, we need to depopulate Citizens. We need to bring Citizens down to a number under a million policies, where Citizens will be truly our carrier of last resort,” he said.
• HB 1029 applies the popular My Safe Florida Home homeowners program to condominium complexes and individual condo unit owners in an initial pilot program. The program offers a $2 to $1 match to incentivize homeowners to harden their homes from future hurricanes. “Anytime that we can mitigate losses in the state, it’s going to go a long way in contributing to that healthy insurance market,” said Sen. DiCeglie, who sponsored the Senate companion bill. “In my district alone, we have thousands of condominium associations and those folks are looking for relief as well. Recent condominium reforms requiring them to put more money in reserves, so that they're making the necessary repairs and upkeep of the condominiums (together with)....

(For full Show Notes, visit https://lisamillerassociates.com/episode-48-2024-legislative-roundup/ )

Ray Shelton, Ph.D. is a nationally-known expert on stress and the impacts it has on frontline personnel in disasters and other crises. He is a Fellow and the Director of Professional Development for The American Academy of Experts in Traumatic Stress, in Miller Place, New York. He’s seen tragedy first-hand over 35 years serving with the Nassau County, New York Police department, including the Twin Towers Collapse during 9/11. He’s also a former firefighter and paramedic.

“The adjusters are no different than fire, police, and EMS, they're front line. They're action-oriented. They take risks. They have tremendous attention to detail. They have a powerful need for control, to help people get their lives back in order,” said Shelton. “But the price that is paid for that, is all of the memories, all of the conversations, all of the sites that they see stays with them. There's absolutely no delete button in the human brain.”

Shelton worked with the Liberty Mutual Insurance Catastrophe Response Team during the California Wildfires in 2008 and subsequent tornado outbreaks across the country. That’s where he met Jenny Pye, M.S., whose 35 years with Liberty Mutual included serving as a Property Claims Manager and Director of Quality Improvement for Auto Physical Damage (APD), Property, and Shared Services.

“Every time I hear Ray talk, it takes me back to early in my career when I was an adjuster in the field and would go out and have multiple fatality 18-Wheeler accidents, and just the emotions of being on scene and investigating a claim,” said Pye.
“Sometimes the bodies were still there and then talking to their families, just all those emotions.”

Today, Pye is the Director of Commercial Claims at Pilot Catastrophe Services, based in Mobile, Alabama. She helps adjusters and the firms they serve to not only proficiently manage the technical part of the job, but manage the emotional toll that claims can have. She said adjusters who strive for great customer experience, often ignore or cover-up signs of traumatic stress.

“But sometimes you get feedback as a manager and hopefully before you get that feedback from your customer, you're recognizing these issues,” said Pye. “Maybe the adjuster is not as responsive as they normally are. It's not just answering a text or phone call, if you're calling about a claim, it can be on a Zoom call and you will see where these folks that are normally engaged are not engaged.” That, she adds, requires claim managers to “finely tune your senses to be aware of what’s going on.”

Shelton, who presents “Fine Tuned Adjuster” webinars for the Property Loss & Research Bureau said there are consequences of not recognizing the signs in adjusters or of claims management not responding to the signs.

“If you do nothing, it stops productivity and the bigger danger (is) maybe that you lose that person who has bottled this all up from multiple times that this has occurred and finally says, ‘You know, I've had enough’ and they leave the industry,” Shelton said, noting the current market challenge of recruiting adjusters to replace those that leave the profession.

(For full Show Notes, visit https://lisamillerassociates.com/episode-47-stress-strain-of-adjusting/)

Advances in artificial intelligence (AI) and machine learning are getting closer to providing insurance companies with a new underwriting tool to combat fraud: the ability to review meeting minutes and other public documents from homeowners and condominium associations, whose communities are home to nearly half of Florida’s 22.3 million residents.

Several Florida associations have been accused of recent wrongdoing, including one where four former board members were arrested, accused of engaging in a multi-million dollar embezzlement of monthly dues from residents. Former Florida Deputy Insurance Commissioner Lisa Miller sat down with an insurance lawyer and an insurance services company executive who uses AI, to find out how often this fraud happens, how it increases property insurance rates, and exactly how the new technology to fight it will work.

Show Notes

The South Florida Sun Sentinel did a recent exposé of a West Miami development called The Hammocks, a 6,500-unit community of houses, townhouses, and condominiums. Four former association board members were arrested for allegedly engaging in an intricate scheme to embezzle millions of dollars in monthly dues from residents. Authorities say $2.4 million in checks were written to five companies that did little or no work for the homeowners association (HOA) – two of them owned by the husband of the former board president.

Andy McGuire, Chief Strategy Officer and Co-Founder of PEAK6 InsurTech, said such fraudulent practices contribute to inflationary pricing and higher insurance rates. He said advances in technology, especially artificial intelligence (AI) and the machine learning process, are providing better insights into risk. His company’s subsidiary, Focus Technologies, is doing this today to serve its customers better.

“With enough observations, you can run a model, for example, on the language used in the meeting minutes to potentially pick up on schemes,” said McGuire. “Now that we have this example, for this particular issue, we can build an AI and teach it with these talk paths or words and knowing that it resulted in fraud, you have your first learning. You can get enough positive observations that you now have a model that an underwriter can load the minutes into and get a prediction. Combine that with financial data and a propensity to commit fraud of each individual member of the board, and you have a fully automated decision tree. I don't think we're totally there yet, but we're really close. This is the future,” said McGuire, whose 25 years in the industry include risk management and reinsurance.

Tiffany Rothenberg is a Partner at the Kelley Kronenberg law firm’s West Palm Beach office in the heart of Florida’s condominium country. She represents commercial property insurance companies in complex coverage disputes and is an expert in the HOA and condominium association insurance claims arena.

“I can't tell you how frequently we end up seeing this kind of a scenario,” Rothenberg told host Lisa Miller. “I just had a case here in Palm Beach County, where the association submitted a $4.5 million dollar Hurricane Irma claim for roof damage. When we started to review their condo records, we discovered that the association actually had five roof replacement proposals that were all under $1 million. And then during depositions, it came out they actually signed a contract with one of those roofing contractors for around... (For full Show Notes, visit https://lisamillerassociates.com/episode-46-insurers-know-the-building-and-the-board/)