The days of Universal Property and Casualty Insurance Company’s now well-known “post-claim underwriting” practices, which led to many homeowner’s having their property damage claims denied or have their policies canceled, and without the required notice of cancellation, are over. The property insurance giant has agreed to implement corrective action, change its policies and procedures and pay the $1.26 million fine ordered by Florida’s Office of Insurance Regulation.
This insurance company’s unjust denial of claims and cancellation of policies due to improper handling of claims resulted in numerous consumer complaints that were eventually brought to the attention of Florida’s Insurance Consumer Advocate, who at the time was Robin Westcott. The Insurance Consumer Advocate worked with the Office of Insurance Regulation, the agency responsible for overseeing that insurance companies are following proper procedures, to investigate the complaints that consumers had against Universal. The investigation revealed that Universal had been using their customers’ credit history information as a basis to issue denials on property damage claims, well after the time when policy underwriting was completed.
Essentially, Universal had been issuing policies and collecting insurance premiums after only conducting a partial underwriting of insurance policies, and then waiting until a homeowner filed an insurance claim to finish the process. In many instances, Universal alleged that the reason a claim was denied or a policy cancelled is because during the claims handling process, was based on a misrepresentation made by a homeowner on an insurance application. This would include, for example, if homeowners did not disclose a prior lien or judgment on the insurance application. Such information is publicly accessible in county records, and easily obtainable by an insurance company during the original policy underwriting process.
In May 2013, the Office of Insurance Regulation issued an Order with its findings that Universal had unnecessarily caused delays in paying claims to their customers, as well as denied claims and cancelled policies following the improper “post-claim underwriting” practices and in violation of Florida Statutes. Insurers are required to return unearned insurance premiums to the policyholder within fifteen days of the policy cancellation, and are required to give the policyholder proper and timely notice of the cancellation
Universal was ordered to pay $1.26 million in administrative fines as a result of the investigation conducted. Initially Universal challenged the Prior Order, but in October 2013, it signed a Consent Order, and agreed to implement changes to its claims handling and underwriting practices, as well as pay the fine. Universal will review 262 claims it previously denied on the basis of application misrepresentations. After Citizens, Universal is the second-largest property insurer in Florida, with more than 542,000 policyholders.
See the Consent Order in full.