More than $10 billion in life insurance benefits have gone unclaimed in recent years. And the darndest memory problems at insurance companies seemed to keep popping up.
Some insurance companies managed to check death rolls quietly but quite efficiently to stop paying annuities, an investigation spearheaded by Florida officials found. But then whoops, it slipped their minds to look very hard for beneficiaries who might not know they were named in life insurance policies.
Settlements with two insurers announced this week highlight continuing efforts by regulators to help make sure beneficiaries get what they are due.
Curious if you might be due something? One place to check is a state unclaimed-property website, www.FLTreasureHunt.org, or call 1-88-VALUABLE or (850) 413-3089.
Settlements have been reached with Aflac for $350,000 and State Farm for $250,000, regulators said Thursday.
The announcement comes in the sixth year of a multi-state national effort that has returned more than $8.7 billion in proceeds directly to beneficiaries, and sent more than $3.25 billion to the states, where unclaimed-property programs continue efforts to locate and pay beneficiaries, officials said.
Neither company admitted wrongdoing in the settlements, which mean 30 of the top 40 companies have now reached deals or seen investigations concluded on the issue. Previous agreements have sometimes involved much larger sums. Insurer AIG, for example, agreed to make available $25 million in unclaimed life insurance benefits in Florida in 2013.
An investigation by Florida insurance officials in 2009 found “companies were using information from the Social Security Administration’s Death Master File to stop paying a deceased person’s annuity, but not using it to search for beneficiaries of a life insurance policy and initiate an investigation as to whether benefits were due.”
Florida’s share of the settlements with the two companies is about $42,000, according to the Florida Office of Insurance Regulation, the state’s Department of Financial Services and Attorney General.
In statements, the companies emphasized long-running efforts to address the issue.
“Since 2012 Aflac has incorporated the Social Security Administration’s Death Master File to identify individuals who might otherwise be unaware that they are eligible for benefits,” said Jon A. Sullivan, director of corporate communications. “The DMF has become a useful resource as it enables us to better serve our policyholders and facilitate our goal, which is to deliver needed benefits during difficult times.”
A statement from State Farm said, “The State Farm Life companies became aware of this issue when questions surfaced in the life insurance industry eight years ago.
“At that time, State Farm independently began to review how unreported deaths could be located where the life insurance beneficiaries had not presented a claim.
“This effort helped us locate and provide policy benefits to beneficiaries in advance of statutory changes and the requirements of this settlement. We continue to apply this process in all states.
“The recently announced settlement included a monetary payment for the examination, compliance, and monitoring costs associated with the Multi-State Examination.”
Hurricane Irma has produced more than 335,000 insurance claims in a week, according to figures state regulators released Monday.
That includes more than 10,000 in Palm Beach County.
Estimated insured losses statewide so far are just under $2 billion.
The numbers will grow. Some residents are only now returning to their homes, and homeowners with damage from Irma have an additional 90 days to submit information on claims under emergency orders from state officials.
State officials emphasize this data is preliminary.
State-run Citizens Property Insurance Corp. expects about 125,000 claims from its customers. It has the second-highest number of policies statewide, about 450,000.
The Florida Senate’s insurance chairwoman blasted a proposed rate hike up to 10 percent in South Florida by Citizens Property Insurance Corp. Wednesday and said she will consider legislation to limit its “borderline unAmerican” moves to restrict consumer choice in fixing certain claims.
“Make no mistake: This takes away a right someone already has,” said state Sen. Anitere Flores, R-Miami, interrupted several times by applause from the audience at a hearing in North Miami.
Flores said “unfortunately” the state’s Office of Insurance Regulation had already approved part of the state-run company’s plan before the hearing and before the public-comment period had ended on rates.
Citizens will limit payments to $10,000 for water claims if consumers do not choose contractors the company approves in a “managed-repair” plan.
Consumers under duress have little way to know how much fixing damage will eventually cost, and many do not trust Citizens, she said. In a follow-up statement later, Flores urged regulators to reject the rate increase outright: “Citizens has unfairly raised insurance rates on policyholders since 2010, forcing my South Florida constituents to pay $700 million more in premiums than in actual claims since 2004.”
Citizens president Barry Gilway defended the repair policy as well as the rate increases to take effect Feb. 1, 2018, if approved by regulators in early September. He said the real problem is a “scam” perpetrated by some contractors and attorneys to inflate costs for non-storm claims such as water damage from a leaky pipe. The cost of a water claim in South Florida has roughly doubled to $20,000 in recent years, he said.
Gilway said “we continue to experience a surge in non-catastrophe losses and litigation that have forced us to make policy changes and, for the purposes of today’s hearing, to seek rate increases again this year for more than half of our 452,000 policyholders.”
The average statewide increase for homeowners is 6.7 percent, but South Florida would see the highest increases.
Miami-Dade and Broward counties face increases of about 10 percent, but Palm Beach County is not far behind with a 9.3 percent average hike for a standard homeowner’s policy. A records request by The Palm Beach Post showed Palm Beach County’s share of water-claims lawsuits is proportionately small: 5.1 percent, below the county’s 7.1 percent share of the company’s insured risk.
Losses from water claims-related lawsuits totaled just $4.8 million in Palm Beach County in 2016, dwarfed by Miami-Dade County’s $70.7 million in losses, records show.
In Wednesday’s hearing, regulatory staffers inquired about whether Palm Beach County was being treated properly. Citizens officials acknowledged the county had a smaller water-damage problem compared to its southern neighbors but maintained the proposed increase was still justified, with one saying, “Palm Beach really does pay for costs within Palm Beach.”
Customers and the general public are welcome to submit comments on the rate proposal until 5 p.m. Aug. 31 by sending an email to: firstname.lastname@example.org with “Citizens” in the subject line.
Within days of the 25th anniversary of Hurricane Andrew, a South Florida insurer with more than 20,000 customers appears headed out of business and the search is on for another firm to take its policies, records obtained Tuesday evening by The Palm Beach Post show.
Sawgrass Mutual Insurance Co. of Sunrise told state regulators an initial “plan for the orderly wind-down of the company’s operations” is “no longer feasible” and it agreed to consider other plans for the “orderly transition” of its business, records show.
Documents signed Tuesday by Sawgrass CEO Daniel O’Neal show the company agreed that an amended consent order with Florida’s Office of Insurance Regulation should be made public.
Under an order of administrative supervision, regulators are “working with Sawgrass Mutual Insurance Co. and interested parties to develop a wind-down plan for the company, which includes the orderly transition of policies from Sawgrass to another insurer,” OIR spokeswoman Amy Bogner said. “Coverage for current Sawgrass policyholders remains in force until a plan is implemented.”
Consumers can explore options for finding other coverage at www.floir.com, officials said.
An agreement Aug. 18 for the “wind-down” was treated as confidential under state laws, records show.
Tuesday’s document states the parties agree “it is in the best interest of its policyholders and the public to make this Consent Order public.”
A big warning sign appeared Monday when ratings firm Demotech said it was changing the insurer’s rating from A to L, meaning licensed by state officials but not qualifying for a higher grade from Demotech.
Demotech said the company’s “surplus and other financial metrics” no longer supported its previous rating. Attempts to reach company officials for comment were not successful.
Founded in 2009 and based in Sunrise, Sawgrass had just over 20,000 Florida customers as of March 31, including more than 650 in Palm Beach County, state records show.
It’s the latest sign of turbulence in a market where many national insurers have pulled back and smaller, untested companies have stepped in.
On the eve of hurricane season in May, Mount Beacon Insurance Co. went out of business and about 22,000 of its policies were transferred to Florida Specialty Insurance Co.
Send an email or attend a hearing in person next week in South Florida if you want to comment on Citizens Property Insurance Corp.’s plan to raise standard homeowner premiums 6.7 percent statewide in 2018and 9.3 percent in Palm Beach County.
The hearing is set for Wednesday, Aug. 23 at 4 p.m. at Florida International University in North Miami, at the Kovens Conference Center, Bayview Ballroom South, Room 214A.
The general public is welcome to submit comments until 5 p.m. Aug. 31 until by sending an email to: email@example.com with “Citizens” in the subject line.
Palm Beach County was largely spared severe damage from 2016 hurricanes, but that’s not the main driver of rate increases, according to Citizens.
Citizens wants not only to raise rates but also change the way it handles water-damage claims — not necessarily related to storms but issues like a plumbing leak. It would cap benefits for such claims at $10,000 unless consumers use contractors Citizens chooses in a managed-repair plan.
That requires a consumer ankle-deep in water to know repairs will conveniently cost less than $10,000 before making a choice, contractors have argued.
“This is a huge problem and is more of the continued effort to have Citizens and the other carriers control the whole restoration process and not allow the free market and the policyholder to make choices,” David J DeBlander, president of Pro Clean Restoration and Cleaning in Pensacola, told The Palm Beach Post in June. “There is a reason they cannot push their efforts through the legislature these last six to seven years. The people and the legislators can see the carriers are trying to control everything for their best interests and profit margins.”
Citizens officials say water claims are grossly inflated by some contractors and attorneys and they must act.
“It’s ironic that our rates for wind coverage are coming down, but Citizens policyholders in South Florida still must brace themselves for continued rate increases,” board chairman Chris Gardner said in June. “We don’t want to raise premiums, but Citizens is obligated by statute to set actuarially sound rates.”
The average premium for an H03 policy, covering a single-family home, would rise to $2,877 from $2,631 in Palm Beach County under the company’s proposal. Floridians already pay the nation’s highest average property insurance premiums.
Premiums for similar policies would rise 2.2 percent in Martin, 8.9 percent in St. Lucie and more than 10 percent in Broward and Miami-Dade counties, the maximum allowed in a single year for Citizens under a state rate cap.
Company documents said, “The peril of water continues to be the primary driver of Citizens’ increased rate need. In particular, litigated water claims in South East Florida (Miami-Dade, Broward, and Palm Beach counties) are driving the water indication.”
Still, records requested by the Post show Palm Beach County accounts for only 5.1 percent of the lawsuits against Citizens statewide associated with “assignment of benefits” — when a consumer signs over control of insurance benefits to a contractor.
Yet Palm Beach County has almost 10 percent of the company’s overall customers. Citizens had 448,802 customers statewide as of March 31, with 41,975 in Palm Beach County. So Palm Beach County has a lower than average share of AOB lawsuits compared to its total customer base.
Citizens officials insist the rate request for Palm Beach County is still justified. They note 31.3 percent of the county’s claims in 2016 used assignment of benefits, up from 8.5 percent in 2014, though this did not mean they had lawsuits associated with them. It can take about a year after a claim is reported to enter litigation, if a lawsuit is going to happen, a company spokesman said.
But arguments about what might happen based on “trends” in water claims, as opposed to actual losses, have not always withstood careful investigation.
Regulators questioned a proposed 8.1 percent blanket increase that was subsequently withdrawn a year ago for Palm Beach, Broward and Miami-Dade counties by the state’s largest insurer, Fort Lauderdale-based Universal Property & Casualty Insurance Co. Universal consultant Kenneth L. Leonard Jr. said “increasing trends in the Tri-County region” create “additional uncertainty” not “captured through techniques traditionally followed to develop individual territory indications.”
State officials questioned why a special three-county rate increase based on such vague justification was not “unfairly discriminatory.”
Citizens officials said their proposal does not unfairly lump in Palm Beach County with its neighbors to the south.
“The recommended rate changes for Palm Beach is not a result of being ‘grouped’ with Broward and Miami-Dade,” a company statement said. “The recommended rate changes for Palm Beach are due to the fact that Palm Beach is experiencing similar loss trends as Broward and Miami-Dade.”
Still, there’s little question where most of the losses are actually occurring. In 2016 losses associated with AOB lawsuits, Miami-Dade Co. accounted for $70.7 million and Broward $26.4 million while Palm Beach’s total was $4.8 million, Citizens records requested by the Post show.
Miami Dade Co. has 31.6 percent of the company’s total exposure (the potential cost to cover all properties) but 64.1 percent of the AOB lawsuits. Broward has 14.6 percent of the exposure and 26.5 percent of the AOB suits.
Unlike them, Palm Beach Co. has a lower share of Citizens’ AOB suits (5.1 percent) than its share of the company’s total exposure (7.2 percent).
Citizens officials acknowledged Miami-Dade and Broward counties “are in a class by themselves” and that Palm Beach County shows a “much better result.”
But they maintain Palm Beach County is still “worse” than the rest of the state outside the tri-county region, which collectively accounts for 4.3 percent of AOB lawsuits compared to Palm Beach County’s 5.1 percent.
If Citizens officials believe rate hikes in Palm Beach County are justified for reasons other than water claims, that’s different from the clear message in the company’s public statements about this rate request.
Want regulators at the Florida Office of Insurance Regulation to give this request close scrutiny? Now is the time to speak out.
An appeals court on Monday backed State Farm’s bid to hide from the public how many home insurance customers it serves or cancels in Florida, leading consumer advocates to mourn a loss of transparency and accountability.
If there are no further challenges and competitors follow suit, the decision could wipe out public access to information about potentially all of the hundreds of property insurance companies in Florida’s Quarterly and Supplemental Reporting System, or QUASR. The state’s Office of Insurance Regulation, the losing party in the case, did not immediately issue a public statement.
The burden would fall on legislators to write a more rigorous standard than whether data has “independent economic value to others,” advocates said.
“The public needs the information to be able to understand the rates being proposed and try to intervene for relief when an insurer is using unfair or improper prices,” said Bob Hunter, director of insurance for the Consumer Federation of America.
The ruling also hides from the public any troubling matters like “redlining,” which can reflect unlawful discrimination against certain communities, he said.
State Farm failed to get a similar ruling a decade ago. This time an appeals panel backed a Leon County judge who found State Farm met the burden of the law as written, News Service of Florida reported.
“As to the central issue here — whether State Farm demonstrated that its data possessed independent economic value to others — the testimony of multiple witnesses supported State Farm’s case,” said Judge Timothy Osterhaus, writing the main opinion for a 3-o decision of the 1st District Court of Appeal. “A State Farm executive testified, for instance, that a competitor could use the data ‘to see where we’re actively growing. And then go someplace else deriving economic advantage by not having to invest marketing money where they know they can’t advance.’ ”
Despite its arguments in court, numbers have shown in the recent past that State Farm was not “growing” its homeowner business on a statewide basis at all, but perhaps did not welcome publicity that could hurt other lines of business including auto policies. Insurer advertising often emphasizes themes of trust such as being a good neighbor.
State Farm was once Florida’s largest property insurer but has dropped hundreds of thousands of homeowner policies in a major insurance crisis for the state. That helped swell the ranks of state-run insurer Citizens and smaller start-up companies in Florida.
In 2014, State Farm said it was “re-entering” the Florida homeowner market but dropped more than 40,000 customers, or more than 10 percent, in the year following that, The Palm Beach Post reported.
Last year State Farm said it was no longer talking to the newspaper because of its coverage of the issue.
“Thank you for reaching out, but unfortunately due to your consistent approach of continuously writing negatively about State Farm in your news stories, we are no longer responding to your inquiries,” spokeswoman Michal Brower said.
Proving that data provide “independent economic value to others” is a trivial hurdle to lock the public out of a state system that has been in place for years, said Birny Birnbaum, executive director of the Center for Economic Justice in Texas. He has participated in rate hearings and other insurance proceedings in several states including Florida.
“The fundamental problem is that the bar for ‘proving a trade secret’ is absurdly low,” Birnbaum said. “There is no harm to State Farm from release of these data and the so-called proof was simply assertions without any evidence.”
As for value to competitors, the information hardly represents advance warning of a marketing strategy, he said. QUASR numbers form a snapshot at least six months old, he said.
Yet the information has value to the public because it shows how many policies a company is adding, canceling or not renewing statewide and in individual counties, advocates said. Among other things, that allows consumers to judge how likely a company might be to stand behind or drop customers in a given market, which might be at odds with advertising or public statements.
Rates are regulated in part because many forms of insurance are required by law, such as with auto coverage, or by mortgage lenders or government agencies in the case of home insurance, advocates note. So there is a public interest in transparency about annual costs that are not far from taxes in the impact on a typical family.
Birnbaum called it “another loss for transparency and for the goal of public records laws — public accountability.”
Update: “The Office is in the process of reviewing the decision,” said Office of Insurance Regulation spokeswoman Amy Bogner.
How consumers react to the deal remains to be seen. Over the next three years, agreements allow average monthly premium increases ranging from $4 to $44 for MetLife and $5 to $55 for Unum, the Florida Office of Insurance Regulation said. During the next seven years after that, “rates will be guaranteed,” a statement from the state agency said.
“The Office will continue to encourage other long term care insurers to approach rate needs in a similar fashion for the benefit of their policyholders, many of whom are on fixed incomes,” Florida Insurance Commissioner David Altmaier said. “This plan effectively balances the company’s need for rate increases against the impact that those increases have on policyholders who have invested in these products over a period of many years.”
Consumers can also choose to take reduced benefits under a variety of plan options.
Long-term care insurance pays for services such as help with bathing, dressing, eating or housework, at home or an assisted-living facility. Medicare typically does not pay for such services, and more than 10 million people have purchased policies from the private market.
MetLife has more than 22,000 long-term care policyholders in Florida, including 1,883 policies in Palm Beach County and more than 2,000 in Broward County. Under its original request, the average premium would increase from $1,593 to $2,580, according to state officials.
“MetLife appreciated the opportunity to participate in July’s public hearing and worked collaboratively with the Florida Office of Insurance Regulation on implementation details and policyholder communications,” a company statement said Thursday.
Unum Life Insurance Co. of America and related firms have more than 45,000 long-term care customers in the state, including about 1,500 in Palm Beach County. Unum’s proposed increases ranged from 75 percent to 114 percent under different plans. Unum officials could not be reached.
Many consumers said they felt betrayed after paying premiums for years for services they expected to rely on when they got older. Companies said initial cost assumptions proved to be inadequate as people lived longer and required more services.
The appetite of private insurance companies to take new customers could change a lot if Hurricane Matthew veers into Florida, but for now more than 97,000 transfer offers have been approved for customers of state-run Citizens Property Insurance Corp. in December.
The state’s Office of Insurance Regulation said Monday that brings approved offers for the year to 667,470, though only 48,360 Citizens customers have actually switched so far. Remember that private companies don’t always make as many offers as they are allowed, and Citizens customers have a right to refuse and many have been choosy this year.
Citizens has less than 500,000 customers, with about one in 10 of them living in Palm Beach County.
December 20, 2016 Personal Residential Take-Out Period (total of 95,465):
Florida regulators Friday approved with minor changes a 2017 rate increase for state-run Citizens Property Insurance Corp. averaging more than 6 percent statewide and about 9 percent for Palm Beach County homeowners.
State Sen. Anitere Flores, R-Miami, called the rate hike a “slap in the face” of consumers, the News Service of Florida reported.
“Not only are law abiding policyholders being punished for those abusing the system, they are being forced to comply with an increase that is not even across the board throughout the state,” Flores said in a statement, according to the news service.
Among the few tweaks, Citizens had asked for a 6.9 percent statewide increase for “multi-peril” home policies — covering fire and other risks, not just wind — and the Office of Insurance Regulation approved a boost of 6.4 percent.
Regulators said in an order they “utilized slightly lower water loss trends” adjusted for the company’s shrinking size, now under 493,000 customers. About one in 10 of its customers is in Palm Beach County.
Company officials argued inflated costs in South Florida from non-storm claims like water damage from a broken pipe have been a major driver of rate increases.
“The 2017 rates reflect the growing challenge of rising water loss claims and the disturbing increased costs associated with assignment of benefits,” Citizens president Barry Gilway said in a statement. “Unless the legislature takes action, our policyholders can expect these increases for years to come.”
Otherwise, regulators approved increases that closely matched what the company requested, such as an 8.2 percent boost for wind-only homeowner policies and 5.7 percent for mobile home owners. Mobile homes with wind-only coverage will see an average 10.3 percent increase.
Approved rates were not available by county, but under the company’s original request the average annual premium for a standard homeowner policy known as an HO3 in Palm Beach County would jump 9 percent to $2,668 from $2,448.
Things changed since rates were initially filed in May, the state’s Office of Insurance Regulation said in a statement Tuesday.
“The approved percentages varied by about 2 percentage points from the original May requests, with a few exceptions,” the statement said. “The primary reasons for this are (1) companies received official risk adjustment numbers from CMS (Centers for Medicare & Medicaid Services) in June (2) several insurers decided to write only off-exchange policies in Florida during 2017.”
The agency went to cite several examples.
“Aetna, who has a commitment to expand in 2018, has indicated that it will not participate in 2017,” the statement said. “United announced before the May filings that it would not participate on the exchange for 2017. United filed and withdrew an exchange filing under a subsidiary (Harken). Humana filed for participation in only a few areas of the state but did not disclose this information publicly.”
These decisions “changed office and company estimates of the risk pool that companies expect to insure,” the statement said. “Some companies estimate that they will grow more because of the lack of participation in the exchange market by these insurers. All of these insurers continue to write either individual or group products off-exchange.”
Florida 2017 health premiums
Company Requested Approved
On and Off Exchange
1. Blue Cross and Blue Shield of Florida, Inc. 14.5% 19.0%
2. Celtic Insurance Co, 4.3% 20.0%
3. Florida Health Care Plan Inc. 12.3% 15.4%
4. Health First Commercial Plans Inc. 8.4% 11.7%
5. Health Options Inc. 13.8% 18.9%
6. Humana Medical Plan Inc. 43.6% 36.8%
7. Molina Healthcare of Florida Inc. 10.6% 17.4%
8. Harken Health Insurance Co. Withdrawn
Off Exchange Only
9. Aetna Health Inc. 20.8% 22.0%
10. Aetna Life Insurance Co. 28.9% 25.0%
11. AvMed Inc. 27.5% 27.3%
12. Cigna Health and Life Insurance Co. -0.6% -1.5%
13. Coventry Health Care of Florida Inc. 14.1% 11.8%
14. Freedom Life Insurance Co. of America 17.4% 17.4%
15. Sunshine State Health Plan 0.0% 0.0%
Average 17.7% 19.1%