Insurers are losing more court cases not because claims are too complicated, but because they aren’t ready to back up their decisions, says Larry Seal, a veteran insurance professional and principal at West Florida Insurance Managers. Seal explains that if a company wants to deny a claim, it must have solid reasons to do so.
He points to the lasting effects of the case Joyce v. Fednat, which reshaped the way Florida handles insurance claims. Fednat first denied an elderly couple’s water damage claim but later reversed course and paid it. This flip-flop led to a legal rule that still impacts the insurance world today. It involved something called a contingency fee multiplier, or Lodestar, which influenced how attorneys’ fees are handled after bad faith claims. The insurance industry has pushed back, and lawmakers responded with new rules about fee-shifting.
Seal believes the main problem is in how insurers operate. He explains that in past decades, adjusters tended to try and pay legitimate claims, but now it feels more like companies want to find any excuse not to pay. He warns that relying too much on automation makes things worse. For example, asking customers to send photos might work for minor damage, like a cracked windshield, but it falls short for major incidents like explosions or big facility damage. Human judgment is still needed to properly assess these losses.
Seal also criticizes how some insurers use AI tools that inflate replacement cost estimates, driving up premiums and deductibles without drawing much attention from regulators. This means customers may pay more, especially for wind or hail coverage. Many underwriters overlook Florida’s policy law from 1899 that says in a total loss situation, the insurer must pay the policy’s face value. Some underwriters are uncomfortable with this rule, Seal says.
Independent agents, who serve as middlemen between insurers and customers, often bear the brunt of unhappy clients. Seal recalls cases where policyholders misunderstand why a claim was denied and take their frustration out on the agent, even when the denial is backed by policy terms. In one case, a mobile home owner had water damage from wind-driven rain that wasn’t covered. Seal still helped the homeowner find a contractor to fix the damage, but he admits these situations can be tense.
The insurance market itself is split, Seal observes. Some companies are tightening coverage and avoiding claims, while others are offering broader protection. He mentions a new policy form with very few exclusions and hopes this trend continues. On the legislative side, Seal is critical of laws like the Choice Act, which extends non-compete periods for employees. He calls it unfair, saying it makes it harder for people to start their own businesses and hurts competition, which ultimately raises costs.
Seal’s insights highlight ongoing challenges between insurers, agents, policyholders, and lawmakers. His experience shows that while technology has a role, human judgment and clear rules remain essential to fair claims handling.