As insurers shun South Florida, Universal Property & Casualty gobbles market share

July 29--FORT LAUDERDALE -- As fraud-weary home insurance companies have reduced their presence in South Florida over the past year, the state's largest carrier has expanded its market share -- increasing its policy count in the region by 26,203 policies.

Fort Lauderdale-based Universal Property and Casualty says it has no intention of turning away from the region where about 500 of its employees live and work, even if South Florida is considered ground zero for "assignment of benefits" and lawsuit schemes.

In an email, spokesman Travis Miller said the company "is committed to the Florida market" and "to working through the challenges that periodically confront this market."

Still, the company says it's not immune to the troubles turning competitors away from the region. The number of lawsuits filed against it more than doubled between the first halves of 2016 and 2017, as did the percentage of those lawsuits originating from South Florida, according to state data.

And like many of its competitors, the company is seeking approval from state regulators for hefty rate hikes in the region. In June, the company filed for rate increases averaging 9.8 percent and 9.9 percent for all South Florida territories except inland Palm Beach County, which would get a 5.5 percent average increase.

But even those issues pale in comparison to those of other companies, including the region's second-largest insurer, state-run Citizens Property Insurance Corp., the so-called insurer of last resort.

Citizens was targeted with four times as many lawsuits during the first half of the year if measured as a percentage of total policies. And while Citizens is seeking rate increases approaching 10 percent in the tricounty region for the second year in a row, Universal P&C last increased rates in 2015.

At the end of March, Universal P&C insured 203,841 privately owned homes and condos in the tricounty region, while Citizens insured 113,616, state data shows.

Meanwhile, 59 of 88 state-regulated insurers were covering fewer South Florida homes that a year earlier, and just 29 of 88 companies were covering more.

Universal's 26,203 new policies far exceeded those of any other company that reported market share growth in the region, including Federated National Insurance, which added 6,865, Edison Insurance Co. [6,652], First Protective [5,062], and Safepoint [4,346].

Companies that reduced their presence in the tricounty region included Clearwater-based Heritage Property & Casualty [13,586 fewer policies], Homeowners Choice [-5,377], Tower Hill Signature [-4,913], Tower Hill Preferred [-3,587], Florida Peninsula [-3,534], and People's Trust [-3,208].

Companies can reduce their presence in a region by canceling or declining to renew policies and letting policyholders cancel or switch insurers while refusing to sell new policies.

Industry analysts say many companies have stopped writing new policies in South Florida because of heavy losses from assignment of benefits abuses involving water damage restoration companies and about a dozen law firms that specialize in suing insurance companies. Critics say the problem centers around repair companies convincing policyholders to sign over benefits of their policies, then filing suit in policyholders' names if insurers deny or fail to pay the full amount of repair invoices.

More and more companies that choose to remain in the region are covering their losses by increasing premiums, reducing or eliminating water-loss coverage, or a combination of all three.

Deerfield Beach-based People's Trust has stopped selling new policies with water damage coverage in the tricounty region, and several companies that still write policies here limit water damage coverage to $10,000 on homes more than 40 years old.

Universal P&C has not capped water damage coverage on older homes, according to insurance agent Ryan Papy, president of Keyes Insurance, an affiliate of Tom Gallagher Insurance.

Papy said the company insures about a third of his agency's entire customer base and is writing about half of all new policies. "We don't force Universal on anyone," he said. "They just ended up being the best on price and coverage for about 50 percent of homes over the past three months."

The company's large size and efficient operation has enabled it to minimize "assignment of benefits"-related losses and continue expanding in the region, said Arash Soleimani, an insurance analyst with the New York-based financial services firm Keefe, Bruyette & Woods.

The company, with a surplus of more than $300 million, is now licensed in 12 states, which enables it to spread out its risk and hold down its costs for reinsurance. That's insurance that insurance companies buy on the global financial market to limit what they would have to pay out after a catastrophe.

Universal's large "fast track" claims operation enables it to respond to most claims within 24 hours and write checks to homeowners on the spot, Soleimani said. That reduces the opportunity for homeowners to connect with repair companies and attorneys, he said.

Universal P&C spokesman Miller said the company has "significantly expanded the personnel and resources of its claims department in recent years. The effect of this expansion is [the company] is paying meritorious claims faster than ever."

The company also maintains an in-house team of about 20 attorneys -- far more than other insurers -- to deal with litigation, Soleimani said.

Increasingly, that means transferring claims disputes to mediation services provided by the state Division of Financial Resources. Division data shows the number of mediation requests by Universal or its policyholders has swelled from 160 in all of 2015 to 721 in the first six months of this year.

The mediation program can be an "effective forum," Miller said, for resolving disputes about "questionable or inflated claims."

Soleimani said the company has operated more conservatively since 2013, when the state Office of Insurance Regulation slapped it with a record $1.3 million fine for denying nearly 300 claims by retroactively canceling polices.

The company's CEO at the time resigned and Sean P. Downes, former head of the claims division, was promoted to CEO. It also began buying appropriate levels of reinsurance and hired Deutsche Bank to oversee its investment portfolio, Soleimani said.

Today, Universal is increasing its revenue at 5 to 7 percent a year and is focusing on expanding within other states, he said.

That financial stability is ultimately good for South Florida customers, Soleimani said, because they don't have to worry about the company's ability to pay claims -- both the everyday kind and after a disaster.

[email protected], 954-356-4071, twitter: twitter.com/ronhurtibise

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