Florida insurer fined $1M over Hurricane Ian claims

Hurricane Ian has cost insurance companies more than $21 billion dollars as of April 22, 2024, according to data from the Office of Insurance Regulation. Now, one of Florida’s largest insurers will add $1 million to its total.

The OIR issued the seven figure fine to Heritage Property and Casualty Insurance Company for violating a number of Florida laws when handling some of its Hurricane Ian-related claims.

“Insurance companies are financial first responders to disasters”, said Mark Friedlander with the Insurance Information Institute. “Their promise is to take care of policyholders in times of loss. Based on the investigation of the Florida Office of Insurance Regulation, Heritage did not deliver on its promise to policyholders.”

The OIR’s 7-page Targeted Market Conduct Examination Report broke down why Heritage has to fork over so much money. From April 11, 2023 to March 11, 2024, the OIR looked into three different samples of the company’s Hurricane Ian claims filed between the day Ian hit Southwest Florida through February 28, 2023. It found the insurer:

• did not acknowledge claims in 14 days (this law was later changed to 7 days);
• did not give the policyholder a document containing the adjuster’s name and license number;
• did not include the name and license number of the adjuster in a subsequent communication regarding the claim;
• did not pay or deny a claim or a portion of the claim within 90 days (this law was later changed to 60 days);
• did not calculate the correct amount of interest owed on payment of a claim;
• did not pay interest when the claim payment was made 90 days after a claim was filed;
• did not give the Homeowner Claims Bill of Rights to a policyholder within 14 days after an initial claim communication;
• did not keep complete claims records and;
• used adjusters who were not properly licensed.

Friedlander said this examination report and fine sends a clear message to insurers and policyholders.

“Insurers will be held accountable and policyholders will be supported by the Office of Insurance Regulation” Friedlander added.

Heritage CEO Ernie Garateix said in a statement:

“Heritage fully complied with OIR’s market conduct examination into our Hurricane Ian claims from September 2022 to February 2023. We also informed OIR that many of the same concerns they identified were also flagged internally and we have already taken significant action to address those concerns in order to better serve our policyholders. A few of the key improvements Heritage already made to enhance our service includes:

  •    The creation of a Governance and Compliance Director position to further ensure compliance with all state claims requirements;
  •    An expansion of the claims quality assurance process;
  •    The addition of resources to our internal audit functions;
  •    The implementation of a new claims management software;
  •    The added requirement that field adjusters document the manner in which they provide the policyholder with a printed or electronic document;
  •    The modification of software to require the adjuster license number be included;
  •    The creation of automated reports to track compliance claim timeframes;
  •    The reformulation of our interest calculator on claims;
  •    The required validation of names and licenses of new third-party desk adjusters;
  •    The implementation of a new claims training program;
  •    The expansion of the Claims Quality Assurance function to include 10 employees.

“Our message to our policyholders is simple: We are committed to excellence and will never stop striving to improve. Heritage wants to be a valued partner for our policyholders in their time of need and the State of Florida.”

Florida Insurance Commissioner Michael Yaworsky signed the order on Thursday, May 9th.

“The regulator means business, and they are not just all talk,” Friedlander said. “They are taking action, and when they said they were going to investigate the situation, they did it.”

The order said Heritage agreed to pay the fine and must pay it within 10 days. WINK News Consumer Reporter Andryanna Sheppard asked the OIR where the $1 million will go toward. A spokesperson is looking into it.

The last time OIR issued a fine of up to $1 million was in 2013 against Universal Property and Casualty Insurance Company for $1.26 million.

Related: Homeowners insurance company takes dozens of Southwest Floridians to court