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Insurer's hurricane tab gets bigger

The deal with Nationwide to fix underpayments to policyholders leads to a probe of how other major insurers handled hurricane claims last year.

By JONI JAMES
Published October 13, 2005

TALLAHASSEE - Nationwide Insurance policyholders who were hit by more than one hurricane last year could collect millions of dollars more on their claims under a consent agreement the company has signed, Florida insurance regulators said Wednesday.

The deal with the fourth-largest property insurer in Florida has triggered a broader probe into how other major insurers handled claims after the unprecedented four-hurricane season.

"Last year was such a busy season there seems to have been a number of problems," said Beth Scott, a spokesman for Florida's Office of Insurance Regulation. "We're going back to do a systematic look."

The Nationwide investigation, launched because of consumer complaints to the Department of Financial Services, found instances where policyholders who filed multiple hurricane claims in 2004 appeared to have been underpaid.

Under the consent agreement, Nationwide has 60 days to conduct a self-audit of the claims and correct mistakes. The insurer has agreed to pay $250,000 to cover the regulators' investigation costs.

How many policyholders might see more money is unclear. A Nationwide spokesman said the company thinks it will be a "small percentage" of the $1-billion it paid out in claims last year. Scott said the underpayment is estimated to be between $2-million and $10-million.

In a written statement, Nationwide said its goal was to treat all customers fairly and noted the consent order made no mention of violations of Florida's insurance code. "We feel this validates that Nationwide's handling of claims from last year's storms was timely, efficient, and customer focused," the statement read.

Among the problems identified in the consent order: Discrepancies in how the company compensated policyholders for sales tax and general contractor costs, how it applied depreciation rules for big-ticket items and how it assessed multiple deductibles.

Insurers paid out more than $21-billion in claims last year after hurricanes Charley, Frances, Ivan and Jeanne. The total rivaled the payout after 1992's Hurricane Andrew, the costliest hurricane to strike Florida.

Joni James can be reached at 850 224-7263 or jjames@sptimes.com

[Last modified October 13, 2005, 01:10:16]