Report: Insurers slashed Hurricane Ian payouts far below damage estimates
FORT MYERS
When insurance adjuster Jordan Lee entered the cream-colored house battered by Hurricane Ian, the smell from the rain-soaked carpet made it hard to breathe. Piles of pink insulation covered the worn, white couches, he recalled, and poured from the collapsed ceiling, left gaping from the storm’s 150 mph winds. He photographed debris flecked on the carpet and walls, chunks of roof in the yard, and broken screens and gutters around a pool filled with palm fronds.
The home, which belongs to retired couple Terry and Mary Sebastian, sits on a canal in Rotonda West, a coastal community that bore the brunt of Ian when the storm made landfall on Sept. 28. The entire place would need to be dehumidified, the roof completely replaced, the insulation torn out and the tattered pool enclosure rebuilt. It would be about $200,000 to repair the damage, the licensed adjuster calculated in his estimate for Heritage Property & Casualty Insurance Co.
But when Lee checked in on his report about 10 days later, his stomach dropped, he said. It had been drastically whittled down, with entire portions, such as the one detailing issues in the primary bedroom, removed. The amount of
Facing South Florida with Jim DeFede, 11:30 a.m.: With the legislative session underway, Jim brings you an extensive one-on-one with Florida’s Speaker of the House about hot-button issues that affect all Floridians. insulation that needed to be redone was cut by half, and his estimate now said that one-third of the roof should be fixed, instead of it being fully replaced. The homeowners were slated to receive a total of $27,000. The changes were made without Lee’s knowledge or consent, he said, but his name was still on the final report, according to documents seen by The Washington Post.
After major disasters like Ian, insurance companies often bring on third-party firms like Tristar Claim Solutions, an independent adjusting company that Lee worked for as a contractor, to help with the hundreds of thousands of claims.
During the insurance claims process, it’s standard for field adjusters, who are trained to assess damaged homes, to collaborate with those back in the office to make minor edits, discuss aspects of the claim and alter line items if, for example, the carrier has evidence that damage was from a prior event, according to adjusters and insurance industry experts. That is how the system is supposed to work.
But that’s not what has been happening in the aftermath of Hurricane Ian, Lee and others said.
Instead, Lee and other adjusters contracted by regional insurance carriers say that managers have been changing their work by lowering totals, rewriting descriptions of damage and deleting accompanying photos without their approval. These actions to devalue damage are the latest example of the insurance crisis in Florida.
After years of more frequent and intense storms, national carriers have pulled back from the market and smaller, regional carriers with smaller financial reserves jumped in. In the wake of Hurricane Ian, those companies have been aggressively seeking to limit payouts to policyholders by altering the work of licensed adjusters, according to a Washington Post investigation. As a result, homeowners are left footing much of the bill for repairs, exposing an untenable gap between the cost of storm damage and what insurers are willing to pay to fix it.
The Post’s examination included interviews with dozens of policyholder advocates, attorneys and Hurricane Ian survivors as well as five insurance adjusters, who oversaw more than 100 claims for Heritage and Florida Peninsula Insurance Co., another regional carrier. The Post also reviewed 13 original and modified claims, which included hundreds of pages of estimates, photos and general loss reports, as well as internal records, final payment letters, emails and carrier guidelines.
The documents show that a dozen policyholders and their families had their Hurricane Ian claims reduced by 45 to 97 percent.
The adjusters, attorneys and policyholder advocates allege that the independent adjusting firms were internally lowering estimates under the direction of the insurance carriers who contracted them.
The people interviewed for this investigation decided to speak out because, they allege, the ease and scale with which Ian claims have been altered and gutted represents a tipping point for Florida’s insurance industry. The revised claims inaccurately represent their work, for which they said they still have not been fully paid, and they want more oversight, reform and accountability.
The Post made multiple attempts to interview and seek comment from Heritage, Florida Peninsula and Tristar, sending each company detailed lists of questions pertaining to the allegations and evidence in this investigation. Heritage did not reply to calls and emails. Representatives for Florida Peninsula said that “everyone is tied up at the moment” and they would not be able “to help with this one.”
Tristar said that because of a “confidentiality agreement with Heritage Insurance we are unable to comment on Heritage Policy, procedures and/or estimating guidelines.” However, the company said it has reasons for altering claims, and that “estimates are revised/collaborated throughout the entire industry at the direction of the insurance carriers. They have the final say.”
Some in Florida’s insurance industry blame the flailing market on lawyers and contractors who they allege have taken advantage of the system to sue carriers, jack up estimates and use roofing scams as ways to profit off disasters. It’s actually the carriers, they argue, that have been the victims of fraud and bad behavior.
“Florida is the worst of all states when it comes to frivolous lawsuits and roofreplacement fraud schemes. Many claims are not legitimate,” said Mark Friedlander, the director of communications for the Insurance Information Institute, an industry association. To combat those issues, lawmakers have recently passed several pro-insurance industry laws that target attorneys and contractors, he said.
Florida’s insurance market has been teetering toward collapse for years. After destructive storms in 2005, several big carriers including State Farm pulled back coverage in the state, and newer, more thinly financed, smaller companies swooped in and began to operate. Then came 2017, one of the costliest hurricane seasons ever. Hurricane Michael battered Florida the following year.
Adjusters said they started to see carriers greatly reduce damage estimates, fully deny roof replacements more often and force claims of a certain value into litigation. Payouts started to get delayed or not come at all, adjusters and attorneys said.
At the same time, rates kept rising, and fast. Florida homeowners paid an average of $4,231 for home insurance in 2022, nearly three times the price in any other state — and rates are expected to increase again this year. Ten property insurers that operated in Florida have gone insolvent since January 2021. About 125 property insurers remain in the state.
As Lee walked through an essentially totaled home in Venice, in early October, water from the still-mushy carpet splashed onto his calves, he recalled. Like in the Sebastians’ house, insulation hung from the exposed ceiling. The drywall would need to be removed, rooms deeply sanitized and the entire roof replaced, as it “was blow[n] off,” he wrote in a loss report for Heritage obtained by The Post, “causing significant damage to the interior of the home.”
Repairing it would cost nearly $200,000, he estimated. But in the final report for the homeowners, Daniel and Amy Van Sickle, entire sections of his work such as “tear out and bag wet insulation” and “water damage dry out” were removed, and the final amount lowered to $24,619.
Weeks later, on Jan. 9, Heritage emailed the Van Sickles telling them it would issue a payment.
The explanation letter said the carrier “received the detailed field adjuster estimate in the amount of $24,619.46 for covered damage.” Along with it was the revised estimate, with Lee’s name on it.
However, after subtracting from their deductible, the couple would only get $3,204.60.
‘‘ FLORIDA IS THE WORST OF ALL STATES WHEN IT COMES TO FRIVOLOUS LAWSUITS AND ROOF-REPLACEMENT FRAUD SCHEMES. MANY CLAIMS ARE NOT LEGITIMATE. Mark Friedlander, the director of communications for the Insurance Information Institute