Article Courtesy of  The Palm Beach Post

By Jane Musgrave

Published June 5, 2006

"I never felt at this point in my life I'd be living with mommy and daddy," he said. "My life has been turned totally upside down."

Like many of his former neighbors in the 119-unit condo along the Intracoastal Waterway near downtown West Palm Beach, Horn blames QBE Insurance Corp., part of Australia-based QBE Insurance Group, which hasn't paid the association a dime for the estimated $30 million in damage the tower sustained.

"I think what the insurance company has done is deplorable," he said. "They've ruined 119 lives."

Unless something unforeseen happens, most expect that by June 29 a company headed by Palm Beach resident Thanos Papalexis will have the power to buy the vacant and plywood-covered high-rise that was touted as the tallest residential building in South Florida when it opened in 1974. Already more than 50 owners have signed contracts to sell their units to Papalexis. He needs to control 90 units to buy the building.

Horn said he doesn't understand how the situation could have spiraled so out of control that people feel forced to sell their homes.

"It's just unbelievable to me that the insurance commissioner of the state of Florida doesn't step in," he said.

Bob Lotane, communications director for the Florida Department of Insurance, said the agency monitors complaints and lawsuits against companies and acts against those who are violating state rules. He declined to say whether QBE is under investigation, claiming such information is confidential.

State records show that since the devastating 2004 hurricane season, 10 condominium associations have sued QBE, asking courts to force the insurer to pay millions in damages.

In addition, the Florida Department of Financial Services has logged 34 civil remedy notices against the company. The notices, also known as bad faith claims, alert the state of the dispute and give the insurer 60 days to negotiate a settlement with the consumer. If no settlement is reached, the consumer can file a lawsuit and eventually seek punitive damages.

Becker & Poliakoff, a Fort Lauderdale-based firm that specializes in condominium law, has filed roughly a half-dozen lawsuits and civil remedy notices against QBE, said Daniel Rosenbaum, who works in the firm's West Palm Beach office.

"By far we've filed more claims against QBE than any other carrier," he said.

Citizens Property Insurance Corp., the state-subsidized insurer of last resort, insures four times as many condo associations as QBE. However, QBE insures the big ones.

The 1,807 condos QBE covers have an insured valued of $33 billion — more than any other insurer in Florida, state records show. Citizens, by comparison, insures 7,300 condos, but its exposure is $27 billion.

QBE, in fact, drove up rates for Citizen's policyholders. When the state this year approved an average 37 percent rate hike for QBE condo association policies, Citizens got the OK for an average 20 percent boost. Because Citizens is state-subsidized, by law it must charge more than private companies.

Rosenbaum said the frustration of dealing with QBE is the enormous silence that has greeted homeowners associations that have called the company after their roofs blew off and windows shattered.

"The problem we've had on most of our cases is the failure to adjust the claim at all," he said.

David Avellar Neblett, a Miami attorney who represents El Dorado Towers in Aventura, which sustained an estimated $38 million in damage last fall in Hurricane Wilma, offered a similar view.

"The insurance company hasn't come up with an estimate because if it gives us an estimate, it has to pay that amount," he said.

In the meantime, he said, about 10 units are uninhabitable, residents are unable to use their balconies, the air conditioning units aren't functioning properly and many people are selling their homes at a loss just so they can move on with their lives.

Rather than file a lawsuit, which he fears will further delay a settlement of the claim, he has recommended that residents of the northern Miami-Dade condo smother the state with complaints by filing bad faith claims.

"I'd be happy to sue, but my clients just want to live in their apartments," he said.

Jeff Eisen, president of the Sunrise-based firm that represents QBE in Florida, said the company has settled scores of hurricane claims quickly and amicably.

"For every one where there's a problem, there's 100 that get settled without incident," said Eisen, president of Florida Intracoastal Underwriters. "It's just the nature of the claim — those that are complicated take more time to sort out."

Although he declined to discuss any specific claim, he said some condominium associations have blamed hurricanes for problems that existed well before Hurricane Frances roared ashore in September 2004.

"When it comes to insurance, there's a little larceny in everyone," he said, quoting a time-honored maxim of the insurance business.

Fourteen years ago, after Hurricane Andrew, residents of a Miami-Dade County condo pushed two huge planters off the roof onto a deck that had been plagued by cracks, he said. They claimed the deck was damaged in the hurricane.

When a worker reported what really had happened, the condominium's entire claim was rejected.

"If we uncover fraud, you will get zip," Eisen said.

In responses to lawsuits filed by the 1515 Tower and other condos, QBE attorneys have accused the homeowners associations of fraud.

William "Chip" Merlin, who is representing 1515 in its lawsuit against QBE, said such accusations, part of a laundry list of alleged sins used to deny claims, are designed to scare associations. Insurers are supposed to protect homeowners, not intimidate them, he said.

In a trial that is to begin in August, he plans to seek roughly $32 million for the condominium.

C. Deborah Bain, a North Palm Beach attorney who represents QBE, didn't return phone calls for comment. However, Larry Alexander, who is representing Papalexis in his efforts to purchase 1515, said QBE officials told them they plan to pay nothing toward rebuilding the high-rise.

Horn said he and other 1515 unit owners need the state's help.

"How can an individual fight against something like this?" Horn asked.

Lotane, spokesman for the state insurance department, said the agency will step in if it discovers wrongdoing.

In May, it ordered $2 million in refunds to customers of American Mercury Insurance Company and Mercury Insurance Company of Florida for a variety of violations, including improperly denying claims. The companies were also ordered to pay $1 million in fines and administrative fees.

However, most 1515 residents said they are tired of fighting. As part of their deal with Papalexis, most have agreed to give up any future claim they might have to an insurance settlement.

Daryl Cramer, an attorney who is gathering information about the proposed sale for the association, said Papalexis has offered to pay $47 million for the building without the insurance claim and an extra $10 million if residents give up their stake.

Horn realizes he may soon be forced to sell.

"But I'm very upset by the whole thing," he said. "I loved my unit. I loved living there. It's outrageous that an insurance company can do this."