As Florida enters the last two months of the 2023 hurricane season, the state’s Chief Financial Officer Jimmy Patronis has his sights set directly on post-storm fraudsters known as “Storm Chasers.”
“Storm Chasers” are contractors who attempt to siphon as much money from insurance companies as possible by taking advantage of homeowners who have just been hit by a hurricane,” Mr. Patronis told The Epoch Times.
He explained: “You don’t have market condition pricing. You have [say] the roofers setting the price, and then, ultimately, they'll consume an extraordinary amount of resources that the policyholder is entitled to because the policyholder has given them full discretion without their knowledge to set the invoice for the work being done at whatever price the roofer wants.”
These contractors’ business models, he said, also involved partnering with public adjusters and attorneys to go after homeowners’ entire coverage limit.
They have not been doing anything illicit, he added. There’s nothing illegal about hiring a roofer, and there isn’t anything illegal about using a public adjuster or an attorney.
But by using legal loopholes, they have been able to take unfair advantage of a system that Mr. Patronis said he and his team have been working to update.
In the past, attorneys had also been able to add their legal fees on top of the policy amount, which ended up costing insurance companies even more.
Mr. Patronis described seeing “predatory” contractors already staged in a Wal-Mart parking lot when he arrived in north Florida after Hurricane Idalia made landfall.
“Immediately after a storm, people are traumatized,” he said. “They are vulnerable. They don’t have access to the internet. They want access to power.
“You have these predators that are pre-staged, better than utility companies ... canvassing neighborhoods and signing people up.
“And then next thing you know, when the power comes on, and the internet comes on, and they start to talk to their insurance company or talk to their neighbors.
“They realize, you know, ‘Now I need to get my insurance claim in order.’ Well, now they’ve already signed away.”
As an example, he told of one 94-year-old man in Taylor County who had a signed contract with four different roofers within hours of the storm and yet had “no noticeable damage to his house.”
The CFO said he was in New York in March and the insurance carriers told him: “Jimmy, we can model for hurricane risk. We cannot model for your litigation problems in Florida.”
Mr. Patronis said 70 percent of all litigation nationwide originated in Florida.
“Every single year I’ve been CFO of the state, we’ve run legislation to lower rates to curb fraud,” he said.
‘They Own Your Claim’
In Dec. 2022, Senate Bill 2A was passed to prohibit policyholders from being able to sign away Assignment of Benefits (AOB) to contractors on a property casualty claim.What was originally intended for hospital use has been “perverted” by storm chasers who take ownership of the claim and fight directly with the insurance companies on policy payouts, Mr. Patronis said.
“I’m sorry, but they own your claim [by doing this],” he said. “They can fill out the invoice for whatever amount they want, and they send it to the insurance company.”
Also eliminated in that legislation was Florida’s One-Way Attorney Fees Statute.
“Before, the attorney was guaranteed all of their legal fees—even if the plaintiff was awarded $1,” the CFO explained. “So what would happen is these law firms were printing lawsuits like a Xerox machine.”
Now, attorneys get paid on contingency or their client pays out of pocket.
Mr. Patronis also took matters beyond the written word to enforce transparency in disaster recovery areas.
Setting up his own forward operating base right next to pre-staged contractors after Hurricane Idalia, he had agents of the Department of Insurance and Forensic Services (DIFS) and Florida State Highway Patrol officers follow the solicitors going door to door and follow up on their calls.
“We’re not trying to hurt somebody’s business,” he said. “I want to make sure that these guys definitely know that if what they’re doing is unethical, that there’s somebody in law enforcement right there because we do have some very limited language and it allows people to cancel that contract with that roofer.
Connecting Policy Holders
The CFO has also hosted “initial payment centers” and “insurance villages,” which connected policyholders directly with insurance providers on-site after both Hurricane Ian and Hurricane Idalia.The “initial payment centers” were set up in Taylor and Levy counties just three days after Idalia for policyholders to meet directly with their insurance providers, open claims and get money for immediate needs.
Meanwhile, “insurance villages” have been helping the people of Southwest Florida resolve their existing claims in the aftermath of Ian.
In the last week of September, three “villages” in Punta Gorda and Fort Myers featured 15 insurance companies as well as the National Flood Insurance Program (NFIP), the Florida Department of Business Regulation (DBPR), and the Florida Association of Public Adjusters.
“We bring the carriers to the affected areas,” he said. “Allow people to sit face to face across from their carrier, and we insist with those carriers that they have the right checks on site.”
Other Factors
Florida’s “last resort” insurance provider, Citizens, offloaded more than 110,000 policies to private companies in October, with more than 400,000 expected to be offloaded by the end of the year as the market becomes favorable to business again.But premiums continue to rise.
Mr. Patronis cited inflation, interest rates, and supply and demand. A new roof, he said, costs 20 to 40 percent more than it did five years ago. The cost of shingles alone is up 25 percent from the past year.
Then there is the housing boom of 400,000 net new Floridians in the last year alone. Demand for hurricane repairs–which also interrupts the supply chain–and a limited labor supply also make it more expensive to file claims.
Still, he said, he remains hopeful and determined to improve the insurance climate market for Floridians.
“This isn’t the first time Florida has been faced with the same type of insurance challenges,” he said. “Citizens insurance in 2010 had 1.2 million policies in it. There were fewer people in the state in 2010.
“Now we’re 23 million people. We’re about 1.2 million policies again. In 2017, we were at 440,000. So it goes up and down as there is a competitive Florida market.”
Hurricane Season officially ends on Nov. 30, 2023.
