Florida-based Heritage shares fall after ’60 Minutes’ report on adjusters

Just as Florida property insurers face a new wave of storm claims, CBS News has raised questions about alleged insurer fraud stemming from damage from the last major storm — Hurricane Ian, which hit much of southwest Florida two years ago.

CBS’ “60 Minutes,” known as the longest-running investigative news show, aired a segment Sunday night that reiterated claims made by several independent claims adjusters. The adjusters alleged that several insurance companies altered their estimates for repairs to Ian’s damaged homes in a way that undercuts and misleads policyholders.

“I handled 46 of them; 44 of them were changed,” said adjuster Jordan Lee, one of the whistleblowers featured in the TV report. Some estimates were off by 98%, the show said.

Another adjuster, Ben Mandell, said six carriers canceled his damage estimates — on 18 of 20 claims from Ian. “They all got the memo” to flat out refuse to pay for any roof replacement after the storm and only cover repairs.

The regulators, all of whom are independent and work independently for the carriers, have turned over evidence to state authorities and repeatedly called for insurance company officials to be prosecuted. More than two years later, investigators from the Florida Department of Financial Services have made no arrests.

The adjusters’ claims were first reported by Insurance Journal in late 2022 after they spoke at a Florida House of Representatives committee hearing. Since then, NBC News and The Washington Post have produced reports about the alleged deceptive practices, but adjusters said they have heard little about the state investigation.

A DFS spokesperson told Insurance Journal that the department’s investigation has not been forgotten.

“From day one, DFS has taken these allegations very seriously, and the Department’s Criminal Investigation Division (CID) currently has an active and ongoing criminal fraud investigation related to this case,” said DFS Communications Director Devin Galetta. “Although the case is still open, I can tell you that our investigators have conducted dozens of interviews with witnesses and collected thousands of pieces of evidence.”

One claim highlighted by the 60 Minutes report came from Jeffrey Rapkin, an adoption attorney in Northport, south of Sarasota. His family’s home had about half its metal roof ripped off and some plywood torn near the ridge, according to the report. A neighbor filmed the destruction as it happened, showing the roof coming apart.

Rapkin held a policy for the owners of Heritage Property & Casualty Insurance Co.

Lee, the adjuster hired by Heritage, said his inspection report estimated the damage at about $231,400. “The inside of the house was wet,” he said.

But without consulting with Lee, a Heritage office adjuster reduced the damage to about $15,000 and sent the report to the homeowners, keeping Lee’s name and license number on the revised estimate.

Rapkin said he was confused and angry because Lee verbally told him the damage was extensive.

Estate officials could not be reached for comment by Insurance Journal on Monday. In the 60 Minutes report, the carrier said in a statement that 42 percent of its adjusters’ estimates from Hurricane Ian were revised down, but 26 percent were raised to a higher amount after a desk adjuster’s review. Heritage also blamed its previous software for not including the names of office adjusters in the revised reports.

The TV report seems to have had an impact. It has received over 610,000 views on YouTube and over 3,200 comments. Heritage’s share price fell sharply after the market opened on Monday. The price has held steady at about $16 a share in recent weeks, but fell to about $12 at the closing bell on Monday.

Mandell said the 60 Minutes report did a good job of telling the story of how some insurers have made a habit of arbitrarily reducing adjusters’ estimates without looking at the property.

Others in the Florida insurance industry declined to comment on the report. But some in the industry have said privately that Florida insurers, hit by a wave of unnecessary litigation in recent years — so much so that litigation costs have led to more carrier insolvencies — have had to “fight for survival,” reducing in any way damage costs. they can and that adjusters can exaggerate when requesting replacement level work.

Sure enough, one of Mandell’s inspection reports in Florida, reviewed by an insurance journal editor who is not a qualified adjuster but experienced in roofing and construction work, showed that apparently minor shingle damage should lead to a complete roof replacement. Florida lawmakers in 2022, before Hurricane Ian hit, encouraged repairs when they changed state insurance law to allow more roofs to be repaired — not replaced — when storm damage affects only part of the roof.

Mandell said even minor shingle damage can lead to leaks within six months.

Adjusters said that since the first round of news about the falsified estimates, most insurers have pulled back from making wholesale changes to estimates. Instead, at least a few insurers now prefer inexperienced adjusters, who may not notice problem areas, or will require adjusters to review their reports themselves. Some will; some won’t, adjusters said. Other times, insurers may send multiple adjusters to look at a site until one comes up with a lower cost.

Mandell and other adjusters said that even if the practices have been changed, prosecutions are needed to send a message that misleading inspection report reviews are illegal — and policyholders deserve better. The Rapkin home featured in the 60 Minutes segment was obviously badly damaged, Mandell said. A large section of the roof was missing from the video, and the resulting leak appeared to cause mold on part of the ceiling, plus extensive water damage to the contents and appliances.

“Anybody can see that it would cost a lot more than $15,000 to restore the house,” Mandell said Monday.

Replacing just half of the standing-seam metal roof that was torn could cost more than $18,000, according to roofing estimate calculators available online.

The 60 Minutes report, produced by longtime CBS investigative reporter Oriana Zill de Granados, may not have been as thorough or as balanced as it could have been. The show did not hire additional adjusters or contractors to examine the damage and provide its own estimates of repair costs. And it didn’t include much input from others in Florida’s insurance industry, nor did it mention the indemnity litigation and fraudulent and exaggerated roof claims in recent years.

For now, Mandell, Lee and the other adjuster whistleblowers said they will continue to push state authorities to prosecute insurance carriers for what they say is fraud. But they also believe little will be done.

“We know why it’s taking so long,” Mandell said. “They don’t want to do that.”

Rapkin, the homeowner, and his wife continue to pay premiums to Heritage while pursuing litigation against the company. A lawyer for the adjuster whistleblowers told 60 Minutes that he has compiled evidence showing that carriers in five other states have mishandled the reports, claiming the estimates are the product of the work of field adjusters.

Photo: Jordan Lee, interviewed by 60 Minutes’ Sharyn Alfonsi. (photo of the show).

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