Make us your home page

Largest private insurer in Florida fined $1.3 million for long list of violations

TALLAHASSEE — The state's largest private property insurance company has been violating state law, mistreating customers and shifting profits to affiliates for years, according to an order released Thursday by the Office of Insurance Regulation.

Universal Property and Casualty Insurance Company has been fined $1.3 million for a laundry list of violations ranging from mismanaging its money to wrongfully denying insurance claims to failing to maintain appropriate records. Many of the violations are repeat offenses for the company, since regulators flagged the misbehavior in 2005.

The fine, if it holds, would be one of the largest ever levied against a property insurer.

Fort Lauderdale-based Universal has more than 542,000 policyholders, and is 15 times as large as it was in 2004. During that rapid growth span, regulators say, it built up bad habits of breaking insurance rules and using questionable financial practices.

The company was blasted last year by Insurance Consumer Advocate Robin Westcott for its practice of "post claim underwriting." After homeowners filed insurance claims, the company would scrutinize the initial policyholder application, to see if any mistakes had been made. If the homeowner failed to report a credit issue on the initial application, Universal would deny the claim and cancel the policy.

"This practice is reprehensible and should cease immediately," Westcott said last month, urging the Office of Insurance Regulation to investigate.

The OIR found that Universal was indeed canceling policies after policyholders made claims, leaving homeowners who thought they had insurance with huge repair bills and no coverage.

The company also made several other violations, cited in the 19-page OIR order, which is subject to challenge by Universal before it becomes final. They include:

• Canceling policies without justification (a "repeat violation" from the 2005 Market Conduct Examination).

• Requiring homeowners to produce multiple "notarized proof of loss" documents after making a claim.

• Not keeping a copy of consumer complaints, as required by regulators and Florida statutes.

According to regulators, Universal's business plan included paying out lots of money in fees to affiliated companies. Those affiliates ended up with large profits, while Universal ended up with losses.

"The occurrence of losses at (Universal) and profits in the affiliates raises concern as to the fairness and reasonableness of intercompany arrangements in times of declining market conditions," the order states.

For example, Universal paid more than $86 million in fees to affiliates in 2010. One of those affiliates made $44 million in profit while Universal lost money in 2009.

The company also paid a reinsurer more than $18 million for backup insurance, but guaranteed that the unregulated reinsurer would receive a 25 percent profit. The arrangement, flagged by regulators, has since been terminated.

The company's CEO, Bradley Meier, also had sole discretion over a highly active investment portfolio, which made an average of 23 trades per day, racking up $2.3 million in fees and commissions in the 18 months leading up to June 30, 2011. Half of the stock trades were in mining and precious metals companies.

Meier was the only official involved in more than 5,700 trades, which did not yield favorable results to the company relative to the broader market.

The company actually lost money on investments in the first six months of 2011, while the rest of the industry saw investment gains during a healthy year for the stock market. OIR said the trading activity violated state law.

Meier resigned from the firm earlier this year, though he remains a paid adviser for the company. He sold more than 1.5 million shares of company stock last year, yielding about $5 million.

Largest private insurer in Florida fined $1.3 million for long list of violations 05/30/13 [Last modified: Thursday, May 30, 2013 8:28pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Heights Public Market to host two Tampa Bay food trucks


    TAMPA — The Heights Public Market announced the first two food trucks for its "rotating stall," which will feature new restaurants every four months. Surf and Turf and Empamamas will be rolled out first.

    Heights Public Market is opening this summer inside the Tampa Armature Works building.
[SKIP O'ROURKE   |   Times file photo]

  2. Author Randy Wayne White could open St. Pete's biggest restaurant on the pier

    Food & Dining

    ST. PETERSBURG — The story begins with Yucatan shrimp.

    St. Petersburg Deputy Mayor Kanika Tomalin, pilot Mark Futch, Boca Grande, St. Petersburg Mayor Rick Kriseman, and author and businessman Randy Wayne White,  Sanibel, exit a Maule Super Rocket seaplane after taking a fight around Tampa Bay off the St. Petersburg waterfront, 6/28/17.  White and his business partners are in negotiations with the City of St. Petersburg to build a fourth Doc Ford's Rum Bar & Grille on the approach to the St. Petersburg Pier with a second event space on the pier according to White. The group met near Spa Beach after a ground breaking ceremony for the new pier. "We want to have our business open by the time the pier opens," said White. Other Dr. Ford restaurants are located on Sanibel, Captiva and Ft. Myers Beach. SCOTT KEELER   |   Times
  3. Guilty plea for WellCare Health Plans former counsel Thaddeus Bereday


    Former WellCare Health Plans general counsel Thaddeus M.S. Bereday pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District …

    WellCare Health Plans former general counsel Thaddeus M.S. Bereday, pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida stated Wednesday. [LinkedIn handout]
  4. DOT shows alternatives to former Tampa Bay Express toll lanes


    TAMPA — State transportation officials are evaluating at least a half-dozen alternatives to the controversial Tampa Bay interstate plan that they will workshop with the community for the next 18 months.

    Florida Department of Transportation consultant Brad Flom explains potential alternatives to adding toll lanes to Interstate 275 during a meeting Wednesday at DOT's Tampa office. Flom presented seven diagrams, all of which swapped toll lanes for transit, such as light rail or express bus, in the I-275 corridor from downtown Tampa to Bearss Ave. [CAITLIN JOHNSTON | Times]
  5. Claim: State pressured CFO, used secret recordings to shut down Universal Health Care


    ST. PETERSBURG — The founder of St. Petersburg's Universal Health Care alleges that Florida regulators conspired with the company's chief financial officer to drive the once high-flying Medicare insurer out of business.

    Federal agents raided the headquarters of Universal Health Care in 2013, ordering employees to leave the building. The insolvent St. Petersburg Medicare insurer was then in the process of being liquidated by state regulators.
[DIRK SHADD   |   Times file photo]