Heritage Property & Casualty Insurance was slow to pay and respond to claims, kept poor records, and used improperly licensed adjusters following Hurricane Ian, Florida insurance regulators found after an investigation. Regulators fined the insurer $1 million following the probe – one of the largest fines the state has ever administered against an insurer.
The Office of Insurance Regulation (OIR) reviewed 324 claims in a “targeted market conduct examination” and found numerous state law violations.
Heritage Insurance has agreed to pay the fine, the Miami Herald reported.
What the regulators discovered
The OIR examination report shared 10 findings about the randomly sampled claims and found Heritage didn’t:
Acknowledge it had received communication about a claim within 14 days. (30.2% of claims)Ensure licensed adjusters provided a document with their name and license number to policyholders if the process required a physical inspection. (42.9%)Pay or deny claims within 90 days. (21.6%)Include the adjuster’s name and license number in communications about a claim. (20.4%)
Heritage violated nine state laws, according to the OIR findings, but the report also found the company repeatedly violated its own policy. In more than half the sampled claims, adjusters didn’t initiate voice contact with policyholders within one business day of receiving a claim assignment. Heritage’s 2022 claims handling manual requires this contact.
Heritage CEO Ernie Garateix told the Herald the company had noticed the issues internally and has taken action, including creating a new governance and compliance director role and getting a new claims management software.
Florida’s perfect storm
Hurricane Ian hit Florida as a Category 4 hurricane in September 2022. It was the costliest hurricane in Florida’s history, causing $112 billion in damage.
Ian’s destruction created one more obstacle for Florida’s already struggling insurance market, which was facing increasingly frequent severe weather, insurance fraud, and excessive litigation.
The average annual homeowners insurance premium in Florida is $10,996, the highest in the nation, according to Insurify data. Louisiana ranks second, with an average premium of $6,354 per year.
What’s next: Slightly reducing rates
A few weeks after Heritage agreed to pay the fine, the company announced Florida regulators had approved a 3.3% rate decrease for its standard home insurance policies. The new rate will become effective Aug. 20 for new and renewed policies.
The company credited Florida’s positive legislative changes.
“Our commitment to providing Florida with affordable and reliable insurance solutions remains steadfast,” said Garateix in a press release. “The approved rate decrease is a testament to our efforts in effective risk management and strategic underwriting practices, as well as the favorable impact of legislative changes made in the 2022 special session of the Florida legislature.”
The average annual Heritage Insurance premium is $9,096, according to Insurify data. A 3.3% decrease will lower that to $8,796.
