Number two on the list of what insurance companies are most afraid of right now — after billions of dollars in Hurricane Irma claims — are armies of contractors and attorneys swelling those claims by billions of dollars more.
In South Florida, insurers have been raising rates for several years and blaming third-party repair contractors who persuade policyholders to sign over claims benefits and then sue if the insurer denies or underpays the contractors’ invoices — dramatically increasing claims costs.
The Consumer Protection Coalition, a public awareness effort formed by the Florida Chamber of Commerce to generate support for legislation to curb claims abuses, warned consumers this week that Irma “could create new opportunities for unscrupulous home repair vendors and trial attorneys to profit off the disaster.”
What results, the notice said, “are increased insurance costs that put the dream of home ownership out of reach for many Floridians.”
With no major hurricane striking South Florida since 2005, the higher costs have stemmed mostly from everyday claims such as damage from burst pipes or leaking water heaters.
But Hurricane Irma, insurers fear, could unleash a fresh wave of assignment-related abuses and lawsuits.
Heritage Property and Casualty Insurance Co. sent an email notice to its customers on Saturday imploring them to “call us as soon as possible after they and their family are safe.”
“Please do not contract with any vendor except a vendor approved by Heritage,” the notice said. “You can call our claims department and we will dispatch a reputable, licensed contractor to your home.”