Public Adjusters Make the News in Jacksonville and FAPIA Responds
This month, a letter to the editor by Guy Marvin was published in the Florida Times Union.
Marvin is the President of the Florida Insurance Council (“FIC”). The FIC is based out of Tallahassee, but Marvin has ties to Jacksonville from his former work as general counsel at Independent Life Insurance Company.
In case you are not familiar, the FIC’s website says its vision is:
[T]o be the premier organization representing the insurance profession in Florida. The Council will be the recognized and preferred source of information on insurance matters including economic, legislative, regulatory, and consumer issues.
The main point of Marvin's letter seems to be –don’t worry, your insurance company will fairly and quickly handle your insurance claim in the event there is a storm. Mr. Marvin urges Florida policyholders not to hire a public adjuster. Marvin wrote:
Every insurer employs specially trained adjusters who can readily assess your damages and facilitate speedy payment for your losses, all at no cost to you.
Unfortunately, during times of catastrophe, there are some who see crisis situations as an opportunity to get the cash that your insurance company is paying you to help recover your losses.
Allowing anyone to skim 20 percent or more of the funds your insurance company pays for your damages is unnecessary. More importantly, it leaves homeowners unable to fully recover a catastrophic loss…
There is no need for the homeowner to bypass the insurer's adjuster in favor of a public adjuster. After all, any reputable adjuster would make the same determination of loss. The difference is that the public adjuster will keep 20 percent or more of your payment!
…Consumers should recognize that the vast majority of claims are handled promptly and fairly by your insurance company adjuster.
The Florida Association of Public Insurance Adjusters (“FAPIA”) promptly replied and explained where they felt Marvin got it wrong. The response was written by David Beasley, who is the current president of FAPIA. David Beasley was one of the first public adjusters I met when I began working on behalf of policyholders shortly after Hurricane Dennis.
David began the response by agreeing with his adversary: insureds should not panic after a hurricane. But he also explains:
The insurance company adjuster who comes to your house after the storm is there to protect the company's interests.
Following a catastrophic event such as a hurricane, it commonly takes two to six weeks for the insurance company adjuster to visit the property, and that visit is usually by an independent adjuster with no check-writing authority.
Public adjusters are the only individuals licensed by the state to represent consumers and assist with estimating, documenting and submitting claims. Yes, they receive a commission on the claim that is paid, but unlike Marvin's assertion that this represents 20 percent or more "skimmed" from the payment, the commission is capped by state law at 10 percent in the first 12 months following a hurricane.
Beasley goes on to urge homeowners to find reputable help:
…if the damage is more substantial? Is the insurance company adjuster going to focus on giving you the compensation you deserve? Public adjusters work for policyholders.
Their job is to ensure the policyholders receive every penny they deserve. As you might expect, insurance companies, and their representatives such as Marvin, aren't real happy about that.
The Florida Association of Public Insurance Adjusters recommends that homeowners identify reputable public adjusters in advance, so that they can quickly contact them should damage occur.
With the current tropical action in the Atlantic, it is important to stay calm, but it is also important to stay informed and be prepared. I think it is unfortunate that Marvin wrote this post without clarifying that Florida statue regulates the fees charged by public insurance adjusters and, for the first 12 months following a hurricane, the fee is limited to 10%.
I hope Floridians and others in hurricane prone areas understand they need to ensure the insurance company adjusts and pays for all the covered damages provided for in their insurance policy. The process can be challenging and frustrating, but hiring a professional to adjust the loss on your behalf may help a policyholder even the playing field.
Ms. Vinson,
There are three sides to this story. The Insurance Associations, the Public Adjusters Associations and the real story.
Both sides make valid points. The Insurance Representative in the field in many more cases than not want to prepare the most detailed, proper estimate for the damages sustained. Why? Because they do not want to have to reopen a file due to the workload they have. They do not want to say something can be repaired when it cannot. They know that could be a bad faith situation. Granted there are those who feel that if they write an extremely tight estimate they will be looked upon as heros to upper management. Those that do that do not have my respect. Good company representatives prepare an estimate that would not require the services of a Public Adjuster.
Staff adjusters over the last 15 years have decreased in number yet their work load had increased. Since carriers have reduced the number of trainees and older, highly experienced adjusters are retiring there is a huge gap in properly adjusting losses.
On the Public Adjuster side, the knowledgeable and experienced PA's are normally willing to work with the company representative to come to an agreement on the scope of damage. They know that the quicker they can come to an agreement of scope and pricing, the quicker the loss can be paid. Professional Public adjusters can prepare their own estimates, settle the loss and go on to the next one. They do not have to rely on a contractor and mediation to close a file.
Since the four hurricanes in 2004 the number of license holders for Independent Adjuster and Public Adjuster have exploded. Many of those licensed on both sides have no idea what is covered, how to prepare a proper estimate or how to deal with each other.
I have handled losses across the Eastern half of the Country. Most of the time dealing with a PA is not an issue as many were former company representatives who knew what damage was and what coverage were. Sadly, Florida does not fit that case especially in South Florida. During the Katrina/Wilma storms, I found only a handful of knowledgeable PA's. It became a common comment after our first meeting that both parties would say it was nice to meet a professional who knew what they were doing. Too many times the PA was just out there to point out everything wrong with the property even if it was evident that some of the items has nothing to do with the event in question. When asked when they would have their estimate ready, they said they did not do their own estimate, they had a contrator go out and prepare one. When asked if they would agree to a scope of damage, they would normally say no. They would go off of what the contractor estimate was. Many of these types were brand new to the business. Some even admitted that they got into it because of friends who were licensed and had made a lot of money just signing up property owners and showing up when the company representative came. No knowledge of the policies or able or willing to separate previous damage from new damage.
This not to say that every company representative did their job properly. I saw the same things in new company representatives. For five months I did clean up in Dade, Broward and Palm Beach counties and yes, some of the estimates prepared by the company representative were woefully short of what was needed for repairs. Most of this was due to lack of knowledge and experience.
For Florida, the biggest issue is the inability of apply the Replacement Cost Holdback. Correct me if I am wrong, but I believe that Florida is the only state that does not allow the holdback to be used. In the other states I have worked, the Holdback has not been a problem for the PA's or the insureds. I cannot understand why Florida does not get with the rest of the country. This can and probably makes itself an influence in some companies to prepare tight estimates. By having the holdback in place, it could very easily allow better settlements to be offered as the carrier can after the repairs are completed inspect to make sure repairs were done. Remember that normally depreciation is taken only on the materials used. Not the labor to remove or the labor to install the replacement materials. Most estimates that I wrote when applying recoverable depreciation came to between 10-15% of the total estimate. Not 25-35% as some have said would occur.
I have a couple of very good aqaintences who are Public Adjusters and they have told me on more than occasion that they have received calls from property owners who wanted to reopen their claims. When they got to the property they could not see any sign of permanent repairs made. When asked, the property owners said that they used the proceeds for other things besides repairing the house. Needless to say those PA's left without taking on those property owners but they knew that there was a firm somewhere that would take them.
Both sides need to work to have knowledgeable and etheical people. It is sad to read where PA's are intentionally damaging property in order to boost the value of a claim. Same thing for IA's who have no knowledge on how to properly prepare a solid estimate of the damages.
If the adjusters hired by the insurer are properly trained and not"three day wonders" or "newbies" the insured should recieve the full benefit of their policy. The problem lies in poorly trained adjusters with licenses obtained in 3 day courses focused on the answers to the exam questions. After thirty seven years of adjusting it boggles my mind that so little training is required in some states to handle an insurance claim. I for one welcome the presence of a well informed public adjuster, it makes my job easier. Problem is most public adjusters I met had little or no training similar to the ill prepared independent. What is required rather than an adversarial position is individuals who are trained to provide the insured with the full benefit of their policy, no more nor less.
I would also add that Guy Marvin's assertion, "Every insurer employs specially trained adjusters who can readily assess your damages" is unsupported based on real-world experience in the field. It is true that anybody working as an independent adjuster needs to pass a licensing exam to adjust claims. However, in a large scale catastrophe like a hurricane, the carriers are forced to subcontract independent adjusters from all over the country. While this makes perfect sense in terms of improving response time to a filed claim, I can tell you it is highly unlikely that these IAs are given any training in issues unique to Florida, like FBC 1521.4 (commonly referred to as the 25% code), or matching, or a list of roof tiles that are no longer available because they have been out of production for 5 or 10 years. This is not mere speculation my part. I worked a season as an IA, and not a word was breathed about any of these issues. Without pertinent information like that, it's no wonder so many homeowners did not get proper indemnification for their loss.
Shaun, Insurance Veteran, and Gary:
Thanks for reading and commenting on this post. I think comments on stories like these are very helpful because often times the word limit in op-ed pieces limits the amount of information that can be conveyed to the public.
You all make great points and the underlying theme to all of your comments seems to be more education. Shaun explains that both public adjusters and independent adjusters need more of an understanding of the coverages under the policies and need to be able to scope and estimate the damages.
Insurance Veteran says he is happy to adjust the loss with a well informed public adjuster. I have heard this comment from others who work for insurance companies and they explained they welcomed a qualified public adjuster because they like to be able to talk to someone on their level and explain certain issues of the loss to someone who speaks "INSURANCE".
Two professionals should be able to dissect and work out a claim because they each are coming to the table with an understanding of the issues and each has a more equal set of tools he or she can use to resolve some, if not all issues.
I imagine it is much like a lawyer who is taking on a case where the opposing side is unrepresented by counsel. The challenges to those kinds of cases are different than the standard challenges I face when I a have a lawyer as an opponent. Both the lawyer and the pro se litigant and I will disagree but chances are additional hurdles will be added to my case with the non-lawyer just because of the nature of the law, procedures of the court, etc.
Thus, I can appreciate the ability of two qualified professionals working together quickly and efficiently to help the insured. But what happens when the public adjuster, with 20 plus years of experience working for insurance companies, meets the adjuster for the insurance company who has not been properly trained or who is overworked? As Shaun explains, the number of adjusters has decreased but their workloads increased. After the 2004 storms how many claims per day were assigned to the independent adjusters? 10? 15? Obviously proper scopes could not be done by these IAs because the sheer number of the assignments and the extent of damages. This point was also raised by Gary as he explained when he was an IA in Florida, he was not advised of the Florida specifics for loss adjustments but he was asked to adjust these losses.
I really appreciate the feedback from all of you and I am glad to hear additional information about what goes on in the field. I think being an advocate for education, training, and learning (as expressed in your posts) is truly essential to being a professional in this industry. I also hope folks recognize the need to be open to listening to another viewpoint and understanding the other side's opinions. I think this will help all of us to better evaluate each situation and may change our approach and thinking in other similar situations.