Fla. Subpoenas Marsh & McLennan; Reviewing State Agencies’ Contracts

In an effort to obtain a better look at insurance contracts with state agencies and any impact on public dollars, Tom Gallagher, Florida Chief Financial Officer, has subpoenaed Marsh & McLennan to obtain documents related to the purchase of property insurance coverage for state-owned buildings.

Brown & Brown Inc. is confident that twin investigations of the insurance industry by Florida officials will reveal no wrongdoing by the Daytona Beach-based company or its brokers, Jim Henderson, Brown & Brown’s president and chief operating officer said.

Henderson maintains the nation’s eighth-largest insurance brokerage does not rig bids when offering its corporate customers a choice of coverage and routinely tells its clients about the commissions it receives from insurers for selling their policies.

Henderson said the company carefully monitors its nationwide network of brokers to ensure that their actions are scrupulous.

“Do I know what every one of our 4,200 people do every day? No,” he answered. “But we feel confident with our systems. We check constantly.”

Florida reviewing contracts with state agencies
“While we are investigating potential abuses in the insurance industry to protect Florida’s consumers, we are also taking a deeper look at insurance contracts with state agencies and any impact on public dollars,” Gallagher said. “We will not tolerate any misuse of tax dollars.”

Gallagher announced plans to take a broad look at the insurance industry, establishing a legal task force to investigate whether any of the activities outlined in New York Attorney General Eliot Spitzer’s recent civil suits are taking place among insurance brokerages and companies in Florida, including bid-rigging, kickbacks and improper fees.

Spitzer’s suit alleges civil and criminal misconduct involving insurance brokers steering business to insurance companies for a commission.

Recognizing that many homeowners are being told they must wait up to six months to schedule repairs due to a shortage of construction contractors, Gallagher has asked the Office of Insurance Regulation to develop an emergency rule prohibiting insurance companies from canceling or non-renewing homeowners insurance coverage until repairs are complete.

Adjusters warned, don’t discourage consumers
In a related matter, Gallagher recently warned adjusters to avoid discouraging consumers from filing complaints.

Responding to complaints that some insurance company adjusters may be discouraging consumers from contacting the Florida Department of Financial Services for help with a complaint or with filing a hurricane claim, Gallagher issued a warning saying that such actions could result in license suspension or revocation.

“Although we have received a limited number of complaints, the nature of the allegations are so serious I believe it warrants a public warning,” Gallagher said. “I will not tolerate the rights of Florida’s citizens being impeded in any way. Filing a complaint or request for the department’s help in no way inhibits the ability of claims adjusters to settle claims with an insured, nor does it delay or prolong the process unless someone is acting in bad faith.”

Some hurricane victims have reported that adjusters have warned that filing a complaint with the department would slow the claims process. Adjusters engaging in this activity may include insurance company adjusters, independent adjusters or catastrophe adjusters.

Using threats or coercion to dissuade Floridians from filing a complaint violates the provisions of the Florida Unfair Insurance Trade Practices Act as well as the rules regulating the ethical conduct of adjusters. The department can suspend or revoke the license of an adjuster who violates the Insurance Code or department rule, or impose a fine of up to $3,500.