Florida regulators hit Universal Property & Casualty Insurance Co., the largest private homeowners insurance company in the state, with a $1.26 million fine for its market conduct.
This is the second regulatory action against the company since 2009. It has $765 million in written annual premium and over 542,000 policyholders. The order from the Florida Office of Insurance Regulation said the Fort Lauderdale-based insurer, a subsidiary of Universal Insurance Holdings (NASDAQ: UVE) stated that from 2009 through May 2013 had numerous violations. These include:
- Not promptly paying claims when it was already determined they were valid. In response, OIR told it to stop requiring separate “proof of loss” statements for claims with multiple payments.
- Unearned premiums should be mailed to customers within 15 days after they cancel a policy. OIR found this rule violated 26 times.
- It couldn’t prove that notices of cancellation or nonrenewal were mailed to customers on a timely basis.
- Universal voided 12 policies without a valid reason after a company investigation claims there were material misstatement in the application process – investigations that occurred after claims were filed.
The company didn’t underwrite policies when they were made, but instead attempted to retroactively cancel them following claims. The company canceled 262 policies due to alleged mistatements without giving the insured the legally required 100 days notice. OIR ordered Universal to review the reasoning behind those cancellations and, if in error, make restitution to the customers.
It failed to maintain a database of customer complaints. OIR took issue with Universal’s reinsurance contracts with companies it controlled because they appeared to guarantee a profit for the reinsurer with its property insurance company suffered losses. Universal has since placed a portion of its reinsurance on the open market. It failed to make periodic adjustments to the system it uses to estimate its loss reserves, which could lead to them being deficient. OIR told it to make full actuarial reports twice a year, with the first one due in August.
OIR also required Universal to provide it with more comprehensive financial statements. The order expressed concern about the investment activity at the company in 2009 and 2011, including when it paid $2.3 million in commission and executed over 5,700 trades, about half in the area of mining and precious metals. The company tended to sell stocks and mutual funds in the final days of fiscal quarters and make purchases in the opening days of the new quarter.
Its investments over the past five years have performed unfavorably compared to the U.S. property and casualty industry, OIR stated. Universal recorded a $16 million investment loss in the first quarter, although it was a strong quarter for the stock market. The order may shed light on why Bradley Meier resigned as president and CEO of Universal Property in February, replaced by former COO Sean Downes. Meier was solely responsible for its investment functions, OIR said.
Since Meier left, the company has been buying large shares of its stock from Meier to reduce his control. Universal now has a third-party firm handling its investments. Officials at Universal couldn’t be reached for comment.
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