When shopping for homeowner’s insurance, Floridians should not be fooled by the modest discount they receive in exchange for participating in the managed repair program. Aside from suing policy holders who won’t permit their in-house company to make the repairs, Peoples Trust Insurance Co. is now being accused of paying bonuses to their Rapid Response Team who complete repair jobs for less money than estimates by their own adjusters.
Read on or click the link below for the full article recently published in the South Florida Sun Sentinel.
A property insurer that requires its customers to get their homes fixed by its own repair company is facing allegations that it pays bonuses to workers for cutting corners on those repairs.
And the circuit judge overseeing a lawsuit against the insurer said he plans to “dig deep” into claims about its business model, which the suit says is “deceptive and fraudulent.” Whether the outcome compels People’s Trust to alter its business model remains to be seen. But it could add another chapter to the history of a unique company known for its “managed care” approach to handling claims and for suing its own policyholders.
People’s Trust Insurance Co., based in Deerfield Beach, pioneered what’s called the managed repair insurance model in 2008 by forming its own contracting company, Rapid Response Team, which operates out of warehouses around the state. While People’s Trust reported 127,502 policies statewide and 56,465 in South Florida during the second quarter of 2019, putting it among the 10 largest insurers in Florida. Updated counts are no available because the company no longer allows public access to policy counts it sends to the state Office of Insurance Regulation.
People’s Trust has sold homeowners insurance policies by offering modest discounts — usually no more than $200 a year — in exchange for customers agreeing to allow the Rapid Response Team, if People’s Trust chooses, to make any and all repairs. Traditionally, insurers send checks to cover claims and customers use the money to choose their own contractors.
Both companies are subjects of a Miami-Dade County couple’s claims that they failed to properly repair damages to their home caused by Hurricane Irma in September 2017.
The suit, by Anthony and Brenda Bruton, includes allegations that a Rapid Repair Team project manager who supervised the repairs failed to file for required permits, painted over mold instead of replacing drywall, left thousands of dollars of repairs unfinished and ignored damage caused by the company’s workers. People’s Trust “and its affiliated companies used a deceptive and fraudulent business scheme of selling insurance with a Managed Care program they set up, promoted and administered with their affiliated preferred contractor, Rapid Response Team, to generate huge profits while giving the Brutons a less than 5% discount off the $6,300 premium,” claims the suit, filed by Joseph Ligman of Ligman Martin P.A. in Miami.
Amy Rosen, People’s Trust’s chief marketing officer, rebutted those claims, saying in an email that Rapid Response Team workers “went above and beyond what was necessary” to make the Brutons happy. “Nearing the conclusion of that repair process, when [final repairs] were being identified, the Brutons hired a lawyer and refused to allow Rapid Response team back onto the property to finish their work.”
An attack on the entire business model
The Brutons’ suit goes beyond claims of inadequate repairs by adding allegations that Circuit Judge Alan Fine, in a May 7 hearing, called “an attack on the entire business model of People’s Trust.” Among them is a claim that Rapid Response Team’s project managers “are motivated to cut corners in the types and materials used” by earning bonuses of $15,000 if they complete jobs for at least 30% less than what People’s Trust allocates for repairs.
In response, Rosen said that Rapid Response Team “does not cut corners” and offers a three-year 100% satisfaction guarantee. “And it is within our best interest to make repairs that are 100% to the liking and satisfaction of our clients, otherwise we will not gain their approval to close the job.” But in a deposition Dec. 20, Elio Cruz, the project manager assigned to repair the Brutons’ house, acknowledged getting a $11,000 bonus from Rapid Response Team for increasing the company’s profit over a recent year.
Asked if the bonuses are tied to how much money project managers save for Rapid Repair Team, Cruz replied: “Not really. That is not how it works.” Rapid Response Team’s incentive program for project managers, Rosen said, “has always consisted of multi-faceted metrics, with customer satisfaction, profit and productivity being part of the analysis.”
Yet other customers have accused People’s Trust and Rapid Response Team of saving money by performing inadequate repairs. In 2015, George and Marilyn Johnson of Davie filed a suit accusing a roofing subcontractor hired by Rapid Response Team of inadequately fixing the couple’s roof, resulting in water damage. The Johnsons’ complaint stated that the claim had been “woefully undervalued.” The suit was later settled.
An August 2018 lawsuit by Smyrne Sarrazin and Josue Adonis of Pembroke Pines accused Rapid Response Team of failing to perform the scope of repairs for a water loss identified by an independent appraisal. People’s Trust’s initial estimate also failed to include permitting costs, according to the suit filed by The Diener Firm P.A. of Plantation. Failure to pull permits is a “regular, routine practice” of Rapid Response Team intended to save money for the companies, the suit claimed.
When People’s Trust elects to repair
In a traditional relationship between an insurance company and its customer, the customer will file a claim with the insurer after an event causes damage to the customer’s property.
The insurer will send an adjuster to inspect the property or instruct the customer to submit photos and detailed descriptions of the damage. The insurer will then provide the customer with the adjuster’s estimate of what it will cost to repair that damage.
The customer can accept that estimate or seek an appraisal by a third party, such as a public adjuster who will produce another estimate to submit to the insurer. Frequently in Florida, disagreements overestimates lead to lawsuits.
If the two sides agree on the estimate, the insurer then sends the customer a check, minus any deductible dictated by the policy. The customer can then solicit offers for repairs.
Under People’s Trust’s managed repair model, the customer gets a check only when the company decides not to hand the job to Rapid Response Team. If People’s Trust “elects to repair,” it completes an estimate and sends a check for that amount to Rapid Response Team. It also asks the customer to pay the deductible in a lump sum or make payments to its own finance company.
If the customer can’t pay the deductible after the repairs are complete, Rapid Response Team may place a lien against the home for the unpaid amount. In South Florida, 206 liens have been filed against People’s Trust customers since 2017, records show.