Public Adjusters and Sinkhole Claims Topic of Wall Street Journal Story
Florida's sinkhole issues have hit the national news. In an article in today's Wall Street Journal, "Sinkhole Claims Threaten To Engulf Florida Insurers," the public adjusting industry takes some hard hits.
For example, Florida's insurance commissioner, Kevin McCarty, analogized public adjusters who are looking to sign up sinkhole claims as playing the game "Whac-A- Mole." In response, Tim Zeak, of Florida Public Adjusting, blamed the increase of claims on development in known sinkhole prone areas.
The ability of the insurance industry to get this story into the mainstream media certainly raises the spector of significant change at the regulatory and legislative level. Those changes remain to be seen. It is certain, however, that we cannot continue to incur such frequent and severe losses without changes in coverage, if sinkhole coverage is to remain at all.
I think the article was fair, but wish that several other reasons were incorporated in the article such as:
1) the anti-consumer laws recently passed such as neutral evaluation, presumption of correctness, and the requirement to pump mega tons of cement into the ground in order to get paid has made it very difficult for most consumers to navigate without professional help. Many consumers quickly realize that the cards are stacked against them and are driven to PAs or attorneys.
2) It is the annual attempts to restrict, reduce and in fact eliminate sinkhole coverage that has forced, maybe a third of our clients to file claims. It is not the PA's who are causing the fear, it is their neighbors, friends and a few agressive attorneys. People are afraid they will wake up one day and not have coverage. IT WOULD BE A VIOLATION OF FLORIDA LAW FOR ANY PUBLIC ADJUSTER TO TELL THOSE PEOPLE NOT TO WORRY.
3)I made the point that the regulators are all good people but when they are bombarded day in and day out by 50 high priced lobbiests, that some influence will naturally occur. I said the scare was a sham with the sole motive was increasing profits. I cited Governor Chist who referred to them as "profit-hungry parasites".
Money is way too powerful in this country. Delaware just nominated a candiate for the U.S. Senate who was quoted as saying the U.S. Science community has interbred mice with other animals and now having mice with fully functioning human brains. It is no more absurd then to think that someone can manufacture a fraudulent sinkhole claim that not only requires physical damages but physical damages that CANNOT be attributed by the companies' own engineers as having nonsinkhole related causation.
I believe, to a great extent that blaming insurer lobbyists (I'm not one), won't work in this case. Insurers are, through various creative approaches, avoiding sinkhole claims; they are refusing to write homes in sinkhole zip codes, and/or non-renewing high risk properties; doing pre-inspections, redefining structural damage, etc. The problems with sinkholes is being driven by Citizens losses; which is the "state" insurer. It doesn't engage in lobbying per se. Even the Consumer Advocates Office is publicly involved due to Citizens losses. In a televised Citizens rate hearing a few weeks back he said it was so bad that the 10% cap on Citizens rates shouldn't apply to "sinkholes". Yes, it's true, carriers are complaining and lobbying, but...their lobbying is credible to even the most cynical lawmaker because the state insurance consumer advocate and commissioner are concerned by what sinkholes are doing to the STATE INSURER. This is also driving the insurance commissioner's comments in WSJ and his recent data call. My two cents.
I have been an adjuster for 37 years in Florida, 27 as a public adjuster. This State over this period has had up to the recent great recession, phenomenal growth with whole communities seemingly coming out of the ground over night in sinkhole-prone areas. These new communities are all using water from our aquifer on a normal day and pumping it out during our winter freezes to save crops. No surprise we have sinkholes given this unchecked and often very lackadaisical growth management. What I am surprised at is the lack of reporting on fraud on the part of some insurance companies who deny sinkhole claims to their insured’s and then reverse course when the policyholder seeks professional help. I have never figured out (nor do I want to) how to start a sinkhole. Maybe the moral high road would be to require a bold print warning in all real estate contracts notifying a prospective new homeowner about sinkholes and the lack of coverage should it be reduced further or taken out by insurance companies. The future homeowner needs to know that you may have cracks in your walls, doors and windows that do not work or close drywall that separates and other structural damage all of which is just part of the Florida experience.
Also, isn’t it just possible that insured’s are becoming more aware of possible signs of sinkhole damage because they are being better educated on what to look for? Just because claim levels have been low in the past, does it mean that sinkholes are not there? This is no different than women being more aggressive about breast cancer prevention or men about prostate screening. As more people become educated about screening and the technology to identify these conditions, the more cases are detected and the better prevention against conditions that can cost much more to treat if caught at later stages. And in the case where there are visible signs of a sinkhole, shouldn’t insured’s have the right to investigate it in order to ward off even worse damage?
i'm not sure I agree that "whac a mole" was quite fair.. but that's just me.
Interesting article, It still is surprising how they can keep talking about the increase in Public Adjusters, there is a reason for that, it's the demand for Public Adjusters. They never mention the amount of insurance adjusters, or the amount of insurance agents selling these coverages. If the carrier is going to sell billions of dollars in coverage they damn sure better be able to back it up !!
Keep up the good work!
Leave it to Dick Tutwiler to bring EVERYTHING into perspective.
Preventive measures being taken so that people are aware of what they are getting into B4 they move into their home - it should be disclosed if it's a sinkhole prone area. Geez, at the rate we're going, I'm concerned the entire State of Fla is going to become a SINKHOLE!
SHIRLEY HEFLIN