Nationwide to reimburse homeowners for 2004 hurricanes

Friday, April 28th, 2006

Denies violating state insurance regulations
Florida Today
Reproduced under license from
the Copyright Clearance Center

TALLAHASSEE — Florida’s fourth-largest home insurer, Nationwide Insurance Co. of Florida, has been ordered by state regulators to find and reimburse homeowners underpaid for 2004 hurricane damage.

In addition, Nationwide has agreed to pay $250,000 to the Office of Insurance Regulation to reimburse the agency for its investigation of the company’s conduct.

“This is the largest investigation I’ve had contact with,” agency spokeswoman Beth Scott said. Though regulators won’t know how much is owed to homeowners until after Nationwide completes a state-ordered review, “we’re talking millions,” Scott said.

In an Oct. 4 settlement, Nationwide denies violating state insurance regulations.
“We feel this validates that Nationwide’s handling of claims from last year’s storms was timely, efficient, and customer-focused,” corporate spokesman Joe Case said in a statement.

Nevertheless, in the consent order Nationwide agrees to continue a self-audit of its 2004 hurricane claims payments and correct mistakes, including:

o failing to reimburse homeowners for sales taxes paid for rebuilding;
o failure to pay overhead for general contractors hired to rebuild;
o inconsistently holding back part of claims’ checks, as “depreciation” of the damaged building.

“Holding back is fine and done by most insurers, and is legal, but not (if it’s done) inconsistently,” said Scott Johnson, vice president of the Florida Association of Insurance Agents.

Nationwide also acknowledges charging more than one hurricane deductible to homeowners who filed more than one claim, even if it couldn’t substantiate that the damage came from more than one hurricane.

Scott said consumer complaints about Nationwide’s multiple deductibles triggered the investigation.
As part of its agreement with regulators, Nationwide will pay for a state mailing to those homeowners telling them they can request a review of the extra deduction.

“Nationwide’s goal in signing the consent order is the same as it has always been — to ensure all our customers are treated fairly. Nationwide is pleased we were able to work with the OIR to resolve the issues raised,” Case stated.

The Ohio-based company has 5 percent of Florida’s home insurance market, behind Citizens Property Insurance, State Farm and Allstate.

After receiving state permission to raise rates an average 21 percent, it announced in August it would no longer offer new policies to Florida homeowners, though it will continue existing property policies and expand its profitable auto coverage.

Also released Tuesday is a consent order by SAFECO and its insurance companies, agreeing to pay $35,000 in administrative fees for failing to follow state regulations regarding the use of credit reports to determine insurance premiums.

Other Florida investigations triggered by the 2004 hurricanes remain confidential, including one against Citizens Property Insurance.


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