Public Adjusters are Restrained From Citizens Claims Work
The most significant legislation involving Florida public adjusters is the limitation of fee compensation in Citizens claims. As quoted from Florida Legislative Update for Public Adjusters,
For any claim filed under any policy of Citizens, a public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value greater than 10% of the additional amount actually paid over the amount that was originally offered by the corporation for any one claim.
A number of public adjusters have called and written about this, some in disbelief. In response, this is the actual wording in the new law:
6. For any claim filed under any policy of the corporation, a public
adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value greater than 10 percent of the additional amount actually paid over the amount that was originally offered by the corporation for any one claim.
A past President of the Florida Association of Public Insurance Adjusters (FAPIA), Randy Paul, believed that the wording was made to prevent more than ten percent of any re-opened or supplemental claim from being charged because twenty percent is allowed in other parts of the legislation. This has some validity, as I noted:
Current law provides that a public adjuster may not charge more than 10% of the amount of insurance claim payments made for claims based on an event that is the subject of a declaration of emergency by the Governor. The 10% limitation applies to claims made up to 1 year after the declaration. This law is amended to provide that after the 1 year period, the public adjuster fee limitation is 20% of the amount of insurance claim payments.
Unfortunately, though, the law was not written to apply only to re-opened or supplemental claims. The new statute says "any claim."
"The amount that was originally offered" is vague. What constitutes the amount "originally offered?" In third party scenarios, adjusters "offer" an amount to settle and get a release. In first party claims practice, insurance companies pay undisputed amounts of money as determined. An offer should only be made if there is a bona fide dispute.
Does the limitation to ten percent also include the costs of a public adjuster? Does the broad language include phrases such as "other thing of value?" Experts are often retained by public adjusters with approval of their clients to help analyze a loss. It’s not clear whether the ten percent limits the fee or includes these costs.
It is hard to see how any qualified public adjuster can make a profit when a ten percent cap is applied to monies obtained after Citizens, in good faith, fully pays a loss as its original offer. Of course, whether Citizens Property Insurance Corporation will act in "good faith" is another issue. I have heard dozens of Citizens stories in the last 48 hours and plan to share those with others in the future.
Still, the law is an unreasonable restraint of trade as written, and it will be challenged in court. It will be a topic at the next legislative session. The law is not good policy because it prevents policyholders from retaining professional services who will help them obtain the full benefits to which they are entitled. Why do our legislators want to prevent their constituents from receiving help in the wake of a disaster?
Our firm will continue to do everything we can to fight against and prevent these types of wrongs and injustice. We will never give in:
It would really be helpful to clarify this wording. As a public adjuster, do we have to charge 10 Percent on a new claim filed with Citizens or is this limited to supplemental and reopenings only?
Can I charge 20% on a new claim where the insured has contacted me to represent them but has yet to notify the carrier because they were unsure of coverage?
Until this is clarified, I feel reluctant to send in my contract in fear of getting in trouble. Please elaborate on this topic.
I still don't know what to charge on Citizens claims. Can I charge 20 on a new loss or am I capped at 10%? The way this law reads is very ambiguous. The way things are now, I don't want to send in my contract and get fined for this ridiculously written law.
I would like to know if the change is going to be retroactive. I have several claims with Citizens and some of the examiners have stated they feel this will be retroactive.
Some light should be shed on this issue.
Chip, we are still hoping that you could tell us if the 10% percent cap is on ALL Citizens claim or just reopened losses? Your blog is not really clear.
Any also, can you please let us know if this will apply to the current claims we have open in where we are charging 20% but have yet to resolve?
We are really waiting for your word on this.
I noted after reviewing the new leslislation, unless I misread it, there were different effective dates for the same changes.
It would appear from applying the earliest effective date that the changes regarding Citizens percentages immediate.
The changes regarding all named insured's signing and the changes in cancellation of the PA contract is effective June 1, 2011.
Am I reading this correctly?
Thanks,
Gene Angelotti