"This is not just a job, it’s a critical part of our economy and our community..."

Managing Principal of Bressler, Amery & Ross’s Miami office and a member of the firm’s Executive Committee, Hope C. Zelinger focuses her practice on civil litigation with a specialization in first-party insurance defense and an emphasis on trial and appellate work.

With hurricane season upon us, we asked Zelinger about the myriad issues related to natural disaster insurance claims and how to uncover fraudulent claims. In this JD Supra exclusive, Zelinger also shares how practicing in insurance litigation is like playing sports.

How did you come to practice insurance defense law?

Insurance litigation is the fabric of our community in Florida. For better or worse, it drives our economy, fills up the courts, and is constantly on the mind of the Legislature. I never envisioned spending most of my time on insurance litigation, but I wouldn’t have it any other way. This is not just a job, it’s a critical part of our economy and our community.

What do insurance companies classify as a natural disaster or “act of God”?

This is a tough question. What I can say is that natural disasters and acts of God typically involve widespread events that are out of the control of the insured party. Over the last decade of representing insurance carriers, I have handled just as many everyday claims as I have hurricane claims, and my business has grown and been just as busy in both climates.

Why is Florida a hotbed of insurance and re-insurance litigation?

Florida is one of several states that contend with hurricanes regularly. The Insurance Information Institute (Triple-I) reports that premiums are up statewide by nearly 25 percent in 2022. This isn’t only because of the likelihood of hurricanes; it is a result of the “state’s outsized number of lawsuits and its commonplace fraud schemes.”

According to Sean Kevelighan, CEO of Triple-I, “Floridians are seeing homeowners’ insurance become costlier and scarcer because for years the state has been the home of too much litigation and too many fraudulent roof-replacement schemes. These two factors contributed enormously to the net underwriting losses Florida’s homeowners’ insurers cumulatively incurred between 2017 and 2021.”

A recent Triple-I’s Trends and Insights brief also notes that “[t]he current crisis is driven by several factors. Dominated by local insurers too small to accumulate sufficient capital to pay future losses, the market depends heavily on reinsurance.”

Gallagher Re, the reinsurance business of Arthur J. Gallagher & Co, recently reported that “[r]einsurers are retreating from Florida due to high noncatastrophe claims and litigation. Across hurricane-prone states, mid-year renewals showed increases from 5 percent to 15 percent for loss-free accounts to up to 40 percent for catastrophe-exposed, loss-hit accounts. In Florida, increases were as high as 50 percent.”

Triple-I's Issues Brief also highlights the steps taken by unethical roofing contractors. These contractors offer inspections to homeowners claiming the insurance deductible will be waived. They then get the homeowners to sign an assignment of benefits (AOB) or direction-to-pay form, giving the contractor the right to collect claim payments directly from the insurer on the homeowners’ behalf. When the claims adjuster finds no damage or much less damage than the contractor claimed, the insurer pays less than the contractor sought or denies the claim. The contractors then file lawsuits without the knowledge or permission of the homeowner/policyholder. These lawsuits require the insurers to apportion funds, personnel time, and legal costs to defend and litigate these fraudulent claims; all the while, the policyholder often is unaware of the litigation.

In May 2022, new legislation was signed into law in Florida to stabilize the reinsurance market. The reform approved a $2 billion state-backed reinsurance fund and new legislation limiting the amount that attorneys can collect for suing insurance companies.

What are some unique concerns for insurance companies related to natural disasters?

An insurance company’s primary concern is always the health and safety of the insured parties. The insurance adjusters I have worked with over the years are good people who care about their clients. Beyond the impact on a human level, Florida insurance is a competitive marketplace, and natural disasters can lead to the perception that Florida is a less-desirable insurance market. There is no question that natural disasters create reinsurance issues, impact the marketplace, and are a reality in a state like Florida.

What can insurance companies do to prevent or uncover fraudulent claims?

To prevent or uncover fraudulent claims, insurance companies must utilize the conditions and mandates of the insurance policy. Investigate these claims. Take the time to request material documentation, to ask the right questions in recorded statements and examinations under oath, and to invoke the right to inspect the property. Every claim is different and taking time to perform a thorough investigation can uncover not only fraudulent claims but also fraudulent patterns and practices that may exist in groups of hundreds of claims across the state.

What answer do you have to a question that you’ve never been asked and wish you had?

Practicing in insurance litigation is similar to playing sports. Having spent most of my youth and college life committed to competitive athletics, my legal career greatly parallels my sports journey. Just like a sports team, our firm puts a great emphasis on teamwork and outworking the competition. In addition, being empowered to advocate for clients and do trial work has created the same exhilarating experiences that can be found in sports. This job is fast paced, certainly never boring, and a great platform to continue to build important core values like hard work and humility.