Ratings agency ‘concerned’ Fla. insurers may be unfairly denying hurricane claims

Executives of Florida-based Weiss Ratings agency are raising alarm about the high number of claim denials in the wake of Hurricanes Helene and Milton, calling it a “double tragedy” for the state’s homeowners.

“The sheer volume of denials is shocking, especially after the homeowner has paid diligently all his premiums and is following all the rules,” Martin Weiss, Ph.D, founder, Weiss Ratings, said.

Florida currently has some of the highest premiums for home & auto insurance in the nation. Around one in seven homeowners has opted to go uninsured, and there is a significant gap in flood insurance coverage.

Despite this, early reports from the Florida Office of Insurance Regulation reveal 60% to 80% of claims related to the most recent hurricanes have gone unpaid. Nearly 40,000 of the around 360,000 claims received have already been denied.

According to Weiss Ratings, homeowners are facing months-long processing times, and many are not receiving full payments.

“This is a tragedy for anyone who is having to make a claim because their home has been destroyed, whether it’s by Helene or Milton or any of the others that have happened in the last year or so,” Gavin Magor, director of research and ratings, Weiss Ratings, said.

“It’s very discouraging for homeowners to have, A, paid high premiums, B, suffered severe damage and, C, now being victimized twice, adding insult to injury. It’s tragic,” Weiss added.

Reason for denials not forthcoming

The ratings agency founder also slammed a lack of transparency surrounding the denials. He said the issues are “not transparent to us from the outside,” commenting that he’s “not even sure the insurance companies themselves compile the data or keep stats on the causes.”

While he acknowledged that some denials may be legitimate, he questioned whether insurers might be taking advantage of wording discrepancies to deny claims. For example, denying any claim that even mentions the word “flood” if the policyholder does not have specific flood coverage.

“We are concerned that, due to the larger-than-expected damages that are taking place in Florida and due to financial pressures on many of these companies, they are looking to use this mechanism to reduce their liability as a tactical measure rather than as an objective standard operating procedure,” Weiss said.

One of his main concerns is that “man-made disasters on the financial side” could wind up discouraging residents from continuing to buy insurance, owning property in Florida or even residing in the state at all.

‘This is not a game’

However, the issue is “not just a Florida problem.” Data publicly available on the rating agency’s website compiled from last year’s year-end filings show dozens of insurers across the nation with denial rates higher than 50%.

When it comes to Florida specifically, however, Weiss suggested the situation is a political one that has been ongoing for years.

“This is a tragedy that is only made worse by, essentially, people playing games and politics with policies,” Magor said. “Consumers don’t deserve that. The policyholders deserve to be treated with respect and to be paid out properly and promptly without insurers trying to nickel and dime them. This is not a game that should be played, and it is something that, unfortunately, we anticipate will happen.”

What can consumers do?

Despite the challenges, Weiss said consumers can:

1. Research highly-rated insurers before buying a policy
2. Be careful with wording when submitting a claim
3. Have an independent agent investigate your denial
4. Seek legal recourse — but be aware that it may be more difficult than before

He said they can start by looking up an insurer on the Weiss Ratings website to find out their rating score, denial rate and other information that will help them determine which provider to choose.

When submitting a claim, he suggested they be careful to avoid wording that could be potentially taken out of context and result in an outright claim denial.

Once a claim has been submitted and denied, a consumer could seek an independent agent who represents multiple companies to determine whether the claim is legitimate.

“If, with the help of your agent, you decide that it is a legitimate claim and it has been denied outright, then, unfortunately, the only recourse is to take legal action,” Weiss explained.

This would not be uncommon. The National Association of Insurance Commissioners found there were 18 times more home insurance lawsuits in Florida last year than any other state. However, Weiss cautioned that this option may be more time consuming and costly, due to new legislation.

“We’re hopeful that pressure will be put on the Florida legislature and other states and on the insurance regulators to begin to take steps to remedy the problem. That first step, in my opinion, is greater disclosure to the consumers, so the consumer can make informed decisions based on publicly available data that’s clear, accurate and not hidden facts,” Weiss said.

Weiss Ratings is an independent ratings agency for financial institutions and insurance companies. It was founded in 1971 and its headquarters is in Palm Beach Gardens, Florida.

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