Insurer moves to drop stringent eligibility criteria

Not long ago, a DUI arrest or a suspended license conviction could disqualify applicants for Universal Property & Casualty Insurance Co.’s homeowner policies.

Although those eligibility restrictions — plus others left over froma contentious period in thecompany’s history— haven’t been used for several years, they are still part of Universal’s policy program manual provided to homeowners, according to spokesman Travis Miller.

Now, the Fort Lau-derdale-company is seeking to change that. Universal is asking the state for approval to remove those and other disqualifiers as part of a package of revisions intended to ensure that the manual reflects current underwriting and rating criteria, Miller said.

If approved, the changes would take effect for new

and renewing customers on Oct. 29.

Other disqualifiers that would be dropped from the new manual include:

■ An arrest on charges of assault and battery.

■ An arrest on charges of disorderly conduct.

Eligibility for the most common types of policies would no longer be barred for:

■ A lien or judgment over the past 60 months.

■ A repossession over the past 60 months.

Universal is the state’s largest insurer with 631,611 Florida policies and a net income of $46.1 million in the first half of 2018.

The criteria date back to a troubled era in the company’s history that resulted in an investigation and a $1.3 million fineby the state Office of Insurance Regulation in 2013. A report by the office found the company routinely investigated backgrounds of customers who filed claims, then retroactively canceled policies if the investigation revealed a “material misstatement” on the customer’s application.

Anotice by former Chief Operating Officer Sean Downes— now the company’s CEO— urged agents to guard against “false information and suspicious activity” and warned that “some applicants fail to properly disclose prior claims history; relevant financial information; a criminal background or other information that would have resulted in their being ineligible for a policy.”

In 2012, Robin Wescott,

then the state’ insurance consumer advocate, asked the state to investigate accusations about the company’s post-claim background checks. She cited cancellations for “previous financial issues such as a bankruptcy or a lien which occurred up to four years before the consumer applied for insurance coverage with Universal.”

Wescott called the socalled, post-claim underwriting “abusive” and “an unfair trade practice.”

The state’s probe found the company canceled 262 policies over a 15-month period in 2010-11 without giving customers 100 days’ notice, as required by state law. Its report said the cancellations left customers as uninsurable risks, subject to being force-placed by their mortgage lenders into expensive last-resort policies. In addition to the $1.3 million fine, the company was ordered to stop the illegal cancellations and submit lists of all cancellations and res cisions every quarter for state review.

Universal’s decision to change its culture followed the 2013 state report and fine and predated a 2014 change in state law barring insurers from denying claims based on publicly available credit information after a policy has been in effect for 90 days, Miller said.

The company decided to stop using credit information to determine eligibility, Miller said. “Around the same time, UPCIC also decided itwould no longer consider certain non-credit issues such as DUIs, assaults and batteries and suspended driver licenses,” he said.

As with every insurer, thecompany maintains eligibility criteria that can disqualify applicants, including:

■ A felony conviction in the past 10 years.

■ A first-party lawsuit against an auto or homeowner insurance company.

■ A conviction of arson or insurance fraud.

A bankruptcy filing or foreclosure judgment would bar eligibility for the most common types of insurance, but applicants may be eligible for what some experts consider a stripped-down policy that would reimburse losses for their actual cash value, and not replacement cost.

Jay Neal, CEO of the insurance watchdog group Florida Association for Insurance Reform, said the company’s decisions to drop some of its more stringent eligibility criteria likely reflects increased competition in the Florida insurance marketplace — which is good for consumers.

“I think they realized that it’s good business and not just the right thing to do [and] they recognize that if anything smells like ‘gotcha,’ it doesn’t belong,” he said.

Added Paul Handerhan, the organization’s senior vice president of public policy: “They know that if their policyholders aren’t happy, they’re going to leave and go to a competitor.”

Dulce Suarez-Resnick, a Miami Beach-based insurance agent, said none of the companies she represents use DUIs or traffic violations to exclude customers. Eligibility criteria, she said, “should be pertinent to the policy we are issuing.”