Insurers aren’t losing in court because claims are too complex. They’re losing because they’re not prepared to defend their decisions. “If a company is going to deny a claim, they need to be on rock solid ground to do so,” said Larry Seal (pictured), principal at West Florida Insurance Managers.
Seal, who has decades of experience in agency ownership and marketing roles, pointed to the lasting impact of Joyce v. Fednat, a bad faith case that reshaped Florida’s legal and claims environment. Fednat initially denied a water damage claim from an elderly couple – then reversed its position and paid the claim later. That reversal triggered a legal precedent still felt across the industry.
“That’s where, in that particular case, we got the contingency fee multiplier – or the Lodestar – that set the industry standard over the next years,” Seal said. “That was a result of a bad faith claim. And then the industry starts crying foul over it. And then the legislature eventually responds with a fee-shifting statute.”
For Seal, the root issue isn’t legislative – it’s operational. “I think the industry is falling short with delay, deny, defend,” he said. “We used to be in an era back in the ’60s, ’70s, into the ’80s, where adjusters – if at all possible – wanted to cover the claim. But now we don’t have that. They’re more like, ‘Let’s find a way to get out of it.’”
Seal sees a troubling overreliance on automation, particularly in personal lines claims. “Well, take a picture and send it to us and we’ll cut you a check,” he said. “That may work for a windshield or if you’re going to call Dent Doctor – but it doesn’t work if you have an explosion in a boiler room or a large facility.”
His point: technology handles small claims well but breaks down in complex scenarios. “You’re always going to need human interaction,” he said. “Some of these losses require adjusters and appraisers who can physically assess the situation.”
Seal also criticized carriers for using AI-driven valuation tools to inflate replacement costs. “One of the things I’m noticing – and I just did one the other day for a guy – the computer, the AI, calculated the replacement cost of the building as astronomical,” he said. “They’re giving themselves an artificial rate increase.”
This tactic often goes unnoticed by regulators, he added. By boosting replacement costs, carriers can indirectly increase premiums and percentage-based deductibles – especially for wind or hail coverage. “The more coverage they can put on the building, the higher the deductible goes,” Seal said.
He noted that many underwriters still ignore Florida’s valued policy law, on the books since 1899. “In the event of a total loss, you pay the face value of the policy,” Seal said. “Some underwriters want to crawl in a hole when you tell them that.”
He recalled running an agency where policyholders often misunderstood claims denials. “He’s going to show up in your office and say, ‘He’s denying my claim,’” Seal said. “And sometimes, because of the complexities involved in insurance, they try to read their policy and can’t. And then they go to their agent.”
One case still stands out to him – a wind-driven rain claim from an elderly mobile home owner. Rain had blown under the soffit, saturating the wall – damage excluded by policy language. “It was a legitimate declination on the wording,” Seal said. “Had a pine limb hit the trailer and knocked a hole in it, it would have been covered.”
Still, he personally helped the customer find a contractor and repair the wall. “It’s those disappointments... where it can get really testy with the insured,” he said.
He pointed to a new policy form with almost no exclusions. “About a half a page,” he said. “I hope that’s where the industry is heading.”
Seal also criticized legislative moves such as the Choice Act, which extended allowable non-compete periods. “It should be called the No Choice Act,” he said. “Or the Indentured Servitude Act. How is anyone ever going to go out on their own?”
Such laws, he warned, suppress competition and inflate costs. “Let’s just say an employee quits and then they enforce the non-compete,” Seal said. “It’s going to take two years to play out... now it’s going to be four years.”
