Florida Insurance Law Blog : Florida Insurance Lawyer & Attorney : Mark Nation Law Firm : Orlando, Longwood, Gainesville

Zurich-based ACE Ltd. said its 2010 second-quarter profit increased 27 percent to $677 million compared with last year during the same time.

Chairman and Chief Executive Officer Evan G. Greenberg said the profit increase is due to the company’s successful risk management, diversification and underwriting.

ACE's property and casualty underwriting income was $294 million compared with $355 million in 2009. Net written premiums were flat. Mr. Greenberg said slow economic recovery in the U.S., Europe and Japan, along with competition, impacted premium growth and will likely continue to do so “for some time.”

Net investment income rose 2 percent to $518 during the second quarter compared with the same time in 2009.
 

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Allstate subsidiary, Castle Key Insurance Company, has request that the Florida Office of Insurance Regulation allow it to increase its homeowners insurance premiums by 33%.  Florida's Insurance Consumer Advocate, Sean Michael Shaw, has stated that Castle Key only needs a 14.4% increase. 

The rate request is now in the hands of the Florida OIR which has gone head-to-head with Allstate before. Two years ago the OIR and Allstate reached an agreement to settle a long dispute over regulators’ requests for more documents related to a rate request. At one point the OIR suspended Allstate’s license to do business in Florida.

Allstate paid $5 million to resolve legal issues from the argument and agreed to lower homeowners insurance rates by 5.6 percent. The insurer also agreed to write 100,000 new policies by November 2011.

Allstate then renamed its Florida subsidiaries to Castle Key in order to make it clear they were separately capitalized from Allstate Insurance Co.

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We were recently retained to seek accidental death and dismemberment benefits from The Prudential Insurance Company of America (“Prudential”). The insured was involved in a motorcycle accident suffering severe injuries. The policy requires that a death occur within 365 days of the accident in order to claim life insurance benefits. Although the insured died as a result of the accident, his death occurred more than 365 days after the accident. However, the policy also provides for the payment of benefits if the insured suffered other losses – including the loss of speech, vision, hearing or the loss of use of one or more limbs during the 365 day window. In this case, the claimant suffered the loss of speech and paraplegia –- losing his ability to walk -- within 365 days of the accident. In spite of these covered losses Prudential refused to pay any benefits under the insurance policy.

As with many policies, the Prudential policy requires that we file an administrative appeal prior to filing a lawsuit. An appeal has been filed seeking these benefits.
 

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Life Insurance Company of North America (“LINA”) was recently ordered to continue paying disability benefits under an ERISA governed Plan. In that case, the our client was employed by UBS as a senior sales brokerage assistant earning over $100,000.00 a year. She left work as a result of a heart condition and fibromyalgia which caused severe pain, fatigue and shortness of breath. LINA approved her claim in 2005 and began paying benefits. Benefits were terminated in 2007 based on LINA’s finding that our client was not disabled from performing her own sedentary occupation.

In its denial, LINA demanded that its insured provide it with “objective” medical evidence of disability.

Under the applicable ERISA standard of Review, the Court found that it was unreasonable for LINA to require “objective” medical evidence. The Court found that LINA was required to engage in a meaningful dialogue with the claimant to advise precisely what evidence was necessary in order to support the claim. With respect to fibromyalgia, a condition characterized primarily by subjective complaints, it was noted that were no objective tests to measure plaintiff’s inability to function due to pain. In fact, the Court found that LINA’s request for objective medical evidence was a request for evidence that was not available.

The Court also criticized LINA’s attempt to terminate benefits when there had been no change in the our client’s condition. It noted that her cardiac condition had remained essentially static during the time benefits were paid and that LINA could not explain why benefits should be terminated in 2007 when there had been no change in her condition.
 

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Our client was insured under a self-funded long term disability plan which was administered by Aetna Life Insurance Company. Our client filed an LTD claim based on his anxiety, panic disorder and agoraphobia. Aetna initially approved the claim, but later terminated benefits and denied the claim.

We filed suit in Federal Court and the judge found that Aetna’s decision denying the LTD benefits was “arbitrary and capricious.” In its decision, the Court noted that our client had been approved for Social Security Disability benefits. Yet, Aetna did not consider the Administrative Law Judge’s findings when it terminated LTD benefits. This is in spite of the fact that the Plan requires its insureds to file for Social Security Disability, and also allows the Plan to take an offset for Social Security Disability benefits.

Further, the Court also found that Aetna had failed to advise the claimant that he should submit the Social Security records as evidence in support of his disability claim.

Finally, the Court found that Aetna acted arbitrarily because of its failure to have its own medical reviewers physically examine Mr. Roush as opposed to simply reviewing medical records. The Plan specifically allowed Aetna to require a physical examination.

As a result, the Court awarded benefits and remanded the matter to Aetna to continue paying long term disability benefits.

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My client's home was built about 20 years ago in Central Florida.  Less than a year ago, cracks began to show up in various places throughout the home.  My client reported the damage to her homeowners insurer.  The homeowners insurer hired an engineering firm to inspect the home and to determine the cause of the cracking.  The engineering firm (a firm I have have seen helping insurers on many other claims) says that the damage was due to settlement, and thermal expansion, and was not due to sinkhole activity .  Settlement and thermal expansion are not covered under the homeowners policy, but sinkhole damage is a covered cause of loss.

Based on the engineering report, the insurer denied the claim.  My client requested a "neutral evaluator" to review the engineering firm's findings.  Unfortunately, the neutral evaluator agreed with the original engineers findings.  This is not uncommon.  I frequently see the neutral evaluators simply rubber stamp the original engineering report. 

Upon reviewing the engineering firm's testing and boring records, it appears that the damage is indeed due to sinkhole activity.  As a result, I've filed a breach of contract lawsuit against the homeowners insurer.

Additionally, I've filed a Civil Remedy Notice of Insurer Bad Faith.  If the insurance company doesn't "cure" its violation within 60 days of the CRN, then the insurer may ultimately be held responsible for full damages - even if those damages are in excess of its policy limits.   

As with most of my insurance cases, if I win, the insurance company must pay all of my hourly fees and costs, and if I lose, I'll work for free. 

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My client insures multiple vehicles on his auto policy with Cornerstone National Insurance Company. The auto insurance policy provides liability coverage for bodily injury liability, property damage liability for damage to other vehicles, and collision coverage for damage to his vehicles. My client’s friend, while driving one of his vehicles (with his consent), is alleged to have caused a multiple car accident. Two people were injured in the crash. Claims were submitted to Cornerstone for the collision damage to my client’s vehicle, as well as the personal injury claims.

Cornerstone filed a declaratory judgment action asking the court to void the insurance policy for what it believes were “material misrepresentations” in the application process. According to Cornerstone, my client failed to properly disclose on the application that his friend was a regular user of the vehicle, and the location where the vehicle involved in the crash would be garaged.

However, a close review of the questions and answers on the application shows that there was no misrepresentation at all. We have filed a counterclaim seeking a declaration that the policy provides coverage for all of the claims arising from the crash.

As with most of my insurance cases, if we win, the insurance company must pay all my fees and costs, and if we lose, I’ll work for free.
 

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I have written several times concerning Florida Rule of Civil Procedure 1.525, and the absolute necessity to file a Motion for Attorneys Fees: 1) within 30 days after the filing of the judgment, or 2) within 30 days after becoming entitled to fees if no judgment is filed.  In Jackson v. Betty Holmes Anthony, ____ So.3d ____ (Fla. 1st DCA July 23, 2010), the Court held:

1.  A Motion for Rehearing does not toll the 30-day time limit in rule 1.525.

2.  A post-trial Motion to Admit and Consider Newly Discovered Evidence, does not toll the 30-day time limit. 

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My client's parents own a home near Orlando.  The parents moved to a new home at the beach, and left their grown son to live in their Orlando area home.  There was a fire at the Orlando area home which destroyed the home, and the son's personal property. 

The property insurer agreed to pay for the damage to the home itself, but denied the claim for the son's personal property.  The insurance company claims that the son is not entitled to any coverage under the policy because he is not an "insured' under the policy.

The policy defines "Insured" as follows:  

You [meaning the named insured - parents] and residents of your household who are: (1) Your relatives....

According to the insurance company, because the parents moved out of the Orlando area home, that house is no longer their "household."  However, elsewhere in the policy, the insurer defines "residence premises" as the one family dwelling where the named insureds reside.  Thus, household and "residence premises" are not the same thing.  Also, case law holds that while a named insured may only have one "residence premises," the named insured may have multiple "households." 

As with most of my insurance cases, if I win, the insurance company will pay my hourly fees and costs, and if I lose, I'll work for free.  There are no out-of-pocket fees or costs for my client. 

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My client had a back up of raw sewage into his home from a blockage in a plumbing line.  He insures his home with American Traditions.  The insurance company denied the claim based on an exclusion for "water damage" that results from a "back up of water through a sewer or drain."

Today, I filed a declaratory judgment action against the insurance company for wrongfully denying the claim.  There are numerous reasons why I believe that the claim is covered. 

First, there is a significant difference between "water damage" and damage from raw sewage.  Case law indicates that those two things are two completely different types of loss.  Thus, while water damage may be excluded, damage from raw untreated sewage is not excluded under the insurance policy.

Second, this was not a back up "through a sewer or drain."  Sewers and drains are outbound lines which begin at the property line and take sewage from the property.  The lines that travel from the plumbing fixtures in the house to the property line are not considered "sewers and drains" for purposes of homeowners policies. 

In this case, and in most of my insurance cases, if I win, the insurance company must pay my fees and costs, and if I lose, I'll work for free. 

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The question often arises in insurance litigation concerning whether the insurance agent is an "agent" for the insurance company, or an agent for the insured.  Whenever this issue arises, the insurance industry argues that the agent is the agent of the insured.  This way, the insurance company can argue that any mistakes by the agent can't be used against the insurance company.

I previously wrote on ways to prove an agent is the agent for the insurance company.  That article can be accessed by clicking here.  In a recent article, Joe Plumeri, head of Willis Group Holdings (an international insurance brokerage firm), points out another good reason that insurance agents should be considered agents of the insurance company.  Mr. Plumeri discusses the practice of insurance agents accepting contingency fees paid to the agents by the insurance companies. 

Mr. Plumeri, chairman and chief executive officer of Willis, wrote that “whether you’re a big global broker like Willis or a local insurance agency…you can only serve one master. It’s either the carrier or the client. You can’t work for both.”

Mr. Plumeri wrote that those who accept volume-based contingent bonuses might be tempted to compromise their primary duty to place a client’s business with the best company for the best terms and price, while profitability-based fee deals create a disincentive to provide aggressive claims service.

“Willis, unlike most retail brokers and agents, has planted its flag firmly on the side of its clients. That means not taking bonuses from insurance companies that would put us at odds with our clients’ best interests,” he wrote.

Addressing a more fundamental issue, he added that when doing business with an agent, buyers should be aware that “they are dealing with a sales representative of the insurance company. There is nothing ‘independent’ about an independent agent. They work for the carrier, not the customer.”

He also wrote that since “some agents count on these [contingent] payments for, maybe, 100 percent of their annual profits…those who buy coverage through an agent should know those agents aren't’t obligated to get them the best price, terms and conditions, or fight for them when they have a claim. No amount of compensation disclosure will change that fact.” 

In many cases, the insurance agent makes a mistake during the application and procurement process.  If the agent is the "agent" of the insured then the insurance company is not responsible for the results of those mistakes.  But, if the agent is the "agent" for the insurance company, then the insurance company can be held responsible for those mistakes.  Thus, in the cases where the agent makes a mistake, either in the application or procurement of insurance, it is critical that the insured prove that the agent is the agent for the insurance company.

In every litigated case where this issue arises, the attorney for the insured should dig deeply into the agreements between the insurance company and the insurance agent.  Further, the attorney must be aware that these contingent bonuses may be set forth in a stand alone agreement separate and distinct from any other agreements between the insurer and the agency.  These contingent bonus agreements may not even be in writing, so the attorney must thoroughly explore this issue during deposition discovery.  Obviously, this compensation structure helps prove for whom the insurance agent is actually working.  Additionally, the agreements between the insurance agent and the insurance company typically show a high degree of control by the insurance company over the insurance agent.  This level of control is another strong indicator that the agent is the actual agent of the insurance company. 

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In a statement on its website, Marsh said some excess liability insurers have indicated that they anticipate adding extremely broad exclusions to 2010-2011 policies to prospectively eliminate coverage for the oil spill resulting from the sinking of the Deepwater Horizon.

Several insurers also have said they will strictly enforce claims time-limit provisions and will not consider the date when policyholders first became aware of their potential exposure, Marsh said in the statement.

Some policies' pollution exclusions have carve-outs that allow some coverage but require policyholders to provide the insurer with notice of a claim within a certain time period.

The Deepwater Horizon oil rig exploded at an unknown time on April 20, creating a fire that sank the rig on April 22 and resulted in a subsea oil leak first discovered on April 24. A strict reading of an 80-day notice provision would require that notice for Deepwater losses be provided by 5 p.m. EDT on July 8, although the exact date of the start of the loss is not yet known, Marsh said.

“We therefore recommend that notice be submitted as soon as possible, using the time of the explosion as the operative date for calculating notice provision deadlines,” the broker said in the statement.

Policyholders that do not provide notice of potential claims may run afoul of certain standard policy wording at renewal, such as provisions requiring an accounting of known losses, the broker said. 

This article is reprinted from www.businessinsurance.com. 

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According to Munich Reinsurance Co, natural catastrophes caused record worldwide insured losses of $22 billion for the first half of the year, more than double the average for the period since 2000.

There were 440 catastrophic events through June, the second-highest number since 2000, Munich Re said.  

The three biggest losses were earthquakes in Haiti and Chile and Windstorm Xynthia in Europe. Combined, the catastrophes caused $11.55 billion in insured losses, according to Munich Re. 

Natural catastrophes in the first half of this year caused 230,000 fatalities, far higher than the average of 30,000 for the period recorded from 2000 through 2009, Munich Re said.

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My client is a roofing contractor who was sued by a homeowner.  During the tear-off of the old roof, it began storming and the interior of the home was drenched.  My client submitted the claim to his insurance company, however, the insurance company denied the claim.  The insurance company is citing an endorsement to the policy.  The endorsement excludes any water damage to a home unless the roofer documents that he checked the weather report on the day the tear-off began. 

Contrary to the insurance company's assertions, I believe we will be able to show that the roofer complied with this endorsement.  Also, even if he did not check the weather report, I will be able to show that had he done so, the weather report for that day did not indicate rain. 

Because the insurance company has denied the claim, we filed a declaratory judgment action seeking a judicial determination that there is coverage for this claim.   Obviously, a victory for my client will be a great help to the homeowner also. 

As with most of my insurance cases, I have agreed that my only fees and costs will come from the insurance company if we win.  And, if I lose, I'll work for free.  In either event, there will be no fees and costs at all from my client. 

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My client's home was built in 1979.  He recently began seeing cracks in the walls, around windows, and in the ceiling.  He reported the cracking to his homeowners insurer - Universal Property and Casualty Insurance Company.  Universal had an engineer inspect the home.  The insurance company's engineer wrote a report stating that the cracks in the home were caused by settling, and not by sinkhole. 

I have had the home inspected by engineers who determined that the damage is being caused by ongoing sinkhole activity. 

Today, I filed suit against Universal for breach of the insurance policy.  I also filed a Civil Remedy Notice concerning what I believe to be the insurer's bad faith in denying the claim. 

This lawsuit was filed in Nassau County, Florida  I handle insurance cases such as this for policy holders throughout the State of Florida.  As with most of my insurance cases, if I am successful, the insurance company will have to pay all my hourly fees and costs.  If I lose, I'll work for free. 

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My client is a landscape architect who was hired to design a "false bridge."  Unfortunately, the retaining wall supporting the false bridge failed.  The housing developer which owns the bridge sued the landscape architect alleging negligence. 

My client submitted the claim to his liability carrier.  The insurance carrier sent a letter stating that it was denying the claim because landscape architects are not authorized to design bridges. 

A "false bridge" is not an actual bridge.  It is simply a road over land with ponds or a water retention on either side.  Although the false bridge looks like a bridge, it is not. 

After demonstrating the differences between a false bridge and a bridge, and showing the insurance company the applicable statutes and regulations which govern the activities of landscape architects, the insurer agreed to withdraw its coverage defense and provide a full defense and indemnification of the claim. 

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