State backed Citizens Insurance Corporation has gained national attention over the past years, although the bad seems to outweigh the good in most instances. Citizens was known as one of the most aggressive carriers after the 04-05 hurricanes, constantly refusing to honor the appraisal provision in its policy and forcing policyholders to file suit to recover amounts they were owed. Even then it often drug policyholders through lengthy appeals when a judge or jury found in their favor.
A few years back, several journalists began reporting about a new trend in product packaging: offering less product for the same price. One of these journalists, Michael Brush, dubbed PepsiCo’s subtle repackaging as, “The incredible shrinking Doritos bag.” Most companies cited rising costs as the reason for reducing sizes, but when the result ends up being higher profits and larger market share, those motives could rightfully be challenged. According to Brush and Harvard Business School Professor John Gourville, this strategy works because consumers don’t react to a change in quantity like they do to a change in price. Unfortunately for insurance consumers, this trend is finding its way into the insurance industry.
While the holiday season usually brings good tidings and cheer, condominium associations and residents insured by Citizens Property Insurance Corporation can expect coal in their stockings this year. Once again, the state’s largest insurer plans to increase rates to Florida condominium residents between 19 and 20.6 percent on average leaving many dismayed, especially since it has been over 5 years since the last major hurricane.
On March 7, 2011, Jeremy Tyler wrote Litigating The Right To Resolve Disputes Without Litigation, providing an excellent synopsis of various appeals Citizens Property Insurance Corporation (Citizens) pursued in the Florida Third District Court of Appeal related to compliance with policy conditions before appraisal. He discussed how Citizens is forcing policyholders to “proceed with evidentiary hearings to prove entitlement to an alternative dispute resolution proceeding that was, ironically, created as an alternative to litigation.” With so much contractual and judicial support for appraisal, policyholders may wonder what this evidentiary hearing that Citizens keeps requesting is supposed to accomplish.
The issue of whether Florida’s legislative-created insurer, Citizens Property Insurance Corporation, is, or should be, subject to damages for bad faith claims handling practices has been heavily debated by industry professionals during the last several years. Debbie Moroy, of ClaimSmentor, recently posted a comment to request an update on the Citizens Property Insurance Corporation v. San Perdido Association, Inc. case. In my Property Insurance coverage Law Blog post from October 18, 2010, titled Bad Faith Lawsuit Allowed to Proceed to Trial Against Citizens Property Insurance Corporation, I discussed an interesting turn of events on this issue. At that time, the First District Court of Appeal rejected Citizens’ request to stop a bad faith action against it from proceeding in the trial court.
Previously, in Documentation of Prior Repairs Can Be Important, I wrote about the importance of keeping relevant information such as receipts and pictures from prior maintenance and repairs to support a future insurance claim. Aside from the work that your association does, another important source of information is your insurer’s underwriting and claims files. While most for-profit insurers will not easily part with these files, if you are insured by Citizens Property Insurance Corporation, you have a right to these files as a matter of law.
Last week on the Property Insurance Coverage Law blog, I wrote about new appeals that had been filed in Florida’s Third District Court of Appeal in Miami regarding insurance appraisals. Since November of 2010, three new cases regarding appraisal had come out of the Third District: Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, Inc., 48 So. 3d 188 (Fla. 3d DCA 2010), Citizens Prop. Ins. Corp. v. Maytin, No. 3D10-693, 36 Fla. L. Weekly D51 (Fla. 3d DCA Dec. 29, 2010), and Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12, Inc., No. 3D10-2014, 2011 WL 613518 (Fla. 3d DCA Feb. 9, 2011). As of last week’s blog post, four new appeals had been filed by Citizens, which makes a total of seven (7) appraisal appeals filed by Citizens in the Third District alone.
Although Florida has not seen a major hurricane touch its shores since Hurricane Wilma in 2005, Citizens Property Insurance Corporation may be raising rates on many of its policyholders. Earlier this month, Insurance Commissioner Kevin McCarty approved additional rate increases that will affect thousands of insureds, including many condominium associations.