What a Coincidence? Universal Property & Casualty Engages in Post-Loss Underwriting and Makes 30 Million in Profits

The Florida Senate recognizes the bad acts of Florida’s Universal Property Insurance Corporation (UPIC). Just yesterday, the Senate passed an amendment to HB635 that added language prohibiting insurance companies from some types of “post-loss underwriting.” House approval is needed before the legislation can be sent to the Governor for his signature.

The Palm Beach Post has been reporting about the bad acts of Universal in frequent stories:

• Florida Senate moves against ‘abusive’ insurance practice

• ‘Reprehensible’ insurance practice sparks call for insurance commissioner, legislators to act

• Customers protest tactics at state’s biggest private property insurer

Palm Beach County has the largest number for UPIC policyholders but the company as a whole is the largest private insurance company in our state. The Post reported about the 2012 profits of the company totaling $30 million and published stories of insureds who weren’t paid for valid claims.

Our prior blog posts on this topic include:

• Robin Westcott, Consumer Advocate, Investigates Universal Property and Casualty’s Rescinding of Policies and Denial of Claims

• Just How Poorly are Homeowners Insurance Claims Handled? A Call to Florida Policyholders, Part II

UPIC has been escaping paying for otherwise covered claims, including total house fire losses by using the application questions and answers to attempt to void coverage all together. As reported by the Post, a whistle blower who formally worked on Universal claims told Robin Westcott, Florida’s Consumer Advocate, that he was instructed to find any reason in the consumer’s records to deny clams above a certain dollar value. Florida’s Consumer Advocate has been passionate about fighting this reprehensible conduct because, often times, the application answers that are used against the insureds are public record, a resolved financial issue that has been recorded, and or something that can be looked up by Universal before the 90 day evaluation is complete.

The Office of Insurance Regulation approves each and every homeowner insurance application that is used in the State of Florida. Questions on applications generally give the insurance company information about the policyholders or property that are used for underwriting purposes. Underwriting is the property risk assessment process that takes place during the first 90 days of insurance. Proper underwriting varies from company to company but this evaluation can include an inspection of the home and a verification of prior insurance. Many Florida companies also look to verify the year and size of the home, whether it qualifies for hurricane mitigation credits and prior claims of the insured. UPIC’s property insurance application includes many of the standard questions but includes some other financial and personal background questions that have now landed them in hot water because of when and how they are used.

The questions from the 07/09 application includes the following qualifier:

Under the policy requested in this application, the ‘insured’ includes the applicant, spouse if a resident of the same household, and other residents of the same household who are relatives or are under the age of 21 and in the care of any person included in this definition.

Westcott takes issue with the all-inclusive nature, applying to all insureds or qualifying insureds — whether or not that other person signs the application.

Universal’s underwriting questions are then listed as insured background questions.

The way these questions are presented to insureds and whether they are discussed during the application process is a topic for a future blog, but it is important to note that the insureds do not initial these responses and do not sign on this page of the application.

Since last fall, Robin Westcott’s Office has been investigating Universal for using public credit and public records of an insureds background as a basis to later deny a claim and void the policy. Westcott’s most recent letter to CFO Atwater was sent just last week. As a part of its investigation and because of the insurance forums being held across the state, the office of the Consumer Advocate now has evidence of claims where the most outlandish credit and even resolved financial blemishes are being used by UPIC to not pay valid claims Westcott understands that credit and financial questions can be used to decide whether to sell a policy but says that doing this evaluation after the claim is a method to escape otherwise permissible payments.

Universal defends its practices, but Florida policyholders disagree.

If you have a policy or a claim with UPIC and want more information on this issue contact Merlin Law Group.