Property insurance attorney offers perspective on Florida’s insurance crisis

John Tolley joins anchor Justin Warmoth on ‘The Weekly’

ORLANDO, Fla. – Insurance companies protecting Florida’s homeowners are going under as seven of the state’s carriers have become insolvent in recent weeks.

Meanwhile, agencies that are still afloat are doing what they can to stay financially sound by raising premiums, dropping policies and denying new business.

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The crisis, according to insurance companies, is being fueled by mounting litigation and fraud. Carriers operating in the Sunshine State shelled out more than $1 billion last year in underwriting losses — that’s in addition to paying out claims.

John Tolley, a property insurance attorney with JT Law, told anchor Justin Warmoth on “The Weekly” that there’s more to the crisis than homeowners filing lawsuits against insurers.

“It’s kind of a one-sided narrative,” Tolley said. “These insurance companies have millions of our dollars to spend. It’s always that people are committing fraud against the insurance company. It’s never the insurance company committing fraud at all.”

Florida lawmakers have been calling for a special session aimed at reforming the state’s insurance market, but that likely won’t happen until after the November midterms.

Tolley, who used to represent insurance companies before switching sides, said the proposed legislation — which essentially makes roofs cash value — isn’t fair for Florida homeowners.

“A lot of the reform that’s being proposed is one-sided,” Tolley said. “The major senator on this actually owns an insurance brokerage company. He has a financial incentive to write favorable legislation for the insurance companies.”

The insurance market, according to Tolley, started to change in 2016 after Hurricane Irma caused widespread damage in Florida.

“What I’m seeing here is that they’re denying more claims than they’ve ever had since Hurricane Irma, and they’re underpaying more claims than they’ve ever had since Hurricane Irma,” Tolley said. “Basically, Irma was a gamechanger in the state of Florida for these types of claims, and as a result, litigation obviously has to be done.”

On a recent episode of “The Weekly,” Hugh Cotton Insurance CEO Tom Cotton said there were 117,000 property claims filed for litigation, which takes up more than 75% of the property insurance lawsuits filed in the United States.

Cotton said he agrees with the legislation surrounding the value of a home’s roof.

“People are treating their homeowners policy as a warranty policy for a roof,” Cotton said. “Right now, if you have damage to a roof and it’s five years old, you get a new roof. If your roof is 25 years old and gets damaged, you get a brand-new roof.”

Insurers also blame predatory roofing companies going door-to-door asking homeowners if they’d like a new roof. Tolley acknowledged the alleged fraud committed by some “bad actors” but said they aren’t causing insurance companies to struggle financially.

“Obviously, I understand their argument, but there are two sides to every story,” Tolley said. “We have to ask ourselves why. Is that a situation that you wrote too many policies and didn’t have enough assets, knowing you didn’t? Is that a situation where you didn’t buy enough reinsurance at the time?”

Tolley also discussed a recent case his law firm handled that uncovered a major carrier in Florida committed insurance fraud during Hurricane Irma claims, which ultimately led to a Civil RICO case filed against the carrier in the Middle District of Florida.

“I recently just deposed essentially four whistleblowers against a major insurance company here in Florida,” Tolley said. “They all came out under oath and testified that this insurance company forced them to not put damages on their report and forced them to zero out estimates, and ultimately to deny these claims that were related to the events because they weren’t going to provide coverage. They incentivized these adjusters by telling them they were going to pay them more quickly.”

Watch the full interview in the video player above.

About the Author:

Justin Warmoth joined News 6 in February 2013 as our Brevard County reporter. In March of 2016, after anchoring the weekend mornings since August of 2015, Justin was promoted to weekday morning anchor. You can catch him Monday through Friday mornings from 5-7 a.m. and at noon.