Predictions and Questions Regarding Insurance as a Result of Elections in Texas and Florida
The recent election results clearly showed that people were upset with those running government—especially those in the Democratic camp.
Yesterday’s post, Texas Voters Favor Homeowners Insurance Reform, by Sergio Leal, clearly indicates that people are afraid of not having full and prompt benefits paid after they have a loss. Two major points struck a cord:
- 77% of those polled felt that consumers should be given stronger legal remedies and enhanced damages and sanctions if insurance companies unfairly deny, delay, or underpay legitimate claims.
- 85% of those polled thought that insurance companies should be required to offer a few standard policies written in plain language that would be consistent across the industry.
These two points are related. Policies need to be written to cover losses. The trend has been towards less coverage through small but significant changes in the wording of property insurance policies. This needs to stop because it is not helpful to have prompt and full payment of benefits from an illusory policy that covers very little.
People and businesses are in fear after a loss. The insurance company is often in total control and determines the destiny of policyholders after a loss. A claims culture that is truly as prompt as possible with an attitude of payment and looking for ways to provide the benefits contemplated under the contract is no longer the norm in the industry. I noted that even a major insurer agrees with this proposition in Chubb Calls Competitors Cheap And Unfair.
I predict that the Florida legislature is going to tackle various issues of insurance claim dispute through appraisal. I noted in yesterday's blog that newly elected House Representative Frank Artiles and I share different views on appraisal. Frank has indicated that he will sponsor legislation calling for the licensure of appraisers and umpires. As far as I know Florida would be the only state in the union with such requirements.
The insurance industry is upset that many public adjusters can appoint themselves as appraisers or have appraisers retained on a contingent basis. They also claim that many appraisals are requested without much, if any, adjustment.
Florida seems unique to a system that allows an appraiser to obtain a percentage of the recovery because most Courts in other jurisdictions find that having a percentage interest in the award will make the appraiser biased or interested in the amount rather than coming to an honest conclusion.
Either through regulation or legislation, public adjuster advertising and solicitation will surely be raised. The "investigation" by the Office of Insurance Regulation into sinkhole losses closely monitored cases involving public adjusters because the insurance industry has been adamant about seeking methods to prevent policyholders from engaging public adjusters after a loss. There is a goal by the insurance industry to obtain legislation or regulation thwarting the time, place and method of how public adjusters can solicit.
The Florida Office of Insurance Regulation may become the Office of Insurance Non-Regulation. Legislation along these lines failed last year only because Governor Crist vetoed the legislation. Newly elected Governor Rick Scott ran a non-regulated medical insurance company. He knows it is a lot easier to make money as an insurer if rates are not regulated and there are few consumer protections afforded after bills are submitted for payment. I wouldn't expect any insurance industry vetoes by this governor.
Citizens Property Insurance Corporation may come under attack. Its rates are too low for many private insurers to stomach. Its claims handling has taken a very strong turn for the worse over the past six months. My impression from discussions with those representing policyholders is that Citizens' senior claims officials seem to relish that Citizens has no accountability for courteous and fair treatment to its customers. Since Citizens claims it is not subject to laws requiring good faith, this conduct is not a surprise. I expect a number of the newly elected legislators to conduct public hearings on the recurrent complaints of claims handling by Citizens.
Finally, a number of these matters could be raised and voted on in the legislature with little debate. Special sessions are being planned as this is being written. Charlie Crist will soon be out of power and last year's proposed laws that were vetoed may escape full consideration by the newly elected.
Alex Sink's loss is a huge loss for Floridians in relation to the complex and serious insurance issues that have been in play in the Sunshine State over the past 10 years. My general impression is that McCarty and his FLOIR staff have worked their tails off, been courageous (not perfect) but very pro-active in trying to stablize the P/C marketplace, regulate rates and protect consumers. Setting up public hurricane modeling, mandating mitigation discounts, standing up to State Farm -- all that important hard work that's been done.
It's frightening to think what lies ahead.
Dear Chip,
I would like to thank you once again for another great entry to your blog.
As a public adjuster, I find it impossible to settle or negotiate a claim with any insurance company for the last year or so. I will admit that i have invoked appraisal, perhaps prematurely; only because the insurance company does not care to acknowledge a public adjuster is assigned to their file.
How many times have I gone to a loss and been told by the field adjuster that they are not there to determine coverage or negotiate a claim. Trying to get in touch with a claims examiner is a complete waste of time. In reality, a majority of the desktop adjusters are not qualified to hold the poisitions they have.
I have encountered this problem with Citizens Property. If you happen to get past their call center, which will not transfer your call unless they have your Letter of Representation and Contract on file(which they never seem to have in their system) they refuse to transfer you to the claims examiner.
Just this week, a Citizens claim examiner reviewed a loss, dropped a check and did not acknowledge the estimate we faxed in. So i invoked appraisal. Within 24 hours, a claims examiner is calling to discuss a settlement. This is how it has been for the last year. Complete disregard for the policyholder. I do not change my fee if i invoke appraisal. For me, it has become an additional step I must take in order to get my client paid.
I do not belong to any of the associations so I try to keep my eyes and ears open and learn as much as i can from blogs like these. Each time a company decides to change their claims handling procedures, I adjust and change the way I handle mine. Its a matter of survival. I have been a Public Adjuster for the last 12 year and love what I do.
I would appreciate any feedback from other Public Adjusters facing the same dilemma.
Thanks for the heads up on Frank Artilles. I believe the majority of the Inurance company lobbyist's and representatives are very conservative. I know Frank is a tough guy and he believes in standing up for the little guy, but if what you say is true, Frank may need to be reminded that Conservatives stand for less regulation and less government interference in the every day operations of business. The licensing of appraisers and umpires is counter to true conservative principals. My fellow conservatives need to be reminded of this.
I would love to see less regulation of Insurance rates (let the market place set the rates) and move to a better review process for the policies that are allowed to be written in the P&C business. Our current system is dysfunctional as rate regulation only creates an artificial price and carriers circumvent the rate review process by simply changing their policies.
Let's shine the light of day on the Insurance market and I believe the consumers will benefit dramatically.
Amy is right. It's scary. There is little to stop the legislative leadership from any plan it chooses. However, there are a couple issues that may give legislators pause: massive rate increases aren't popular, and legislators are going to want to raise a lot of money from insurance companies before taking any action. Those items will tend to slow things down.
FCAN is concerned about the Insurance Consumer Advocate office, which will now be under new CFO Jeff Atwater. Atwater may be less extreme than some in the legislature, but it is going to be a big change. FCAN urges Atwater to empower the consumer advocate and allow them to do their job. Of course, the best remedy would be an independent consumer advocate.
The Republicans have been in control for 12 years in Tallahassee, so maybe it is not such a huge change. What has changed is that the legislature can do whatever it wishes. There are still a few moderate voices left in the Senate, and they will be sought out by everyone who disagrees with Haridopolous and friends.
Kevin McCarty is bound to be on thin ice. His election as president of the NAIC may help him retain his position here, but his relationship to Atwater is more important. Atwater and McCarty worked together on 2860 in 2008, a bill strongly opposed by the Florida Insurance Council and Chamber of Commerce. Those interests may doom McCarty even if Atwater supports him. McCarty was seen by some as working with Gov Crist, although others thought that was only a temporary alliance. McCarty and Crist are convenient scapegoats for any problems in the Florida market, but their detractors must put forward another plan, and the voters will render a verdict in short order.