EDITORIAL: Thursday Property insurance fraud is just the latest scam to hit Florida

April 06--Florida: Where scams begin and grow.

Though Florida went about a decade without a direct hit from a hurricane, many property insurance companies were struggling with sinkhole claims.

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Random cracks in pavement were being considered sinkholes.

Finally, the Legislature cracked down but not before millions of unwarranted claims were paid.

Now here is another. Water claims usually are simple to resolve. Unlike wind, the evidence usually is obvious. Then around 2010 something changed.

1. Water loss claims not related to hurricanes or storms increased.

2. A loophole in a well-intended law involving assignment of benefits was found. Property insurance policyholders can transfer assignment of benefits to a third party. In many cases, the policyholders may be signing away their rights. The third party may receive all the benefits of the policy without the duties.

3. Litigation has skyrocketed as a few law firms have used Florida law to file lawsuits over these claims.

Insurance companies, fearful of the cost of lawsuits, are willing to pay relatively small individual claims rather than pay the larger legal settlements.

It's worse in South Florida.

Water claims: Up 9.4 percent in South Florida (Palm Beach, Broward and Miami-Dade) but just 3.2 percent elsewhere.

Cost of water claims: $19,966 average in South Florida, $7,540 for the rest of the state.

Cost of claims: Up to $9,000 for non-litigated, $30,000 for litigated claims.

Premium increases: From $637 to $1,882 in South Florida and from $149 to $243 elsewhere in Florida.

As a result, here is what Citizens, the state property insurer, has instituted:

--No coverage for permanent repairs that begin before 72 hours after the loss is reported to Citizens, the loss is inspected by Citizens or approval by Citizens.

--Limit on emergency repairs of $3,000 or 1 percent of the coverage, which is greater, unless Citizens approves additional funds.

--A public information campaign to encourage policyholders to provide Citizens a chance to handle a claim before going to a third party.

--The Legislature is being asked to make changes, such as requiring third party vendors to keep the same policy requirements as the original policy.

Thankfully, many of these fraudulent practices haven't reached Northeast Florida.

In recent years Citizens has reduced policies from 1.5 million to about 500,000 with only about 450 of them in this area.

MORE LEGISLATIVE MISSTEPS

The Legislature approved a special tax to be used for affordable housing about 25 years ago. But just about every year most of those funds are swept into the state's general fund.

This would be academic if the state had no affordable housing crisis. But of course we do.

And it would be academic if the state's construction industry weren't hurting. But it is.

And now, keeping a bad habit alive, the trust fund for affordable housing will collect about $292 million this year, and the governor and House want to spend just $44 million of it, reports The Miami Herald.

The Senate's a little more generous at $162 million, but then bad habits seem to drive out good intentions in Tallahassee.

The trust funds come from documentary tax stamps on housing sales. So when housing prices are high, the funds increase. And when prices increase that also means there is a greater need for affordable housing.

In a county like St. Johns, for instance, it's tough to find housing that working class people can afford. St. Johns, like most other counties in Florida, has effectively spent the affordable housing funds through a coalition of public and private groups.

The Florida Housing Coalition has been a rare and effective group of builders, business interests and nonprofits. This is one of those unusual success stories that is little known because it's not controversial.

Yet Tallahassee leaders continually slash its funds.

That cynical move is not rare, unfortunately.

House Speaker Richard Corcoran (call him Scrooge) was quoted in the Herald as saying the trust fund is too generous. Other successful trust funds have been raided, as well, such as the one on transportation that created jobs.

Corcoran's comment comes in a state that is among the stingiest in the nation in funds for the mentally ill.

INTRUDING IN JUDICIARY

The separation of powers is a fundamental principle of the U.S. Constitution.

Yet the Legislature is intruding into the judiciary by proposing 12-year term limits for appellate judges and Florida Supreme Court justices.

The concept of term limits is fine for elected officials, but it would only weaken the judiciary.

Experience on the bench is a valuable asset.

A typical appellate judge is not appointed until the 40s at the earliest. Florida's mandatory retirement age is 70.

At most, that means 25 to 30 years on the bench. In the legal field, that is not excessive.

As noted by The Florida Bar in prepared material:

--Experience matters. This is true in any profession but especially one that makes life and death decisions.

--Best and brightest won't apply. Let's take a talented 45-year-old lawyer. With a 12-year term, this lawyer would be out at 57 having lost his private practice and having not served long enough to build a retirement account.

--The judiciary would be politicized. Creating this turnover will politicize the judiciary, thus tainting a key element of checks and balances.

--We don't need it. Through the Judicial Qualifications Commission and the mandatory retirement age, Florida doesn't need term limits for judges.

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