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Lessons Learned from Last Years Hurricanes in Florida

By Steven D. Venook

Most insurance company’s claim departments were under staffed, their adjusters were poorly trained, and this delayed your claim settlements. What has changed? Nothing! The Florida Department of Insurance seemed to solicit and welcome emergency claim adjusters. Many of these adjusters had no prior claim experience they may have been tending bar or cutting hair the day before they walked in to your house to inspect your damages. No wonder thousands of policy holders put in complaints against their insurance companies. Do you think your insurance company owes you better service? It is interesting that there were numerous press releases last year by the Chief Financial officer of the Florida Department of Insurance about helping consumers solve their claim problems with their individual insurance companies.

I think the citizens of Florida deserve an answer to the following questions. What was the result of this PR campaign?

  • The DFS stated that it will fine insurance companies for delay of claims?
  • Which insurance companies were fined?
  • How much they were fined?
  • How my complaints were filed against a particular company?
  • Why is it there is no public record available on the DFS Web site of each insurance company complaint ratio? The complaint ratio information on the DFS web site is not updated past 1999 for homeowner companies? On October 1, 2004 Gallagher has asked the Office of Insurance Regulation to develop a rule that would require insurance companies to take the following actions for consumers who have filed claims:
    • Advance funds to all storm victims entitled to additional living expenses
    • Send adjusters to evaluate and assess damage.
    • Make a settlement offer and work to resolve all claim

On May 3, 2005 there was this media release on the DFS web site:


Tami Torres or Bob Lotane 
(850) 413-2842

“Last month, we were still facing more than 140,000 open storm claims. To spur action on settling these claims I brought a rule before the Governor and Cabinet requiring insurance companies to settle all outstanding claims by April 18th with a reporting deadline of April 28th.

“I asked the Office of Insurance Regulation to provide an update on compliance with the rule at this morning’s Cabinet meeting. OIR Commissioner McCarty reported 186 insurers had a total of 57,830 claims still open.

“The preliminary numbers look positive and it appears things are moving in the right direction. However, I am reserving judgment until the Office of Insurance Regulation has time to develop more concrete data. It appears many of the open claims can be closed once contractors can finish repairs, and we know contractors have been in short supply. My focus will remain on getting the 57,830 claims resolved.”

How is it that after nine months after last year hurricanes there are these many open claims and unresolved claims? Perhaps the article below may shed some light!

Citizens exec quits amid kickback claims

Published September 15, 2005

TALLAHASSEE – The chief operating officer of Florida’s insurer of last resort has resigned amid allegations laid out in a Texas lawsuit that he sought kickbacks from insurance adjusters after last year’s hurricanes.

R. Paul Hulsebusch, 39, left Citizens Property Insurance Corp. Friday, less than two days after a Texas company suing Hulsebusch said it forwarded damaging information about him to the state-backed insurer. Universal Risk Insurance Services of Houston, claims its information shows Hulsebusch accepted at least $25,000 in goods as a bribe from a competing adjuster that ended up winning a lucrative contract with Citizens.

Hulsebusch was tapped to overhaul the claims operation last year after Citizens received thousands of complaints for its slow and mistake-prone response to handling claims from hurricanes Charley, Frances, Ivan and Jeanne.

A Citizens spokesman confirmed Hulsebusch’s resignation Wednesday but declined further comment.

Responding to calls from the Times, Citizens executive director Bob Ricker said in a statement Wednesday the insurer takes the allegations seriously and has launched an investigation.

“This claim will be thoroughly reviewed, and at the conclusion of this investigation, all necessary steps will be taken to ensure that all Citizens employees maintain the highest level of professionalism,” Ricker said.

Hulsebusch, as well as the adjuster alleged to have paid the bribe, could not be reached for comment. Messages seeking comment were left on an answering machine at a home Hulsebusch maintains in Pennsylvania and on his mobile phone. Someone answering the phone at the Pennsylvania address later Wednesday said Hulsebusch was traveling but had been given the message.

The allegations come 11 months after Ricker hired Hulsebusch as a consultant to turn around Citizens’ embarrassingly sluggish claims processing after the 2004 hurricanes. In February, he was hired permanently as the chief operating officer with a $150,000 salary. An insurance executive from a New Jersey company, Hulsebusch blamed the delay in processing hurricane claims on Citizens’ network of third-party adjusters, saying they’d defected to other companies that were paying more.

But the Houston lawsuit, filed in March but amended Wednesday with the bribery allegations, offers another version of what went so terribly wrong last year when thousands of Citizens policyholders waited for months and months to get their claims processed.

Universal Risk claims it was Hulsebusch’s haphazard management and his system of rewarding adjuster contracts based on bribery that was at fault. The firm is seeking $3.6-million in lost, past and future profits and an unidentified amount of punitive damages from Citizens, Hulsebusch and Quantum Claim Services, which allegedly paid the bribe. Neither Quantum’s attorney nor company owner Rodney Harrell of Richmond, Texas, who is a defendant, could be reached for comment.

The allegations come as the insurer faces increased public scrutiny.

By law, the state-created insurer must charge the highest rates in the market. But its policyholders complained about customer service more than any other’s after last year’s hurricanes.

What’s more, all Florida property owners will see a 7 percent surcharge on their annual premium this year to help Citizens recover from a $515-million deficit caused by hurricane claim payouts. The cost for someone with a $1,300 premium is roughly $90.

State Chief Financial Officer Tom Gallagher, who appointed the Citizens board in charge during last year’s hurricanes, could not be reached for comment. His spokeswoman said she wasn’t familiar with the case and noted that while Gallagher appointed the Citizens board, he had no role in picking the staff.

It’s the second time in a decade the state’s insurer of last resort has come under scrutiny on allegations its executives were dealing in self-interest.

In 1995, federal and state grand juries investigated the state’s Joint Underwriting Association – Citizens’ predecessor – after allegations surfaced that executives at an affiliated business had been using the state insurer’s offices and resources to build a private business. Gallagher, then the state’s elected insurance commissioner, had appointed the head of the JUA who allowed the executives at the affiliated business to work on private business. No criminal charges were filed.

The current controversy has its roots, according to Universal, in the panic of last year’s hurricane season. Universal claims it responded in good faith when Hulsebusch called seeking as many adjusters as it could spare to help process Citizens’ mounting claims.

Universal said the rate schedule agreed to over the phone with Hulsebusch before sending adjusters to Florida was never honored nor was a written contract forthcoming. Nonetheless, Citizens gave Universal the responsibility to assess more than 1,000 claims. Universal lost much of that work after Quantum paid “a series of bribes to Paul Hulsebusch … in return for substantial work assignments resulting in substantial revenue for Quantum and substantial lost revenue to Universal Risk,” the lawsuit charges.

Universal Risk’s attorney, Scott Rothenberg, said Universal had deployed adjusters in Florida when Hulsebusch approached Universal asking for a kickback of 3 percent of the adjustment fees.

“The request was made and it was refused,” Rothenberg said. “All of a sudden virtually every claim Universal was adjusting was reassigned.”

Even before the lawsuit, Citizens had come under fire for its hurricane response and its growing role in the state’s insurance market because hurricanes and sinkholes have caused many private insurers to stop writing policies, particularly in Tampa Bay areas.

The 2004 hurricanes exposed and exacerbated staffing shortages, training problems and systemic flaws within the company. One of Citizens’ biggest stumbling blocks: it didn’t have a large core of in-house adjusters and had to rely on hired, independent adjusters to meet with hurricane victims. But those adjusters often shoved Citizens’ claims to the back of their “to-do” list. First, they investigated claims by private insurers that were more strategically important to them and paid better.

Gallagher, who is seeking the Republican nomination for governor in 2006, threatened to take over the company if it didn’t clean up its act.

Meanwhile, state legislators and a task force recommended a overhaul, including beefing up Citizens’ claims department to avoid relying on out-of-state adjusters so heavily after a catastrophe.

Ricker, Citizens executive director, turned to Hulsebusch to get the job done, making him Citizens’ point person to parry questions from a state task force over what the company was doing to improve its claims handling.

“Citizens has turned the corner on claims resolution,” Ricker said in February, attributing the success to management changes. “Our number one focus is closing hurricane claims.”

Joni James can be reached at or 850 224-7263.
Jeff Harrington can be reached at or (727) 893-8242.



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