Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

As explained by Chip Merlin in his post, Adjusters Have Codes of Ethics: Florida's Are Significant and Need to Be Enforced,

These rules were made to protect the public and consumers of insurance:

Code of Ethics. The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster's own interests in every instance.

FAPIA, the Florida Association of Public Insurance Adjusters, requires it members to follow both the Adjuster Code and the FAPIA Code of Ethics. FAPIA also has a committee devoted to enforcing its high standard of ethics. The Florida Department of Financial Services looks to FAPIA and its Ethics Committee for responses on ethical issues relating to public adjusters statewide.

Harvey Wolfman, of The BCH Group, is the current chair of the FAPIA ethics committee. Mr. Wolfman is proud of the work of the committee. As it stands, FAPIA is the largest trade organization of public insurance adjusters in the nation and other public adjuster associations have modeled their groups after FAPIA.

Mr. Wolfman, along with the FAPIA board, recently invited Gary Rowland of AAA Claims Consultants Inc., to join the Ethics Committee. I had the opportunity to spend some time with Gary at the summer conference, and I learned more about Gary and his passion for helping policyholders in Florida.

Gary said that both his past experience working as a contractor and the guidance and principles from his late father have shaped his approach to helping policyholders with insurance claims.

After working more than three decades as a contractor, Gary left Atlanta and began preparing damage estimates after the 2005 storm season. It took only six weeks in Florida for Gary to see that he could use his skills here to truly help homeowners and business owners get their property back to normal. Gary studied to become a public insurance adjuster and put his construction knowledge to work for the benefit of Florida insureds with United States Public Adjusters in Hollywood, Florida.

They trained me in the proper ways to handle a claim, adjust a loss, and work with the insurer’s representative to get my clients their full benefits

When you meet Gary, you can tell right away that he has a love and passion for explaining to others how to fix a problem based on construction principles. When in Atlanta, Gary was the contractor on many renovation projects, including restoring or upgrading some of Georgia’s historical properties. Gary is well respected, and was published in the Journal of Light Construction in 1995.

Gary often focuses on explaining how renovation construction is different from a new construction project. Renovations involve repairs and replacements within an existing framework. Gary uses his background in renovations and restorations when he adjusts claims for Florida policyholders.

In 2008, Gary moved to Tampa and started AAA Claims Consultants. I asked Gary about this business now.

Starting any business from the ground up is difficult, yet basic rules remain. Be true to your client, be vigilant in getting the facts, study to know the ever changing rules, remain calm and be polite to all you meet.

My work is secure, in that we will always be the consumer’s guardian for fair treatment in claims. I know even with all our trials and tribulation in this industry, we are the voice of reason in a world filled with the mantra of business interests. It should be our goal to always have our client’s best interests as our focus and safeguard them from pitfalls that could jeopardize their claim.

I am honored to be in a profession that by its very nature throws a safety net around the consumers we represent. I have heard our job is like herding cats. Yet, in a world gone mad, we must continue to be the consumer’s best weapon.

Whether you are a public adjuster or an adjuster working for insurance companies, a best practice for adjusting claims in Florida is to print the adjuster Code of Ethics, study it, and keep a copy in your briefcase for guidance and reference.

At exhibit number 256, Radcliff handed the public adjuster a document that listed the following:

The minimum requirements of a well documented public adjuster claims file will include:

1. Contact Information

2. Retention Contract

3. Insurance Policy

4. Summary of Coverage and Limits

5. Time Deadlines—Proof, Replacement Cost, Statute of Limitations

6. Diary

7. Communications

8. Causation Proof

9. Damage Proof

10. Checklist of Post Loss Requirements

11. Claim Costs—listed and copies of invoices.

12. Insurance Company Causation and Damage Proofs

13. Claims Payments—listed and copied.

14. Closing Statements or Public Adjuster Invoices for Services

That is exactly what I wrote in the paper, Public Adjuster Best Claims Practices and the Claims File, published in Saturday's post Public Adjuster Claims Handling Best Practices.

For all my public adjuster friends, it appears that the insurance industry may consider what I wrote authoritative enough to be a claims handling standard. While most public adjusters have files that adhere to most of these "minimum requirements," I am certain many public adjusters fail to maintain all of them. For example, some public adjusters have privately argued with me regarding the need to keep diaries of activities and communications.

The Florida Association of Public Insurance Adjusters has already asked for permission to use my paper in its orientation class required for all new members. Since I think these standards help policyholders obtain full, fair and prompt recoveries, I will promote them and provide additional details of each aspect in the future.

The hard work David Beasley provided to FAPIA has made a definite impact on the association and FAPIA’s conferences. During Beasley’s time as president, members received monthly updates about the work of FAPIA and news updates on topics affecting Florida insureds. Beasley worked closely with FAPIA’s public relations firm to increase public awareness of public adjusters, challenge unsupported negative remarks about the public adjusting industry and promote consumer rights.

Beasley also spearheaded a new sponsorship program to ensure FAPIA’s ability to continue its fight for the rights of consumers who want to hire public adjusters. He changed the educational structure of the association by hiring Florida Career Development, Inc., which successfully secured continuing education credits for public adjusters and continuing legal education credits for associate members who are attorneys. Beasley was also instrumental in bringing FAPIA and NAPIA together so that both associations work as a team in Tallahassee to best serve the public adjusting industry and consumers. This partnership has been very successful.

Beasley joined FAPIA in 2001 and has been a board member for the past seven years. He credits positive changes within the association to the hard work of the board and the close relationships of past presidents.

Long before becoming the president of FAPIA and before he became a public insurance adjuster, David Beasley worked as independent adjuster and then as a large loss residential and commercial adjuster for Nationwide.

I enjoy helping people in need. There is no greater satisfaction than when an insured gives you a big hug and thank you for assisting them put their family’s life back together after suffering a substantial loss.

As time passed, Nationwide began to make changes that caused Beasley to question his role in the process. In November 2001, Beasley decided that he no longer felt comfortable working for Nationwide and joined a public adjusting company. Beasley stated:

This was the right decision, now I can truly help people without any of the insurance company restrictions or interference. The first month or so was a big eye opener as a public adjuster. As I would meet policyholders, I could not believe how their claims were under paid or denied when there was no question that the damages were covered. My jaw kept dropping when I would witness these injustices. I would like to thank Ron Livingstone for giving me the opportunity and training which has helped me become the Public Adjuster I am today! Thanks Ron!

Since becoming a public adjuster, Beasley feels like he is making a difference and oftentimes helps people who can’t help themselves. It is not uncommon for Beasley to take a case pro bono if the insured is in need.

I have a soft spot for the elderly and the disadvantaged. I truly enjoy helping people. Insurance policies provide insurance benefits to the insureds, but insurance companies are making it increasingly difficult for policyholders to get a fair settlement.

Beasley is not only a veteran adjuster, he is also a Windstorm Insurance Network® Certified Umpire with advanced training and frequently acts as an umpire or appraiser evaluating insurance claims.

Beasley has also been called to testify as an expert on bad faith regarding the standards that should be followed during a claims investigation. He and the other members of FAPIA have pledged to follow a code of ethics that goes beyond what the Florida Statutes require; this voluntary association holds its members to a higher standard.

 

• Conduct themselves in a spirit of fairness and Justice to their Clients, the Insuring Industry, and the Insuring Public, as to command the respect and confidence of All.

• Solicitation of business will be conducted on the highest level of Propriety and Professionalism.

• Institute a rate of commission that is fair and equitable and strictly in accordance with laws of Florida and the rule of the Department of Insurance.

• Presentation of all facts will be represented to the Insuring Public and the Insurance Industry with undisputed clarity.

• Observe the rules of licensure set by the Department of Insurance and Peruse the laws of State of Florida without deviation.

• Follow a standard of education that assures the proper fitting, of knowledge and experience, for the adjusting process assumed.

• Shall never disseminate any form of agreement, advertising, or printed matter, which might subject public adjusting and Public Adjusters to criticism or disrespect.

• Will always protect the rights of the insuring public and assure professionalism within the membership of Florida Association of Public Insurance Adjusters

1. Members shall conduct themselves in a spirit of fairness & justice to their clients, the insurance companies and the public.
2. Members shall refrain from improper solicitation.
3. No misrepresentation of any kind shall be made to an insured or to the insurance companies.
4. Commission rates shall be fair and equitable and strictly in accordance with the prevailing laws or regulations of FDFS.
5. Members shall conduct themselves so as to command respect and confidence. They shall work in harmony with one another, with their clients and the insurance company representatives, so as to foster a cordial and harmonious relationship with all branches of insurance business, and work with the general public.
6. Members must be fitted, by the knowledge and experience, for the work they undertake. They must not endanger the interests of the public adjusting profession, or risk injustice to insureds or to the insurance companies by attempting to handle losses or claims for which they are not qualified, and for which they cannot find competent technical assistance.
7. Members shall not engage in the unauthorized practice of law.
8. Members shall not acquire any interest in salvaged property or participate in any way, directly or indirectly, in the reconstruction, repair, or restoration of damaged property, except with the knowledge, consent and permission of the Insured.
9. Members shall be cooperative and assist one another in every possible way.
10. Members shall not disseminate or use any form of agreement, advertising, or any printed matter that is harmful to the profession of public adjusting, or which does not comply with the rules and regulations of the Florida Insurance Department, or which might subject public adjusting and public adjusters to criticism or disrespect.

As President of FAPIA, Beasley volunteered much of his business time making sure public adjuster and policyholder interests are front and center. Much of that time was spent fighting laws which restrict consumers from public adjuster representation; laws that harm policyholders and violate their rights to fair representation. Beasley’s hard work and dedication to FAPIA should be recognized and appreciated. He can be reached at 321-277-1784 or via email at dbeasleyfl@gmail.com

If you are interested in becoming a member of FAPIA, please contact the organization directly at their website or by calling 407-830-4892.

At the Florida Association of Public Insurance Adjusters Annual Convention, I recently gave a speech, Ethical Requirements of Public Adjusters and What Experienced Public Adjusters Should Have Included in Their Claim File. A paper I delivered as part of that speech, Public Adjuster Best Claims Practices and the Claims File, is available here. I noted the disparity between the vast sums of literature on this topic for insurance company and independent adjusters and that available for public adjusters:

Claims handling “best practices” are routinely mentioned when discussing claims handling by insurance company adjusters. The discussion and analysis of what constitutes a claims handling “best practice” for a public insurance adjuster is not in current literature. This paper is a beginning of that analysis and focuses on claims file content and organization for public insurance adjusters.

There is no complete or definitive source for property insurance claim handling “best practices.” I read hundreds of insurance company and independent adjuster claims manuals, training classes, operation guides and claims handling requirements. While the insurance defense attorneys and insurers argue their claims handling "best practices" are "trade secrets," they are substantially similar. Most would agree that any first party property insurance claims handling "best practices" would include the following:

1. They are in accord with mandated laws and regulations.
2. Timeliness is paramount. Communications must be acknowledged within mandated time frames.
3. Thorough and timely investigation of coverage and evaluation of damages are accomplished.
4. Claims are settled. A "good faith" effort is made to resolve the claim.
5. Honest and transparent communications (not misleading) are required.
6. Written procedures are adopted and updated.

Many in the insurance industry routinely teach that point number five should not be documented in the claims file. We have uncovered training seminars, sometimes taught by insurance company lawyers, indicating that only a sanitized version of facts and motives for claims activity should be placed in the claims file. According to these training materials, a sanitized claims file should protect the insurer from the consequences of its improper conduct. They essentially instruct adjusters to be dishonest in the written diary activities and communications. Dishonesty is never ethical.

On the other hand, at least there are written standards and procedures that are available for insurance company and independent adjusters to follow. There is a dearth of written claims handling standards for public adjusters. This needs to change. As I indicated in the paper, written standards are warranted as part of our ethical obligations to ensure that policyholders are treated fairly:

It is incredibly important for a public adjuster to understand ethical issues that can arise in presenting claims. In order to ethically represent policyholders when they are at their most vulnerable it is important for a public adjuster to appreciate and abide by the ethical rules and obligations under Florida Law. The ethical representation of policyholders is the foundation upon which the system of insurance is designed to operate. Without the system's ethical foundation it cannot achieve its purpose to protect the policyholder.

That morning, he was worried and upset. He asked if I could do something to help public adjusting in Florida, where a representative from Florida's Department of Insurance indicated that public adjusting may be banned.

Ray ushered me into a meeting with a number of NAPIA's Board of Directors. Apparently, a few non-member public adjusters, primarily from New York, had been arrested and were accused of staging additional damage to property damaged by Hurricane Andrew. This activity was wrong and criminal. It was done by a few bad apples, and we all know how that lyric plays out.

Following the meeting, I called a number of public adjusters who resided in Florida. We needed to organize. While there are hundreds of public adjusters in Florida today, the list of Florida resident public adjusters in late 1992 could not have been more than a hundred.

Doug Grose called and asked if he could help form the organization. With approval from Ray Altieri and Steve Lesser, we selected the name. Using NAPIA as a base, we named the organization the Florida Association of Public Insurance Adjusters (FAPIA). Doug Grose filed the corporate papers. A graphic artist in my firm, Carol Bowels, designed the logo used at the first meeting in Orlando, 1993.

I felt that FAPIA needed passionate and honest leadership. From dealings with Ray and those with Adjusters International, I knew Ray Altieri was honest, sincere and wanted to make public adjusting a life's work that would make his wife and children proud. He was the obvious choice for FAPIA's first President.

Steve Lesser and his family were paramount pioneers of public adjusting in Florida. There were other public adjusters considered as FAPIA's First Vice President, especially Dick Tutwiler, who had integrity and character. But, because Ray Altieri and Steve Lesser were such good friends and Steve was from Miami, most felt Steve Lesser should take that position.

Last Friday night, Doug Grose, Steve Lesser and I were at NAPIA's installation banquet. We were overjoyed as Ray Altieri was inducted into office as President.

Ray Altieri is passionately proud of what he does and bitterly hates anything that tarnishes the reputation of public adjusting. In his world, the pride of a job done to the best of an adjuster’s talent is what matters. He loves stories of public adjusters helping policyholders. His purpose is to serve policyholders, not to make as much money as possible. He loathes those who adjust unscrupulously, and his sharp Italian tongue lets others know exactly where they stand.

NAPIA has selected a leader it can be proud of. Role models are important in all professions. Like Dick Tutwiler and Steve Lesser, Ray Altieri is a role model for public adjusters throughout the country. I am happy for him and proud to be his friend.

I replied:

You asked three questions, not one.

Here are the answers:

1. Nothing.
2. Yes.
3. I cannot tell you because of attorney client confidentiality. However, many public adjusting firms are losing money and policyholders are as well because of this legislation. I expect there will be many challenges to this aspect of the law.

Finally, all public adjusters should go to the FAPIA annual convention this summer. This will be a major topic of conversation and united opposition is needed. (emphasis added)

There has been far too much bellyaching about FAPIA by public adjusters--- members and non-members. Not all the criticism is unwarranted. I know those toiling in FAPIA’s leadership have an impossible task because people have significantly different opinions about ethics and what “good policy” should be reflected in law and insurance regulation.

While thinking about the problems we face, I instantly thought of Franklin’s quote above. Many speak and complain but give little time or money to fight the good fight. They are foolishly undermining the “good” and inviting the “bad” to make some “ugly” legislation which will negatively impact everybody.

In Florida Association of Public Insurance Adjusters Urges Policyholders to be Prepared for Hurricane Season 2011, Nicole Vinson briefly wrote about FAPIA and the upcoming Convention July 7-9, in Ft. Lauderdale. She provided the registration form. FAPIA has further information available here.

I urge all public adjusters to join FAPIA and constructively become involved with raising the standards and competency of public adjusting. Another of Benjamin Franklin’s famous statements, made at the time of signing the Declaration of Independence, inspired me to emphasize this point:

“We must all hang together, or assuredly we shall all hang separately.”

The Florida Association of Public Insurance Adjusters, commonly called FAPIA, has been an active organization of public adjusters helping policyholders in Florida with insurance claims since 1993. I wrote about the history of FAPIA in my prior post, The FAPIA website lists the contact information for its members and its directory can be searched by name or by zip code. FAPIA consists of nearly 500 members and associate members who have joined together to protect the interests of insured homeowners and businesses that suffer an insurance loss. Where company and independent adjusters represent the insurance companies, public adjusters represent the insured. The association is based in Maitland, and its members are located everywhere from the Panhandle to the Keys.

David Beasley is the current FAPIA president. Before becoming a public insurance adjuster, Mr. Beasley worked as a large loss adjuster for a very well known insurance giant. David Beasley and FAPIA remind policyholders to secure their property and check their policies of insurance.

Once basic supplies are secured and stored for the storm, begin a review of your insurance coverage. Does it cover flood or wind damage? Does it take into account current market value to rebuild your home or business? What is required of you under "Duties After Loss"? Failure to follow the provisions here could result in non-payment on your legitimate claim.

Carefully review the "Exclusions" portion of your windstorm policy. Some insurance companies have added new exclusions to coverage, which could affect your protection against property damage.

Now is the time to locate your policy, review the provisions, and ask questions.

Now is also a good time to take pictures. Many times, people photograph the damage after the storm, but photographs and video should also be taken before a storm starts brewing. Videos and photos complete with dates and descriptions are a great way to show an insurance company the condition of your property before a loss. These photos also become very valuable when trying to make a list of damaged property after a loss. Be sure to keep this information in several places or in a format that isn’t easily destroyed.

FAPIA’s website offers more tips to help prepare for a storm, suggesting stockpiling two weeks worth of necessary supplies, making a written hurricane plan for whole family, and making a few copies of your insurance policies before and storing them in more than one safe place.

FAPIA members follow the same statutory and ethical requirements imposed on all public adjusters licensed in Florida, but members have also elected to follow FAPIA’S Code of Ethics. The Code emphasizes professionalism and education. Each year, FAPIA holds two conferences with numerous educational courses for public adjusters.

Merlin Law Group has been invited by FAPIA to present at the next conference, in Fort Lauderdale, July 7-9.

Chip Merlin,  Doug Grose and David Pettinato will be presenting "What Experienced and Advanced Public Adjusters Should Have Included in their Claims File” -- Reaching the level of excellence through best practice methods of claim file documentation.

Javier Delgado and I will be presenting “Case Law Update” -- An overview of current case law that affects property insurance claim settlements –from the daily claim to those pertaining to windstorm claims.

For more information on how to attend the conference as a member or non-member, click here.

The financial statistics, if accurate, show the reason for my pessimism. Despite my belief that much of the report is propaganda without policyholder input, the statistics demonstrate that something has to be done because insuring this peril because it is not financially sustainable. For example, for Citizens Property Insurance Corporation during the years 2005 through 2009, the sinkhole peril had a premium earned of approximately $211 million. The reported indemnity paid for that period was approximately $442 million. That is a huge loss for a peril that happens on a repetitive basis.

The results are a little skewed because the Florida legislature, wrongly in my opinion and as demonstrated by the statistics, allowed Floridians to opt out of sinkhole coverage or purchase inferior coverage. There are fewer risks in the pool in the years the losses were incurred because many simply opted out. The population left is more prone to sinkhole loss and fewer premium dollars are earned before losses are incurred. Yet, this is trivial compared to the large underwriting loss for the sinkhole peril. If anybody else views the statistics in a light much more favorable to the policyholder, let me know because that is extraordinarily important.

One solution may be to require Citizens Property Insurance Corporation to write the sinkhole peril to an actuarially sound sinkhole rate—so it would have a chance to break even. This one change may allow other private insurers to compete with Citizens, if they desire, without having to worry about doing away with the rate regulation laws or other changes. There will be a huge uproar because the rates will go up a lot---but that might be a fair scenario for the risky population Citizens is forced to write because our regulators have allowed private insurers a form of geographic sinkhole redlining for the last decade. Citizens Property Insurance Corporation has the worst sinkhole prone structures because Florida allowed private insurers to leave those geographic markets.

The report explains that Citizens’ sinkhole operating loss will continue unless Florida law changes and that the losses are caused by Citizens having more policies in the worst sinkhole prone areas:

The actual premium that Citizens charges its policyholders, however, is only a small part of Citizens’ actual sinkhole costs. This deficiency in premiums is worsening because Florida law prohibits Citizens from increasing the rate of any policyholder by more than approximately 10 percent, even as losses continue to rise at a much faster pace. Thus, Citizens’ already deficient sinkhole premiums will fall even further behind its sinkhole losses. As a result, Citizens’ surplus continues to be eroded by the deficiency in sinkhole premiums. The deficiency in Citizens’ sinkhole premiums can be seen graphically on the following pages. Each of the four graphs displays the difference between the average pure premium (average loss per policyholder) for a defined geographic region and the actual premium that Citizens is allowed to collect in that region.

David Beasley, President of the Florida Association of Public Insurance Adjusters, also indicated the interim report was not hopeful or helpful to Florida's policyholders in Adjusters: Legislative Proposals on Sinkhole Insurance Harm Homeowners:

Proposed legislative changes in sinkhole insurance regulations would undermine consumers and unfairly benefit the industry, an adjusters' group charged Tuesday.

"While the recommendations for changes in the Florida Building Code have merit, the report as a whole lends great weight to insurance company interests at the expense of Florida homeowners," said David Beasley, president of the Florida Association of Public Insurance Adjusters.

Beasley said the call for a single-peril repair program includes "onerous conditions" that would force consumers who dispute a claim to do so with no representation by public adjusters or attorneys sworn to protect their interests.

"Further, the concept that insured consumers must put all claim payments toward repairs flies in the face of established precedent, and would require many homeowners to remain in homes that even after repairs would have drastically lower property values," Beasley contended.

"This new requirement, not found with water, fire or windstorm losses, would have a drastic impact on individual property rights," Beasley said of the staff recommendations by the Senate Committee on Banking and Insurance.

Beasley said the staff report "appears to be based heavily on unproven allegations by some insurers that the increase in sinkhole claims is somehow fraudulent."

But a November report by the Office of Insurance Regulation actually found a drastic decrease in claims reported for investigation, and the staff report acknowledged that neutral evaluators confirmed sinkhole losses in a majority of completed cases.

"It is our hope that the Florida Legislature puts consumer interests first when considering any future changes in sinkhole coverage. Putting the interests of insurance companies ahead of those of the Florida residents they are supposed to protect is unconscionable," Beasley said. (emphasis added)

In State Panel Makes Sinkhole Recommendations, the Miami Herald listed a good summary of the recommendations:

Among the committee's proposals for lawmakers to consider this spring:

• Create a state-run sinkhole repair program. Instead of homeowners getting checks based on their insurance claims, their houses would be fixed. Insurance companies have said many homeowners who file sinkhole claims do not use the money to fix their houses.

• Define what kind of damage sinkholes could cause. Most of the claims homeowners have filed aren't because a house was swallowed up by collapsing ground but for cracks in walls and other damage that is difficult to link directly to a sinkhole. The report also suggests limiting coverage to homes, leaving driveways, pools, decks and other structures without coverage.

• Require sinkhole claims to be filed within two or three years after damage surfaces.

• Allow insurance companies to not renew policies with sinkhole coverage or after paying a sinkhole claim.

• Revise the Florida Building Code to require soil testing and foundation construction that would reduce sinkhole-related damage to buildings.

• Cap fees for public adjusters who work with homeowners on insurance claims and make it an unfair and deceptive trade practice if public adjusters make misleading statements.

Many of these proposals are not new. Most of them were noted two years ago in Late Reported Claims, Public Adjuster Fee Caps, And Sinkhole Coverage, where I noted that legislation proposed the following:

1. Place a two year limitation to report a claim.
2. Cap public adjuster fees to 10% of paid amounts.
3. Eliminate mandated sinkhole coverage.

This is the same scenario today. Change is going to have to happen because the loss ratio cannot be sustained if Citizens Property Insurance Corporation or any entity is to keep most sinkhole prone policies. The insurance industry may be entitled to higher rates for this peril. My impression is that something has to give. The question is how draconian will the change be.

As I indicated in that two year old blog post, if you are a concerned person there is a suggested course of action:

The lesson is that people do make a difference in government. The system works best when people, and I mean folks, show up, write a letter, write an email, or send in a video. Even one person can make a point which can stop the "bad guys" from their agenda. I witnessed it first hand with this Task Force. Anybody who thinks that one person cannot make a difference is far too pessimistic about our democracy. The last thing the "sneaky bad guys" want is for their customers to participate in a process to show how very bad they are.

Members of our law firm will do what we can for policyholders. We will encourage and organize others to help our leaders be educated fairly about these important insurance issues. I suggest those interested in the sinkhole and other insurance related issues likely to be raised in the Florida legislature contact Sean Shaw in our Tampa office at 813-229-1000 or sshaw@merlinlawgroup.com.

Merlin Law Group will be presenting two courses at the January conference that should not be missed:

• Florida Case Law Update presented by Chip Merlin, Kelly Kubiak, and Shaun Marker
• The Sword and Shield of Ethical Public Adjusting presented by Doug Grose, Craig Kubiak, Michelle Claverol of Merlin Law Group with George Keys of Keys Claims Consultants, Inc. and Pat Cuccaro of Adjusters International.

There is still time to sign up and attend the conference; the deadline to register for FAPIA is December, 22, 2010.

If you are considering joining FAPIA, I encourage you to learn about the history of the organization.  Charter member and past president, Raymond A. Altieri, Jr., of Altieri Transco American Claims, has memorialized the history of FAPIA and explains how it all got started:

In December of 1992, NAPIA had moved its Mid-Year Convention to Miami in an effort to accommodate its members who were working in South Florida. The DOI’s Agency Director had come to the meeting as a guest speaker. He warned the entire organization of impending doom for public adjusting in Florida once the next Legislative session opened in a few short months. After this gentleman spoke, Ray Altieri’s partner (at the time) and long time public adjuster, Jerry Levin, of Utica, New York, came to him while he was talking with attorney, William “Chip” Merlin and suggested that we were going to need a state public adjusters association to fight this off. Immediately, they went to work. We contacted all of Florida’s PA’s and attorney Doug Grose. We set a meeting for all Florida Public Adjusters in Orlando.

FAPIA: The Inaugural Meeting

The inaugural meeting took place in February 1993 at the Marriott World Center in Orlando. At dinner the night before the meeting, Chip and Doug, as our legal advisors, proposed a slate of Officers, which was to be voted on the next day by the public adjusters who were in attendance. Raymond A. Altieri, Jr. of Tampa was nominated as the organization’s first President, Steven Lesser of Miami Beach as President–Elect, Stephen Sarasohn of Boca Raton as Vice President, Chuck Howarth of Tampa as Treasurer, and Allan Brodsky of Hollywood as Secretary. The Directors were James Toukatly of Orlando, Craig Tanner of Clearwater, Ron Livingstone of Orlando, and Ira Sarasohn of Boca Raton. Competing public adjusters began to work together for the common good. By the next morning the slate was voted on and accepted. As President, Ray used NAPIA as an organizational model and employed a similar system for FAPIA. It remains in place today. The Board of Directors went forward with three major themes:

• Prevent the extinction of Public Adjusting in Florida
• Uniting was mandatory for survival
• Inclusion of all licensed PA’s in FAPIA was a must to be successful

FAPIA Meets With The Department of Insurance

FAPIA was armed with one strategy. As coined by Chip Merlin, “We must approach on the side of Angels.” Testify from the perspective of what eliminating PA’s would mean to the public, not us! Many of the PA’s named above and others, testified in front of the General Counsel of the DOI on this very issue. We were successful! We were invited to participate in the writing of new legislation. They accepted our work almost verbatim. During this same period and in addition to fighting for our lives to do first party property work, we had to overcome a competing group of PA’s who formed FAPA (Florida Association of Public Adjusters). This group was trying to fight for the “right” to do liability and bodily injury adjusting as an alternative to attorneys! NO WAY!! We separated ourselves greatly from FAPA, we showed the DOI that we would support aggressive and responsible regulation as an industry, and most of all we gained credibility as a new organization with top management personnel at the DOI. WE WERE ALIVE!

FAPIA Moves Forward In It’s First Decade

Armed with newly earned credibility at the DOI, FAPIA flourished. New challenges came and went through sacrifice of time and money by many of the Charter Members. First name basis relationships were established with DOI Division Directors. New proposed Rules and Legislation came forward and the DOI actively sought our input and opinions. FAPIA’s language was inserted into new Bills involving PA’s. The Tallahassee Mid-Year Meeting tradition was established to coincide with the annual Legislative Session to keep us in front of Senators, Representatives, and the DOI. Negative legislation slowed for a period, which allowed FAPIA to turn inward.

By–Law Revisions were made in 2000 to help conform to organizational growth. An Officer’s Ladder was created to send experienced members to the Presidency. FAPIA enhanced its professionalism by developing a website and hiring an Administrator, a Lobbyist, and a CPA firm to assist the organization in its affairs. Through the personal sacrifices of some, our entire association benefits. FAPIA through the hard work of Charter Members and Past Presidents such as Mark Boardman, Kimberly Pope, and Dale McCrory continue to achieve results. Mark is responsible for spearheading FAPIA’s advancement of the industry’s professionalism through Continuing Education and political interaction. Kimberly works hard to obtain Continuing Education credits from the Department of Financial Services for FAPIA’s members. Dale McCrory has almost single-handedly been responsible for all arrangements surrounding our conventions since FAPIA’s inception.

FAPIA has also gained recognition beyond the DOI, as many of its members became members of the Windstorm Network with Dick Tutwiler becoming that organization’s President and Steve Lesser and Jim Toukatly voted to its Board of Directors. NAPIA also has repeatedly recognized FAPIA as the largest and best State public adjusting association in the country. For its efforts to further the cause of public adjusting FAPIA has also been rewarded through NAPIA, by it’s voting of Raymond A. Altieri, Jr. to its Officer’s Ladder, where he will become NAPIA’s President in 2011. FAPIA’s growth has been outstanding. Our first meetings would attract 20 to 30 PA’s. Today, at our meetings, we exceed 250 members. That’s a testimony to the hard work of all.

Look for my next post in this series of Public Adjusting Stories on January 1, 2011.

Mr. Grose received his Juris Doctorate from Florida State University College of Law and began his legal career as an Assistant State Attorney in Hillsborough County State Attorney’s Office in Tampa. After a few years as a general civil litigator, Mr. Grose turned his career into one of representing the policyholder throughout Florida and in various other states across the U.S. His last position before joining Merlin Law Group was with Childress Duffy Goldblatt, Ltd.

Along with William F. “Chip” Merlin, Jr., Mr. Grose was one of the “Founding Fathers” of FAPIA (Florida Association of Pubic Insurance Adjusters) and has been a presenter at many of the organization’s seminars over the years. He is also a proud member of the American Association for Justice, American Trial Lawyers Association and the Florida Justice Association.

“Merlin Law Group’s strong infrastructure directed by Chip Merlin and Mary Fortson will allow me to put my years of experience at use assisting insureds throughout Florida and around the country,” said Mr. Grose. “It is obvious that our united efforts will better serve policyholders and allow me to practice law at a very high level.”

"I have known Doug Grose for over twenty years. He is a great and passionate attorney---the type of person you want representing you because he cares so much, has the experience and carries the respect with adversaries that produce the results we want for our clients. I am truly humbled Doug has joined us,” said William F. “Chip” Merlin, Jr., president of Merlin Law Group. “Our attorneys are excited about the firm not only adding a colleague with extensive trial courtroom experience, but adding someone who is really enjoyable to practice law with. Doug is a great guy to be around professionally and personally.”

Mr. Merlin continued, “At our recent staff retreat, I commented on how much more Merlin Law Group can offer our clients as we share experiences and winning techniques. We want to make the experience with our law firm the best it can be for our clients and referral sources. People trust their most precious hopes with our firm. Having Doug Grose sharing his experiences, influences, and successes make our entire team better. His desire to switch to our firm is great news for our clients and our team. We have never had this depth of legal and trial experience as we do today."

Recently, I had the opportunity to discuss sinkhole losses with Tim. We discussed his practice and he shared interesting information about his public adjusting firm and about his background.

In 1979, when interest rates were on the rise, Tim Zeak left the real estate industry and became a public insurance adjuster in the great state of Indiana. He adjusted losses in Michigan and Indiana for over twenty years, and he has been a full-time public insurance adjuster for 32 years. Full-time for Tim was 7 days a week for many of those years.

I asked Tim if he could share information with the world about public adjusting, what would he say? He responded with a  question, “the insurance company will have their own adjuster at the loss, shouldn’t the policyholder have their own adjuster?” Point well taken.

Tim is a true pioneer public insurance adjuster and worked diligently in 1983 with the Insurance Commissioner in Indiana to revamp the state’s public adjusting statute after it was deemed unconstitutional by the Indiana Supreme Court.

Zeak moved to Florida in 2001, when Florida Public Adjusting was born. He recommends other Florida public adjusters take advantage of professional associations like FAPIA and the Windstorm Insurance Network. Zeak learned many of his best practices and earned his stripes on his own without the benefit of a strong network of public insurance adjusters. Similar to many other public insurance firms, Florida Public Adjusting is a family affair. Tim’s wife, Charlotte, and sister, Becky Davis, are integral in the business.

Zeak provided three tips for other public adjusters:

1. Communicate-- Call them before they call you. (This can apply to clients or other professionals you are dealing with on a claim)
2. Explain-- Explain to the client what to expect and explain to the insurance company your position.
3. Florida is an infinitely better state to be a public insurance adjuster because Florida’s bad faith statutes and attorney fee statute can help you get better results for your clients. In order for these statutes to help, however, your client needs to involve a qualified first-party insurance attorney early in the claim.

I found it interesting that the Wall Street Journal article gave the impression that public insurance adjusters were canvassing neighborhoods and prowling the streets with advertisements in search of sinkholes, however, Zeak estimates that 90% of his clients have found their way to Florida Public Adjusting because of a personal referral. The other clients usually find Zeak and his firm through his website. As mentioned in the Wall Street Journal article, Tim’s website provides extensive information about sinkholes and is a valuable asset for homeowners and business owners who have property that may be on unstable ground.

Clay Morrison is a public insurance adjuster who, in a former life, owned a restoration company. His largest customer was State Farm. Clay is now the president of Morrison & Morrison, Inc. His public adjusting office is based out of League City, Texas and similar, to many public adjusters, the business includes family—the “other” Morrison is Clay’s wife, Ruth, a Texas attorney and corporate counsel for the firm.

Morrison decided to become a public insurance adjuster when he was “urged” by one large insurance company to go against his ethical standards and change the way business was done. Morrison’s article, published in the NAPIA Summer Bulletin, details the closed door meeting he was invited into with an upper level claims manager who made a request for Morrison to help State Farm.

The request:

“We refer a lot of restoration business to you, and we need your help in rectifying the consumer’s entitlement mentality.”

Morrison declined State Farm’s request, but his very successful restoration business was quickly out of business.

Now, Morrison is a public insurance adjuster, member of the NAPIA board, Secretary of the Texas Association of Public Insurance Adjusters (TAPIA), FAPIA member, and a Windstorm Network certified umpire.

Morrison explains that even as a small operator of his own public adjusting firm, he found it very important and beneficial to be a member of professional educational programs. Morrison acknowledges the expense of being active in multiple associations, but explains his two reasons for going the extra mile and spending the extra dollar.

Number 1: “If you want to be successful in a field, you must associate yourself with people who are most successful in that field.”

Number 2: “If you endeavor to do something, you should strive to be the best.”

Two valuable points for all of us to consider as we enjoy this holiday weekend and our work.

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.

Johnson recently wrote a piece in the Florida Underwriter, Public Adjusters, Part 2, which I suggest every public adjuster should contemplate. The part I have considered and disagree, only in part, with is the following:

Your readers need to understand that their homeowners' insurance premium already includes payment for claim service and post-claim consultation and that hiring a public adjuster results in paying "again." After a claim, one of the first things a policyholder should do is call their insurance agent. Many are "independent" and, while appointed by carriers, they hold licenses, which include state-sanctioned authority to adjust claims and assist policyholders in receiving fair payment. Not only are they prohibited from charging additional sums for this service, their locally-owned business and livelihood is based on customer satisfaction.

I am pretty familiar with the adjuster and public adjuster licensing statutes. I have never heard an insurance agent claim he or she can legally do all the activities that constitute being an adjuster. If so, maybe that is an entirely new area of insurance agent errors and omissions I should investigate when things go wrong after a loss. I cannot find where a statute that gives a Florida insurance agent the legal right to act as an adjuster. While they do cover instances where the agent fails to forward notice of the loss to the insurer, I have seen no insurance agent errors and omission policies that would cover negligent adjustment conduct. Perhaps I have been missing the boat.

Indeed, my reading of the Florida licensing statutes seem to indicate otherwise: 

626.112 License and appointment required; agents, customer representatives, adjusters, insurance agencies, service representatives, managing general agents.--
(1)(a) No person may be, act as, or advertise or hold himself or herself out to be an insurance agent, insurance adjuster, or customer representative unless he or she is currently licensed by the department and appointed by an appropriate appointing entity or person.
(b) Except as provided in subsection (6) or in applicable department rules, and in addition to other conduct described in this chapter with respect to particular types of agents, a license as an insurance agent, service representative, customer representative, or limited customer representative is required in order to engage in the solicitation of insurance. For purposes of this requirement, as applicable to any of the license types described in this section, the solicitation of insurance is the attempt to persuade any person to purchase an insurance product by:
1. Describing the benefits or terms of insurance coverage, including premiums or rates of return;
2. Distributing an invitation to contract to prospective purchasers;
3. Making general or specific recommendations as to insurance products;
4. Completing orders or applications for insurance products;
5. Comparing insurance products, advising as to insurance matters, or interpreting policies or coverages; or

6. Offering or attempting to negotiate on behalf of another person a viatical settlement contract as defined in s. 626.9911.
...

(3) No person shall act as an adjuster as to any class of business for which he or she is not then licensed and appointed.

...

(9) Any person who knowingly transacts insurance or otherwise engages in insurance activities in this state without a license in violation of this section commits a felony of the third degree.... (emphasis added)

On the other hand, some public adjusters, even "consultants," have started a new type of business, signing up Florida policyholders to provide advice and compare insurance policies. They provide these additional services if a policyholder signs a public adjusting contract in advance of a loss. This is illegal because those individuals are acting as an insurance agent without a license. Attorneys are exempt from both license requirements, so yours truly has no such problem. Public adjuster errors and omission policies do not cover these agent activities either.

Further, the most important part of Scott Johnson's message might get lost in all this statutory legal discussion. For that, you have to read Johnson's prior article, Public Adjusters and RCV - The Messenger and the Message. I think that Johnson wrongfully takes advantage of a wrongful incident I reported on in Public Adjusters Arrested in Broken Tile Insurance Fraud Scheme. He uses it to buttress an argument that smears all public adjusters and justifies taking away policyholders legal rights:

Facts of his arrest reveal an intimate marriage between PAs and replacement cost coverage — one is the messenger; the other, the message.

The message — the pot of gold that used to be at the end of the rainbow — is now at the beginning. Instead of actually spending new dollars to replace old property, you can get all your money up front, and, even better, you can spend it however you want: on a new big screen TV, on a new car, a vacation, some lingering bad debts, or all of the above. All you have to do is give 20 percent to the messenger.

...

For those who still believe that a purchase of replacement cost coverage warrants replacement cost payments without a hold back, consider this: The price for RCV is roughly 25 percent more than ACV with a hold back provision! Without a hold back provision (ala Espinosa) it's more like 75 percent more and climbing. Florida is the only venue in the entire world that does not have a hold back provision for replacement cost. Replacement cost would not exist if it were not for the hold back provision.

Look at what Espinosa and other bad PAs are doing (though most not as overtly) and ask yourself: Is it any wonder that frequency and severity have skyrocketed? Is it any wonder that losses per policy are up 65 percent? Is it any wonder Florida has 3,200 new PA messengers, almost 90 percent of who are located in Dade and Broward counties?

There's no room for subtlety. Senate Bill 2044 was just a start. For a return to normalcy, we must limit the activities of PAs and completely eliminate the prohibition against a replacement cost hold back provision. (emphasis added)

Scott Johnson is wrong about replacement cost holdbacks not existing absent the provision. A number of insurance carriers sell this product in states without the law and seem to do very well making profits--they keep selling the product. Further, Florida has a longstanding common law allowing for no holdbacks for real property loss. I noted the fallacy of his arguments in An Interesting Day in Tallahassee and Thoughts on the Pending Replacement Cost Coverage Legislation. Scott Johnson is bootstrapping two different issues:

1. Should we reduce policyholder benefits by removing consumer protection statutes?
2. Should there be stronger oversight of public insurance adjusters?

From the policyholder's viewpoint, I think the answers are:

1. No
2. Yes

I will understandably catch grief from insurers and public adjusters for these answers. Yet, when I helped form the Florida Association of Public Insurance Adjusters eighteen years ago, I told those in attendance that they would succeed so long as they always looked at their vocation as first serving policyholders. If so, they would always be "on the side of angels." I suggest that the same should hold true for those managing insurance companies, insurance agencies and those making laws for Florida citizens.

Nobody likes to read bad press. It is worse when some suggest that criminal acts are automatically attributable to the group, as Scott Johnson suggested. Yet, his views are shared by many within the leadership of Florida's insurance industry. While I acknowledge that it is in the insurance industry's interest to have this viewpoint, the same way it was in the interest of Halliburton to support the view that Saddam Hussein had a significant number of weapons of mass destruction, the question posed to public adjusters should be:

Can you better serve policyholders by raising the professional bar of what is expected of you and your peers?

Scott Johnson is an honorable person and his perception that some public adjusters charge too much in return for too little is worthy of reflection. I have talked with Johnson on various insurance matters and have read his book regarding the history of Florida's independent agents, From Cartel's To Competition (2004). He has a deep commitment to Florida's insurance market and to the extent he has expressed a view, I am certain many others share it as well.

I have been very up-front when people ask me what changes I would suggest could be made. Keeping it simple, I suggest a significant raise in the public adjuster licensing fee so that more market conduct studies of public adjusters files would routinely be conducted by the Office of Insurance Regulation. The law is already in place to do so, but it is rarely done regarding public insurance adjuster files. Knowing that regulators will periodically be looking at files and talking with clients is one sure way of raising the professional bar of public insurance adjusters.

Could you imagine how honest all Americans would be regarding income tax if there were no audits? This simple regulatory step would be significant if used with significant penalties for non-compliance. Hardworking, honest and professional public adjusters would support this change as well because it would show either their industry has significant problems, as suggested by the insurers, and help clean it up, or, alternatively, it would help prevent wrongful conduct by adding a significant risk that otherwise honest public adjusters would be caught.

Maybe we can come together and make some win-win laws and regulations. And with that kumbaya thought, how about this appropriate song from one of the best rock and rollers of all time:

Nicole Vinson's observations in Public Adjusters and Continuing Education: The Education Pays Off are certainly correct. Adding to that, is my belief that people pay a lot of money to come to these seminars and they deserve their money’s worth. From surveys our firm has conducted, we find that people want to bring back practical knowledge which will make their work easier, more enjoyable and more profitable. This is what my speeches and presentations try to accomplish. The law is left to the paper in the handout. The part to take home is found in the speech.

Tips and techniques are important. Learning from those who have experience from the other side of the table is extraordinarily valuable. Recognizing that methods used in the past need to be changed to achieve a better outcome for the client is paramount. I bet there are quite a few adjusters and insurer attorneys for that would love to put their two cents in on this presentation. Many public adjusters could do a much better job for the policyholder if they would just consider and appreciate the needs and role of the insurance adjuster.

On Wednesday, the conference will be over and everyone who attended will be back to work—business as usual. Or, maybe not. After spending three days at a conference with “our side of the industry,” I am recharged. I am invigorated to advocate on behalf of the policyholders. The feeling is a little hard to explain, but after spending time surrounded with others who fight on the same side, it is kind of like a pep rally before the big game.

At education conferences, I try to learn more than the materials in the handouts, and take advantage of the opportunity to sit and discuss issues with those of you who are working the claims in the field. Sometimes this will happen during a random elevator ride or in line at breakfast. The discussions vary. Sometimes I hear in-depth testimonials of big wins and disappointing losses. I get more than the summary of the claim; I hear the passionate details of the claims. I have a better perspective into the actions of insurers and the situations of insureds. And after the conference has come to a close, these stories and comments that stick with me. When I am doing legal research or trying to formulate a good strategy for a mediation, I am more motivated to advocate for the policyholders. I work harder, push a little further.

Like most conferences in any industry, for the public adjusters who attend conferences, the competition is all around. In this economic climate, I can see how the room could be filled with hostility. However, in my experience, most public adjusters at educational conferences are friendly and treat each other with professionalism. I think this approach of working together as a more unified front or group makes sense and is very beneficial to each of you as an individual and for your business.

I think everyone should join voluntary associations and take advantage of continuing education events, no matter your occupation. So I encourage you to reach out to those who may be the competition. Join associations, make associations and learn from each other. We all have something to share and many things to learn. It is important to take these steps and keep an open mind.

As I explained in the beginning of this series in my post, Public Adjusting Case Stories, I think sharing information will help all of us. I think it is important to share resources, especially from others who are in the same line of work. The information is very valuable but not always easily accessible.

I previously discussed this legislation in a post, Policyholders and Public Adjusting Under Attack in the Florida House of Representatives. I have met with and discussed the proposed House Legislation with Representative Janet Long which lead to a post last week, Representative Janet Long Gets a Hug From Chip Merlin.

Many Public Adjusters are quite understandably concerned about this legislation. I would urge those that would like to participate in this process to contact and do so through the National Association of Public Insurance Adjusters (NAPIA) and the Florida Association of Public Insurance Adjusters (FAPIA) to learn how your participation can be most positively effective.

Here is the Senate Bill as it currently reads:
 

Florida Senate - 2010                                    SB 2264

      By Senator Bennett

       21-01397-10                                           20102264__

    1                        A bill to be entitled                      

    2         An act relating to public adjusters; amending s.

    3         626.854, F.S.; providing a definition; prohibiting

    4         public adjusters from making certain employment

    5         solicitations; prohibiting certain unsolicited written

    6         communications; providing exception requirements;

    7         revising prohibited solicitations; revising prohibited

    8         charges by public adjusters; providing a definition;

    9         amending s. 626.8796, F.S.; specifying required

   10         information in public adjuster contracts; creating s.

   11         626.70132, F.S.; barring certain personal lines

   12         residential coverage insurance claims subject to

   13         certain notice requirements; providing a definition;

   14         providing nonapplicability to certain civil actions

   15         limitations; providing an effective date.

   16 

   17 Be It Enacted by the Legislature of the State of Florida:

   18 

   19         Subsections (5), (6), and (11) of section Section 1.

   20 626.854, Florida Statutes, are amended to read:

   21         “Public adjuster” defined; prohibitions.—The 626.854

   22 Legislature finds that it is necessary for the protection of the

   23 public to regulate public insurance adjusters and to prevent the

   24 unauthorized practice of law.

   25         (5)As used in this subsection, the term “solicit” or (a)

   26 “solicitation” means contact in person or by telephone,

   27 facsimile, United States postal service, electronic mail, or any

   28 other method of communication directed to a specific recipient.

   29         Except as provided in paragraph (c), a public adjuster (b)

   30 may not solicit professional employment from a prospective

   31 customer with whom the public adjuster has no family or prior

   32 professional relationship, in person or otherwise, when a

   33 significant motive for the public adjuster’s doing so is the

   34 public adjuster’s pecuniary gain.

   35         An unsolicited written communication to an insured for (c)

   36 the purpose of obtaining professional employment is prohibited

   37 unless it complies with the following requirements:

   38         The first page and the lower left corner of the face of 1.

   39 the envelope of such written communication shall be plainly

   40 marked “ADVERTISEMENT” in red ink in 14-point font.

   41         The communication must be sent only by regular United 2.

   42 States mail and not by registered mail or any other form of

   43 restricted delivery.

   44         The communication may not be made to resemble legal 3.

   45 pleadings or other legal documents.

   46         The communication may not contain any information as to 4.

   47 the public adjuster’s or public adjusting firm’s record or

   48 history in obtaining claim payments or settlements for other

   49 insureds.

   50         The communication may not be mailed less than 30 days 5.

   51 after the occurrence of an event that may be the subject of a

   52 claim under an insurance policy. A public adjuster may not

   53 directly or indirectly through any other person or entity

   54 solicit an insured or claimant by any means except on Monday

   55 through Saturday of each week and only between the hours of 8

   56 a.m. and 8 p.m. on those days.

   57         A public adjuster may not (6) directly or indirectly

   58 through any other person or entity initiate contact or engage in

   59 face-to-face or telephonic solicitation or enter into a contract

   60 with any insured or claimant under an insurance policy until at

   61 least 48 hours after the occurrence of an event that may be the

   62 subject of a claim under the insurance policy unless contact is

   63 initiated by the insured or claimant.

   64         If a public adjuster enters into a contract with an (11)(a)

   65 insured or claimant to reopen a claim or to file a supplemental

  66 claim that seeks additional payments for a claim that has been

   67 previously paid in part or in full or settled by the insurer,

   68 the public adjuster may not charge, agree to, or accept any

   69 compensation, payment, commission, fee, or other thing of value

   70 based on a previous settlement or previous claim payments by the

   71 insurer for the same cause of loss. The charge, compensation,

   72 payment, commission, fee, or other thing of value may be based

   73 only on the claim payments or settlement obtained through the

   74 work of the public adjuster after entering into the contract

   75 with the insured or claimant. The contracts described in this

   76 paragraph are not subject to the limitations in paragraph (b).

   77         A public adjuster may not charge, agree to, or accept (b)

   78 any compensation, payment, commission, fee, or other thing of

   79 value in excess of:

   80         Ten percent of 1. any the amount in excess of the insurance

   81 company’s claim valuation to repair or replace damage to covered

   82 property payments by the insurer for claims based on events that

   83 are the subject of a declaration of a state of emergency by the

   84 Governor. This provision applies to claims made during the

   85 period of 1 year after the declaration of emergency.

   86         Twenty percent of 2. any the amount in excess of the all

   87 other insurance company’s claim valuation to repair or replace

   88 damage to covered property for all other insurance claim

   89 payments.

   90         For purposes of this subsection, the term “claim (c)

   91 valuation” means the total amount offered in writing or actually

   92 paid, or any combination of such amounts, by the insurance

   93 company to the policyholder for the claim for the damaged

   94 property, including loss of use, additional living, emergency,

   95 and any other expenses required to be paid under the terms of

   96 the policy.

   97 

   98 The provisions of subsections (5)-(13) apply only to residential

   99 property insurance policies and condominium association policies

 100 as defined in s. 718.111(11).

 101         Section 626.8796, Florida Statutes, is amended Section 2.

 102 to read:

 103         Public adjuster contracts; fraud statement.— 626.8796

 104         (1)All contracts for public adjuster services must be in 

 105 writing and must prominently display the following statement on

 106 the contract: “Pursuant to s. 817.234, Florida Statutes, any

 107 person who, with the intent to injure, defraud, or deceive any

 108 insurer or insured, prepares, presents, or causes to be

 109 presented a proof of loss or estimate of cost or repair of

 110 damaged property in support of a claim under an insurance policy

 111 knowing that the proof of loss or estimate of claim or repairs

 112 contains any false, incomplete, or misleading information

 113 concerning any fact or thing material to the claim commits a

 114 felony of the third degree, punishable as provided in s.

 115 775.082, s. 775.083, or s. 775.084, Florida Statutes.”

 116         A public adjuster contract must contain the names and (2)

 117 addresses of the public adjuster, the public adjusting firm, and

 118 the insured, together with the signatures of the public adjuster

 119 and the insured and the signature date. A copy of the contract

 120 must be remitted to the insurer within 30 days after execution.

 121         Section 626.70132, Florida Statutes, is created Section 3.

 122 to read:

 123         626.70132Duty to file windstorm or hurricane claim.—A 

 124 claim, supplemental claim, or reopened claim under an insurance

 125 policy that provides personal lines residential coverage, as

 126 defined in s. 627.4025, for loss or damage caused by the peril

 127 of windstorm or hurricane is barred unless notice of the claim

 128 was given to the insurer in accordance with the terms of the

 129 policy within 3 years after the windstorm or hurricane first

 130 made landfall, or the windstorm caused the covered damage, in

 131 this state. For purposes of this section, the term “supplemental

 132 or reopened claim” means a claim for recovery of additional

 133 payments from the insurer for losses from the same hurricane for

 134 which the insurer has previously paid pursuant to the initial

 135 claim. This section may not be interpreted to affect any

 136 applicable limitation on civil actions provided in s. 95.11.

 137         This act shall take effect July 1, 2010. Section 4.

The Bill introduced by State Representative Janet Long has raised many critical concerns among those aligned with the interests of insurance consumers. Given the significant campaign contributions to Representative Long by insurance lawyer lobbyists, insurance companies such as Allstate, Tower Hill, Travelers and many insurance agents, is there any doubt as to the interests she was protecting when introducing this legislation?

This is probably the first of many anti-policyholder laws that will be proposed. And, many of the most devastating laws will first be proposed as amendments in the final hours on the last days of legislative session. For consumers and hard working policyholders who are not funding an army of professional lawyer lobbyists and public relations firms like the insurance industry, such last minute changes to proposed insurance laws do not provide enough time. The average Floridian cannot counter the onslaught of insurance industry legislative deals worked out months before in private meetings with legislators, such as Representative Janet Long. I truly believe that insurance company interests will be prominent in the 2010 Florida legislative session. The title to this post is for everyone, including those who are not in the insurance industry. Insurance is an important product, and it impacts everyone. Over the last few years, many voters have not been provided the truth regarding the insurance industry agenda of higher insurance rates and less regulation. This agenda fosters the biggest problem with insurance-- insurance companies that are denying, delaying and not paying claims. Suddenly, Public Adjusters and greedy policyholders are being singled out as the cause of problems in insurance. This is not by accident and has been orchestrated by very effective public relations techniques and constant lobbying of Florida leaders by the insurance industry.

We need to get involved in our political process. We need to recognize who our elected officials are. We have civic obligations to inform them about the issues of which we have specialized knowledge and training. Public adjusters need to explain what we do for our clients, and take our clients to our legislators and to Tallahassee so that the insurance company lawyers and lobbyists will be called out for the lies and deception they are attempting. Letters, videos and face to face accounts by policyholders of what really goes on during the claims process is the best evidence of the need for insurance company claim reform. This will also demonstrate why Floridians need professional and trained claims experts on their side immediately after a loss.

I strongly recommend that any Public Adjuster that lives in Representative Janet Long’s District 51 call and make an appointment with her. Those with policyholder clients should be taken to her local office and in Tallahassee. Policyholder clients in her district should be contacted by phone, email, and letters advising them to petition Representative Long to withdraw her anti-policyholder legislation and explaining how their public adjuster helped obtain a fair settlement from the insurance company. These letters, calls and visits from her constituents will draw attention to the overbroad claims of fraud and inflated claims the insurance industry has made. These will further draw attention that the real need is for laws that prevent insurers from abusing homeowners and business owners at claim time.

Next, the same effort that is made for Representative Long should be made with every legislator in Florida. Policyholder clients must tell their story to their elected representative and Senator and they should explain the services we provide.

Finally, those previously not joining the legislative effort must stop sitting on the sideline and letting everyone else work and pay the costs of these efforts. Plenty complain and criticize without joining the effort. Policyholders and public adjusters can join organizations that support consumer interests and flush out the insurance industry’s deception. Public adjusters should join FAPIA or other organizations that will lobby against the formidable insurance industry.

Everyone must join together to do the right thing for Floridians. Protecting policyholder homeowners and business owners is my pledge and honor. I am proud to be a public adjuster, working with my colleagues to make our profession better, and actively “doing” in the political process as Thomas Jefferson suggested is the duty of all long ago.

Below, I have attached the membership list for the Insurance, Business and Financial Affairs Policy Committee: 

Patterson, Pat (R) -- Chair
Grady, Tom (R) -- Vice Chair
Rader, Kevin J. G. (D) -- Democratic Ranking Member
Domino, Carl J. (R)
Eisnaugle, Eric (R)
Flores, Anitere (R)
Hays, D. Alan (R)
Jenne, Evan (D)
Long, Janet C. (D)
Nehr, Peter (R)
Nelson, Bryan (R)
Taylor, Dwayne L. (D)
Wood, John (R)
Workman, Ritch (R)

The Merlin Law Group has sponsored two other fundraisers for Frank as noted in Merlin Law Group Hosting Public Adjuster Ethics Seminar Followed by a Political Fundraiser for a Public Adjuster Running for Public Office and Fundraising Event for a Policyholder Advocate Frank Artiles. I noted the following as the reason why other public insurance adjusters should help get a colleague elected:

Imagine if our legislatures had truly knowledgeable insurance consumer advocates. Do you think the insurance industry would have tried to pass laws in Texas and Florida that allowed insurance rates to unfairly rise or allow immunity for wrongful conduct after a loss occurs like TWIA is attempting in Texas?

By electing Frank Artiles, a Florida public adjuster, for the Florida House of Representatives in South Florida, I don't see those kinds of things happening. My law firm is dedicated to helping this become a reality, and we need your help.
…
You never know what can happen in life until you try. We need your help on this endeavor for Frank.

We hope to see all public adjusters come out in support of Frank next Tuesday afternoon.

Mary Fortson and I were recently reviewing some matters raised by the leadership of the National Association of Public Insurance Adjusters and Florida Association of Public Insurance Adjusters, when I asked her to provide me the Florida regulations pertaining to these ethical rules. Mary is the General Counsel to the Florida Association of Public Insurance Adjusters, and we were certain that many of the conduct issues being raised by the leadership of these organizations were covered in these rules. The violation of which subjects an adjuster to severe penalties, including the possible loss of license. These rules were made to protect the public and consumers of insurance as stated in the first part of the ethical code:

Code of Ethics. The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster's own interests in every instance.

Claims managers need to make certain that they are also adhering to this law. Public adjusters who find company and independent adjusters breaking these rules but do not promptly report the violations to the Department of Financial Services also violate the rules. I recently heard a claims manager suggest that his adjusters had a right to immediate access to the damaged property. Certainly, most policyholders welcome prompt investigation and evaluation, but because of some abuses, access into a policyholder’s home or business is covered in these ethical provisions:

(s) A company adjuster, independent adjuster, attorney, investigator, or other person acting on behalf of an insurer that needs access to an insured or claimant or to the insured property that is the subject of a claim shall provide at least 48 hours notice to the insured or claimant prior to scheduling a meeting with the claimant or an on-site inspection of the insured property. The insured or claimant may deny access to the property if this notice has not been provided.

The Florida Association of Public Insurance Adjusters has a Code of Ethics as well. It also has a committee that reviews every complaint regarding its members. I suggest that when company or independent adjusters report ethical violations to the Department of Financial Services that they also copy the violation to FAPIA. Here is the FAPIA Code of Ethics:

All members of FAPIA are required to abide by the following Rules of Professional Conduct and Ethics. This better enables us to ensure that our clients, members of the public, are able to receive proper and ethical treatment at all times.

1. The members shall conduct themselves in a spirit of fairness and justice to their clients, the Insurance Companies, and the public.

2. Members shall refrain from improper solicitation.

3. No misrepresentation of any kind shall be made to an insured or to the Insurance Companies.

4. Commission rates shall be fair and equitable, and strictly in accordance with the prevailing laws or regulations of the Florida Insurance Department.

5. Members shall conduct themselves so as to command respect and confidence. They shall work in harmony with one another, with their clients, and the Insurance Companies' representatives, so as to foster a cordial and harmonious relationship with all branches of the insurance business, and with the general public.

6. Members must be fitted, by the knowledge and experience, for the work they undertake. They must not endanger the interests of the public adjusting profession, or risk injustice to insureds or to the Insurance Companies, by attempting to handle losses or claims for which they are not qualified, and for which they cannot find competent technical assistance.

7. Members shall not engage in the unauthorized practice of law.

8. Members shall not acquire any interest in salvaged property or participate in any way, directly or indirectly, in the reconstruction, repair, or restoration of damaged property, except with the knowledge, consent and permission of the insured.

9. Members shall be cooperative and assist one another in every possible way.

10. Members shall not disseminate or use any form of agreement, advertising, or any printed matter that is harmful to the profession of public adjusting, or which does not comply with the rules and regulations of the Florida Insurance Department, or which might subject public adjusting and public adjusters to criticism or disrespect.

The enforcement of ethical rules by adjusters leads to a recurrent theme that has to be addressed by Alex Sink and the people operating the Department of Financial Services. Alex Sink is a wonderful public servant. Many in the insurance industry are wholeheartedly supporting her quest to become Florida’s next governor. And, when I hear adjusters and their managers say that when they follow the law, report serious violations of ethical laws to the Department of Financial Services, but the Department essentially says that they are “too busy” to do anything about it, I know she will make a change or change the people who are not doing their job. The California Insurance Commissioner was once sued for not fulfilling the statutory duties of that job.

Somebody needs to find out if our paid regulators are either too lazy or too overworked to do the important job of enforcing the laws. This is a serious matter, but many have been complaining about the lack of action by the Department of Financial Services for far too long. Something has to change soon.

Good, honest, and “playing by the rules” adjusters need to know that their profession and the state will hold wrongdoers accountable for breaking rules. Otherwise, why have any rules?

Here are the ethical requirements of adjusters in Florida:

69B-220.201. Ethical Requirements.

(1) Definitions. The following definitions shall apply for purposes of this rule:

(a) “Adjuster,“ when used without further specification, includes all types and classes of insurance adjusters, (company, independent, and public), subject to Chapter 626, Florida Statutes, regardless of whether resident or nonresident, and whether permanent, temporary, or emergency licensees.

(b) “Client“ includes both clients and potential clients; and means any person who consults with or hires an adjuster to provide adjusting services.

(c) “Department“ means the Florida Department of Financial Services.

(d) “Person“ includes natural persons and legal entities.

(2) Violation.

(a) Violation of any provision of this rule shall constitute grounds for administrative action against the licensee.

(b) A breach of any provision of this rule constitutes an unfair claims settlement practice.

(3) Code of Ethics. The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster's own interests in every instance. The following are standards of conduct that define ethical behavior, and shall constitute a code of ethics that shall be binding on all adjusters:

(a) An adjuster shall: not directly or indirectly refer or steer any claimant needing repairs or other services in connection with a loss to any person with whom the adjuster has an undisclosed financial interest, or who will or is reasonably anticipated to provide the adjuster any direct or indirect compensation for the referral or for any resulting business.

(b) An adjuster shall treat all claimants equally.

1. An adjuster shall not provide favored treatment to any claimant.

2. An adjuster shall adjust all claims strictly in accordance with the insurance contract.

(c) An adjuster shall not approach investigations, adjustments, and settlements in a manner prejudicial to the in-sured.

(d) An adjuster shall make truthful and unbiased reports of the facts after making a complete investigation.

(e) An adjuster shall handle every adjustment and settlement with honesty and integrity, and allow a fair adjustment or settlement to all parties without any remuneration to himself except that to which he is legally entitled.

(f) An adjuster, upon undertaking the handling of a claim, shall act with dispatch and due diligence in achieving a proper disposition of the claim.

(g) An adjuster shall promptly report to the Department any conduct by any licensed insurance representative of this state which violates any provision of the Insurance Code or Department rule or order.

(h) An adjuster shall exercise extraordinary care when dealing with elderly clients to assure that they are not disadvantaged in their claims transactions by failing memory or impaired cognitive processes.

(i) An adjuster shall not negotiate or effect settlement directly or indirectly with any third-party claimant repre-sented by an attorney, if the adjuster has knowledge of such representation, except with the consent of the attorney. For purposes of this subsection, the term “third-party claimant“ does not include the insured or the insured's resident relatives.

(j) An adjuster is permitted to interview any witness, or prospective witness, without the consent of opposing counsel or party. In doing so, however, the adjuster shall scrupulously avoid any suggestion calculated to induce a witness to suppress or deviate from the truth, or in any degree affect the witness's appearance or testimony during deposition or at the trial. If any witness making or giving a signed or recorded statement so requests, the witness shall be given a copy of the statement.

(k) An adjuster shall not advise a claimant to refrain from seeking legal advice, nor advise against the retention of counsel to protect the claimant's interest.

(l) An adjuster shall not attempt to negotiate with or obtain any statement from a claimant or witness at a time that the claimant or witness is, or would reasonably be expected to be, in shock or serious mental or emotional distress as a result of physical, mental, or emotional trauma associated with a loss. The adjuster shall not conclude a set-tlement when the settlement would be disadvantageous to, or to the detriment of, a claimant who is in the traumatic or distressed state described above.

(m) An adjuster shall not knowingly fail to advise a claimant of the claimant's claim rights in accordance with the terms and conditions of the contract and of the applicable laws of this state. An adjuster shall exercise care not to engage in the unlicensed practice of law as prescribed by the Florida Bar.

(n) A company or independent adjuster shall not draft special releases called for by the unusual circumstances of any settlement or otherwise draft any form of release, unless advance written approval by the insurer can be demonstrated to the Department. Except as provided above, a company or independent adjuster is permitted only to fill in the blanks in a release form approved by the insurer they represent.

(o) An adjuster shall not undertake the adjustment of any claim concerning which the adjuster is not currently competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the adjuster's current expertise.

(p) No person shall, as a public adjuster, represent any person or entity whose claim the adjuster has previously adjusted while acting as an adjuster representing any insurer or independent adjusting firm. No person shall, as a company or independent adjuster, represent him or herself or any insurer or independent adjusting firm against any person or entity that the adjuster previously represented as a public adjuster.

(q) A public adjuster shall not represent or imply to any client or potential client that insurers, company adjusters, or independent adjusters routinely attempt to, or do in fact, deprive claimants of their full rights under an insurance policy. No insurer, independent adjuster, or company adjuster shall represent or imply to any claimant that public adjusters are unscrupulous, or that engaging a public adjuster will delay or have other adverse effect upon the settlement of a claim.

(r) No public adjuster, while so licensed in the Department's records, may represent or act as a company adjuster, independent adjuster, or general lines agent.

(s) A company adjuster, independent adjuster, attorney, investigator, or other person acting on behalf of an insurer that needs access to an insured or claimant or to the insured property that is the subject of a claim shall provide at least 48 hours notice to the insured or claimant prior to scheduling a meeting with the claimant or an on-site inspection of the insured property. The insured or claimant may deny access to the property if this notice has not been provided.

The job of a public insurance adjuster requires a great deal of knowledge of the law, but an adjuster must be careful not to practice law; a great deal of knowledge about insurance policies and principles; a thorough understanding of negotiation principles; the skill of insurance estimating; perfection in his/her analysis of damages; satisfying the needs of the property owner during one of the most difficult times that property owner will ever face. An adjuster is often required to negotiate against some of the most powerful companies in the world. This will be the first of several blogs that I will have the privilege of writing with respect to this topic, in hopes of assisting public insurance adjusters in their difficult and complex profession.

Insurance provides a great benefit to society, and in this day and age, it is extremely difficult to think about any profession or type of business that is not insured. However, if an insurance company is to remain in existence, it must make a profit. In making profits, insurance companies are insuring businesses and properties with the hopes of earning an underwriting profit. The property insured is referred to as a risk, and if the expenses and claim payments do not exceed one-hundred percent of the insurance premium, then the insurance carrier has earned an underwriting profit. In fact, many underwriters earn large bonuses at the end of the year after the insurance company has determined that the policies they underwrote have earned an underwriting profit. Insureds and public adjusters face a very difficult task, sometimes monumental, when filing an insurance claim in light of the insurance companies business motives and need for survival/profits.

The first step in preparing a claim for a property owner is to carefully interview the property owner about the ownership, maintenance, damage, and yes, even the cause of the damage. In today’s market, real estate ventures, investment properties, and even the homes of many families have gone into foreclosure, or are only a few months away from being served with foreclosure papers. Sometimes, resolution of the insurance claim is what’s needed to keep some of these properties from going into foreclosure, and time is of the essence. Other times, the public adjuster enters into a contract with a property owner that is too far into the foreclosure process and the property is lost before the claim can be resolved. In that instance, the only winner is the insurance company and the underwriter, because it may never have to pay claim--keeping the expenses below the underwriting premium and earning a profit.

In every property insurance policy, lack of maintenance is an exclusion to insurance coverage. Every insurance company adjuster is trained to look and identify potential maintenance problems. If the field adjuster does not identify this condition, his supervisor will question his ability to properly scope a loss. If the issue of maintenance is addressed up front during the public adjuster’s meeting with the insured and inspection of the property, then the issues of maintenance can quickly and easily be addressed during the first meeting with the field adjuster. Telling the adjuster that your interview with the property owner revealed that there was regular maintenance of the roof with documentation or names of service providers, for example, could dramatically shorten the time it might otherwise take to get a claim paid. If the issue of maintenance can be addressed during the first inspection, the filed adjuster will be satisfied that he has met his duty to address the issues of maintenance and will no longer be concerned about his/her ability to do their job.

A public adjuster should NEVER write their estimate in a way that the total damages do not result from damage caused by a covered peril. We cannot look back in time, but the property owner is one very important source when walking the property and preparing your scope of damage. Many times I hear, “I gotta write it as I see it”; I submit to you that this approach is taking a big risk and the bigger the property, the bigger the risk of having your own estimate used against you by the field adjuster, the claims supervisor, and the defense attorney in an EUO, deposition or trial. The credibility of a public insurance adjuster in the eyes of a jury, and even the field adjuster, is only as good as the accuracy of the estimate and detailed notes kept by that public adjuster. When it comes to negotiating with an insurance adjuster, you have the power of knowledge because you have total access to the owner and the property. The more accurate you are in providing the correct information to the field adjuster, the more powerful you become to that field adjuster. The easier it is for the field adjuster to make his/her recommendations for payment, the faster the claim should be resolved.

A public adjuster’s involvement also frequently increases the dollar amount of a policyholder’s final settlement. By some accounts, the average settlement rises by as much as 20 to 50 percent. See, Peter C. Beller, In the Wake of Disaster, Help for Hire, New York Times (Feb. 2, 2006); and Brian D. Mockenhaupt, For Public Adjusters, Disaster Means Business, Providence (R.I.) Journal-Bulletin (Jan. 18, 1998). The Florida Legislature’ own program policy analysis office has found that, in claims related to the 2005 hurricanes filed by policyholders of the state-run Citizens Property Insurance Corporation, settlements averaged 747 percent higher ...The same legislative report found a smaller but still significant increase – 574 percent -- in settlements when public adjusters represented Citizens policyholders in non-catastrophe claims.

I was amazed at the statistics found and published by Citizens. I think it is far overstated and policyholders should not expect that type of percentage increase unless they have a smaller claim. While I may criticize Citizens' claim handling, there is no way it is that bad and it underpays to that extent that often. If I were a public adjuster, I would advertise this statistic every time I talked with a prospective client. 

This lawsuit seems to be moving along quite a bit faster than a similar public adjuster lawsuit in Dade County which I noted in two earlier posts, Florida Public Adjusters File Lawsuit to Overturn 48 Hour Solicitation Ban and Fee Caps, and Public Adjuster Lawsuit Challenging State's Cap on Fees and Solicitation Ban Survives Venue Change. I expect that the summary judgment will be heard within the next sixty days. Pre-trial hearings are set and the judge seems to be moving this matter along pretty quickly.

I have recently noted the concern that some insurance restoration contractors are acting as surrogate public adjusters and not in the best interests of the policyholder in my posts, Are Insurance Restoration Contractors Ripping Off Insurers and Policyholders? and Former Restoration Insider Comes Out Swinging Against Florida's Limitation of Public Adjuster Solicitation.

The 48 hour solicitation ban was a coup of the insurance companies and Citizens Property Insurance Corporation. I attended the Citizen’s Claims Review Task Force meetings. It was obvious that Citizens claims managers and executives blamed many of their controversial claims delays and underpayments on the involvement of public insurance adjusters. The insurance industry used the Task Force as a vehicle to place before legislators a few examples of how public adjusters solicit for business following a disaster. Door hangers and the lining up of a dozen public insurance adjusters were suggested as being “unsavory’ by many. I guess the connotation is that those that get paid for professional help following a catastrophe must be taking advantage of victims. From the insurance industry’s perspective, it was a “perfect storm” to reduce the retention of pubic adjusters.

The 48 hour solicitation ban states:

A public adjuster may not directly or indirectly though any other person or entity initiate contact or engage in face-to-face or telephonic solicitation or enter into a contract with any insured or claimant under an insurance policy until at least 48 hours after the occurrence of an event that may be the subject of a claim under the insurance policy unless contact is initiated by the insured or claimant.

The lawsuit emphasizes the constitutional aspect of one’s freedom to speak and to contract.

8. By prohibiting the Plaintiffs from directly or indirectly initiating contact or engaging in face-to-face or telephonic solicitation with any insured or claimant, or entering into a contract with an insured or claimant in the first 48 hours after an event that has not been declared an emergency, subsection 626.854(6) constitutes a prior restraint on protected speech in violation of the First Amendment to the United States Constitutions and Article 1, Section 4 of the Florida Constitution.

It also points out some of the practical reasons why the laws are objectionable:

39. Subsection 626.854(6) is not narrowly tailored to further a significant government interest, and other less intrusive means are available to control or prevent any practices of public adjusters which might be needed to adequately protect the public

40. Subsection 626.854(6) is overbroad, in that it restricts the speech of all public adjusters, including Plaintiffs, who are competent, scrupulous, honest, and professional in their dealings with the public

41. Subsection 626.854(6) denies significant business opportunities for Plaintiffs and other public adjusters by denying property owners the services of a licensed public adjuster at the time they are in most distress and have the greatest need.

42. By preventing public adjusters from contacting property owners immediately following a natural disaster, subsection 626.854(6) prevents public adjusters from having any contact with the most severely damaged property owners at the only time they can be located before moving to an unknown address.

43. Section 626.854(6) amounts to an impermissible restriction on the time, place, and manner of conducting the business of public adjusting, and unduly restricts Plaintiffs' freedom of speech.

Pat Catania has done an excellent job assembling a great legal team and getting a case stated clearly. Using a Shakespearean phrase, he told me yesterday that “if they [the insurance industry] want a war, I’ll show them the war.” Pat is not a part of FAPIA or NAPIA. He is creative, bright, energetic, and I find him fun. I believe the lawsuit has a good chance of success. He asked me to let other public adjusters know that he would like to include others as plaintiffs in the lawsuit.

Catania is also a fantastic marketer and entrepreneur. He started two web sites, MySmartClaims.com and SmartClaimsPro.com which help policyholders and professionals regarding the estimating and submittal of property insurance claims. He is a passionate consumer advocate and tireless opponent. I predict he will prevail and many public adjusters will be thanking him for his efforts.

Catania also told me that his dream is to submit the final proof of loss State Farm will pay on before it leaves Florida. He considers State Farm completely unworthy to be in the insurance business because he asserts that most State Farm policyholders are not treated properly regarding claims. He has some inside information on that issue--his wife worked as a property insurance claims adjuster for State Farm.

Following my post, Umpires Following Unfavorable Appraisal Awards May be Subject to Suit, I wrote one of the most active umpires in property insurance appraisals and a teacher in the Umpire Program, John Voelpel. Voelpel is one of the busiest property insurance umpires in Florida. He was part of a roundtable discussion on “Umpires and Umpiring” at the Florida Association of Public Insurance Adjusters 2009 Annual Convention. I asked John if there were any written procedures regarding the appraisal process. He indicated no, but directed me to the Wind Umpire Directory.

The Wind Umpire Directory has been widely distributed to judges in the coastal areas of the United States and to the members of the Windstorm Network. It lists certified umpires and is a far better source for a policyholder find an umpire than a list provided by an insurance company. The appraisal procedures explained in the Wind Umpire Directory are rather basic and barely more than what is written in standard insurance policies:

What is the appraisal process?

The appraisal process is a contractual process for resolving valuation issues. Appraisal provisions have been included in insurance contracts for over 100 years. Most appraisal clauses in insurance contracts provide that if the insurer and the insured cannot agree on the value of the property or the amount of the loss, either party may make a written demand for an appraisal. Each party then selects their own appraiser and the appraisers perform their own independent evaluation. Prior to the evaluation, the umpire is selected by the appraisers or the Court is petitioned to appoint an umpire. If the two appraisers can agree on the value of the property or the amount of the loss, that amount is established and the process is concluded. If they cannot agree on the value of the property or the amount of the loss, then the matter is submitted to the Umpire for resolution. The Umpire’s decision becomes binding only by a majority agreement (2 of 3).

The most admirable work other than the teaching Voepel and others have done with the Windstorm Network has been to develop an Umpire Code of Ethics. More than anything else, this Code of Ethics provides some semblance of fairness to the individual required to be the “judge” of this very informal and important process. While not truly a judge, an umpire’s powers in the appraisal process cannot be overstated. The individuals that painstakingly worked on the Code should be proud--as should the Windstorm Network. I should point out that this Code is copyrighted.

The Code of Ethics for Umpires in Insurance Appraisals^© was prepared in 2004 by the Umpire Directory Committee of Windstorm Insurance Network, Inc. The Officers and Board of Directors approved the Code on August 3, 2004. Pursuant to the Bylaws of the organization, the Code was adopted by the members at the Annual Business Meeting in February 2005, at the annual Windstorm Insurance Conference. The Code was revised in September 2007.

I encourage all to read the Code in its entirety. I think the most important provisions of the Code are:

PREAMBLE:

The use of appraisal to resolve insurance disputes has grown extensively. Persons who act as Umpires therefore undertake serious responsibilities to the public, as well as to the parties. Those responsibilities include important ethical obligations.

…

Although most proceedings are Appraised pursuant to an insurance contract and voluntary agreement of the parties, certain disputes are submitted to Appraisal by the Court. In all such cases, the persons who have the power to decide should observe fundamental standards of ethical conduct… Umpires, like judges, have the power to decide cases. However, unlike full-time judges, Umpires are usually engaged in other occupations before, during, and after the time that they serve as Umpires. Often, Umpires are purposely chosen from the same trade or industry as the parties in order to bring special knowledge to the task of deciding the pending issues. This Code recognizes these fundamental differences between Umpires and judges.

…

CANON I. AN UMPIRE SHOULD UPHOLD THE INTEGRITY AND FAIRNESS OF THE APPRAISAL PROCESS.

A. An Umpire has a responsibility not only to the parties but also to the process of appraisal itself, and must observe high standards of conduct so that the integrity and fairness of the process will be preserved. Accordingly, an Umpire should recognize a responsibility to the public, to the parties whose rights will be
decided, and to all other participants in the proceeding.

B. One should accept appointment as an umpire only if fully satisfied:

(1) that he or she can serve impartially;

(2) that he or she can serve independently from the parties, potential witnesses, and the appraisers;

(3) that he or she is competent to serve; and

(4) that he or she can be available to commence the appraisal in accordance with the requirements of the proceeding and thereafter to devote the time and attention to its completion that the parties are reasonably entitled to expect.

C. After accepting an appointment and while serving as an Umpire, a person should avoid entering into any business, professional, or personal relationship, or acquiring any financial or personal interest, which is likely to affect impartiality or which might reasonably create the appearance of partiality. For a reasonable
period of time after the decision of a case, persons who have served as Umpires should avoid entering into any such relationship, or acquiring any such interest, in circumstances which might reasonably create the appearance that they had been influenced in the appraisal by the anticipation or expectation of
the relationship or interest. Existence of any of the matters or circumstances described in this paragraph C does not render it unethical for one to serve as an Umpire where the parties have consented to the Umpire's appointment or continued services following full disclosure of the relevant facts in accordance
with Canon II.

D. Umpires should conduct themselves in a way that is fair to all parties and should not be swayed by outside pressure, public clamor, and fear of criticism or self-interest. They should avoid conduct and statements that give the appearance of partiality toward or against any party.

…

F. An Umpire should conduct the appraisal process so as to advance the fair and efficient resolution of the matters submitted for decision. An Umpire should make all reasonable efforts to prevent delaying tactics, harassment of parties or other participants, or other abuse or disruption of the appraisal process.

…

H. Once an Umpire has accepted an appointment, the umpire should not withdraw or abandon the appointment unless compelled to do so by unanticipated circumstances that would render it impossible or
impracticable to continue. When an Umpire is to be compensated for his or her services, the Umpire may withdraw if the parties fail or refuse to provide for payment of the compensation as agreed.

...

Umpires do not contravene this Canon if, by virtue of such experience or expertise, they have views on certain general issues likely to arise in the Appraisal, but an Umpire may not have prejudged any of the specific factual determinations to be addressed during the Appraisal.

During an appraisal, the Umpire may engage in discourse with the parties or their counsel, draw out arguments or contentions, comment on the law or evidence, make interim rulings, and otherwise control or direct the appraisal. These activities are integral parts of an Appraisal…

CANON II. AN UMPIRE SHOULD DISCLOSE ANY INTEREST OR RELATIONSHIP LIKELY TO AFFECT IMPARTIALITY
OR WHICH MIGHT CREATE AN APPEARANCE OF PARTIALITY.

A. Persons who are requested to serve as Umpires should, before accepting, disclose:

(1) any known direct or indirect financial or personal interest in the outcome of the appraisal;

…

(4) any other matters, relationships, or interests which they are obligated to disclose by the agreement of the parties, the rules or practices of an institution, or applicable law regulating umpire disclosures.

B. Persons who are requested to accept appointment as Umpire should make a reasonable effort to inform themselves of any interests or relationships described in paragraph A.

C. The obligation to disclose interests or relationships described in paragraph A is a continuing duty which requires a person who accepts appointment as an arbitrator to disclose, as soon as practicable, at any stage of the appraisal, any such interests or relationships which may arise, or which are recalled or discovered.

...

E. Disclosure should be made to all parties unless other procedures for disclosure are provided in the agreement of the parties, applicable rules or practices of an institution or by law.
…

CANON III. AN UMPIRE SHOULD AVOID IMPROPRIETY OR THE APPEARANCE OF IMPROPRIETY IN COMMUNICATING WITH PARTIES.

…

B. An Umpire or prospective Umpire should not discuss a proceeding with any party in the absence of any other party, except in any of the following circumstances:

(1) When the appointment of a prospective Umpire is being considered, the prospective Umpire:

(a) may ask about the identities of the parties, counsel, or witnesses and the general nature of the case;

and

(b) may respond to inquiries from a party or its counsel designed to determine his or her suitability and availability for the appointment. In any such dialogue, the prospective Umpire may receive information from a party or its counsel disclosing the general nature of the dispute, but should not permit them to discuss the merits of the case.

C. Unless otherwise provided in this Canon, in applicable arbitration rules or in an agreement of the parties, whenever an Umpire communicates in writing with one Appraiser, the Umpire should at the same time send a copy of the communication to other Appraisers.

CANON IV. AN UMPIRE SHOULD CONDUCT THE PROCEEDINGS FAIRLY AND DILIGENTLY.

A. An Umpire should conduct the proceedings in an even-handed manner. The Umpire should be patient and courteous to the parties, their representatives, and the witnesses; and, he or she should always encourage similar conduct by all participants.

B. The Umpire should allow each Appraiser a fair opportunity to present its evidence and arguments.

C. When the Umpire determines that more information than has been presented by the parties is required to decide the case, it is not improper for the Umpire to ask questions, call witnesses, and request documents or other evidence, including expert testimony.

D. Upon the request of either or both Appraisers the Umpire should personally inspect any available damaged property.

…

CANON V. AN UMPIRE SHOULD MAKE DECISIONS IN A JUST, INDEPENDENT AND DELIBERATE MANNER.

A. The Umpire should, after careful deliberation, decide all issues submitted…

B. An Umpire should decide all matters justly, exercising independent judgment, and should not permit outside pressure to affect the decision.

C. An Umpire should not delegate the duty to decide to any other person.

D. In the event that both appraisers agree upon a settlement of issues in dispute and request the umpire to embody that agreement in an award, the umpire may do so.

CANON VI. AN UMPIRE SHOULD BE FAITHFUL TO THE RELATIONSHIP OF TRUST AND CONFIDENTIALITY INHERENT IN THAT OFFICE.

A. An Umpire is in a relationship of trust to the parties and should not, at any time, use confidential information acquired during the Appraisal process to gain personal advantage or advantage for others, or to affect adversely the interest of another.

B. The Umpire should keep confidential all matters relating to the Appraisal process and decision. An Umpire may obtain help from an associate, a research assistant or other persons in connection with reaching his or her decision.

C. It is not proper at any time for an Umpire to inform anyone of any decision in advance of the time it is given to all parties. It is not proper for the Umpire to inform anyone about the substance of the deliberations of the Appraisers. After an appraisal award has been made, it is not proper for an umpire to assist
in proceedings to enforce or challenge the award.

CANON VII. AN UMPIRE SHOULD ADHERE TO STANDARDS OF INTEGRITY AND FAIRNESS WHEN MAKING ARRANGEMENTS FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES.

…

B. Certain practices relating to payments are generally recognized as tending to preserve the integrity and fairness of the arbitration process. These practices include:

(1) Before the Umpire finally accepts appointment, the basis of payment, including any cancellation fee, compensation in the event of withdrawal and compensation for study and preparation time, and all other
charges, should be established.

(2) Umpires should not, absent extraordinary circumstances, request increases in the basis of their compensation during the course of a proceeding.

(3) Umpires should not withhold any decision or award pending payment by any or either party for the services of the umpire.
....

I urge any person interested in becoming an Umpire to take the certification course and then get listed in the Wind Umpire Directory. The classes will be offered at the Windstorm Insurance Conference January 25-28, 2010, in Jacksonville, Florida.

I noted in the introduction that:

“It is incredibly important for a public adjuster to understand ethical issues that can arise in presenting claims. In order to ethically represent policyholders when they are at their most vulnerable it is important for a public adjuster to appreciate and abide by the ethical rules and obligations under Florida Law. The ethical representation of policyholders is the foundation upon which the system of insurance is designed to operate. Without the system's ethical foundation it cannot achieve its purpose to protect the policyholder.”

One of the most difficult ethical aspects of public adjusting is to not practice law. Many non-lawyers do this everyday. When representing an individual as a public adjuster, it is easy to overstep adjusting duties and provide advice or take an advocate position on legal rights. This is clearly practicing law. Regarding the the unauthorized practice of law in Florida, the Florida Supreme Court has explained:

 

In determining whether the giving of advice and counsel and the performance of services in legal matters for compensation constitute the practice of law, it is safe to follow the rule that if the giving of such advice and performance of such services affect important rights of a person under the law, and if the reasonable protection of the rights and property of those advised and served requires that the persons giving such advice possess legal skill and a knowledge of the law greater that that possessed by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct constitutes the practice of law.

Florida Bar v. Sperry, 140 So. 2d 587, 591 (Fla. 1962). Additionally:

The preparation of legal documents by a nonlawyer, beyond taking down and filling in information to complete a form approved by the Florida Supreme Court, is the unauthorized practice of law. Florida Bar v. Smania, 702 So. 2d 184 (Fla. 1997); Florida Bar v. American Senior Citizens Alliance, Inc., 689 So. 2d 255 (Fla. 1997); Florida Bar v. Schramek, 616 So. 2d 979 (Fla. 1993).

The rendering of services, which could reasonably cause members of the public to rely upon those services to properly prepare legal documents, is the unauthorized practice of law. Florida Bar v. Miravalle, 761 So. 2d 1049 (Fla. 2000).

The use of a business name that may mislead the public and give the expectation that the company has expertise in the field of law is the unlicensed practice of law. Florida Bar v. Davide, 702 So. 2d 184 (Fla. 1997).“

Frankly, many public adjusters know far more law and practical suggestions involving legal aspects of property insurance policies than most attorneys. I find it humorous that a Houston personal injury firm that just started doing property insurance coverage cases is going to provide a seminar to public insurance adjusters. Most public adjusters we deal with have years of experience and could give seminars to attorneys in this field of work. You do not become really good in this field without experience. I have been doing this for twenty-five years, and I learn from some of the most brilliant minds in the insurance claims recovery business everyday—public insurance adjusters.

Everybody has certain obligations to the public. Agents, adjusters and attorneys all play important and distinct roles. I think that many outside the industry do not appreciate how complicated being a property insurance adjuster can be, especially when the public adjuster is trying to accomplish the best result for the policyholder. If you want to be one of those public adjusters, I look forward to seeing you on August 13 and at other NAPIA and FAPIA events in the future.

Most insurance company and independent adjusters log far more hours in training, classes, and supervised situations than most public insurance adjusters. This needs to change.

Policyholders deserve superior adjustment work by trained and skilled public insurance adjusters. FAPIA's leadership discussed mandating standards far higher than those imposed by the State of Florida for membership as well as encouraging the Legislature and Department of Financial Services to go even further regarding testing of new public adjusters.

One of the chief complaints from adjusters and claims managers in the insurance industry is the sloppy estimating and measurement practices by some public insurance adjusters. They imply that the sloppiness is fraudulent rather than accidental. To the extent that is true, it should not be tolerated.

Insurance company and independent adjusters should be able to bring this type of conduct, whether sloppy or fraudulent, to the Office of Insurance Regulation. It is about time that public insurance adjusters are subject to market conduct examinations the same way insurance companies are subject to such examinations. This one regulatory action may help the many professional and honest public adjusters rid the industry of problem public adjusters. I am certain insurers would support public adjusters having the same minimum training requirements their adjusters have. From the policyholder’s perspective, there is no downside.

Over the next several months, I am going to encourage ideas and support for higher standards of professionalism and ethical conduct for public adjusters in Florida.

Policyholders need these skilled professionals immediately following a loss so that evidence can be collected and assistance provided to help soften the financial blow of a catastrophe. I have found that if retained within hours of a loss, skilled public adjusters make the insurance product work far better for the insured and there are far fewer re-opened claims because the claim is adjusted right the first time. But this only happens if the public adjuster is trained, skilled, motivated and has sufficient resources to get the job done right.

I first met Alex Sink in Tallahassee shortly after she became CFO. In our initial meeting, she seemed very concerned with the ability of Florida's Catastrophe Fund to raise money quickly if needed. Several months later, she reached a deal with Warren Buffett and bought an option for Florida to receive funds from Buffett's Berkshire Hathaway in the event of a catastrophe. This was long before the financial collapse last year, and I felt she was a genius to have figured out the oncoming credit collapse months before anyone else. Maybe all her years as a banker gave her a much better appreciation for the upcoming financial mess we have been going through.

Sink applauded FAPIA for raising the standards of Florida public insurance adjusters. Indeed, Sink noted that FAPIA has called for higher testing and educational requirements for those obtaining a license, has requested stronger ethics requirements, and made experience a requirement through an apprentice program. She urged the group to promote more professionalism in the trade and to always look for ways to protect insurance policyholders from those that are unscrupulous.

She said that she supported the gradual rate increases for Citizens property insurance because it was not fair that others had to subsidize Citizens so that it could offer rates that are far from actuarially sound. She was happy the Catastrophe Fund exposure was lessened, although she is still concerned about Florida’s financial exposure should a major hurricane strike southeastern Florida.

In the future, she felt Florida's government needs far greater transparency in operations so people know how our government runs and how laws are made. She felt that Shawn Shaw as the Insurance Consumer Advocate was a great appointment because many in Tallahassee forget that the people, not insurance companies, vote them into office. She indicated Shaw was a strong advocate for consumers. Most, including me, agree.

My impression was that she knows insurance consumers need professional help. She clearly suggested that FAPIA continue its longstanding position with an eye towards serving insurance consumers through higher and stronger professional requirements. She is right on that point. Florida deserves highly educated, trained, professional, and ethical public insurance adjusters.

Fifteen years ago, there were few construction firms dedicated to property insurance recovery, repair and restoration. Today, it is a huge industry, with many firms actively involved in the business on a national basis. The types of construction related vendors vary from small board-up companies, to water dry-out companies, to well-known vendors such as Servicemaster. Major construction companies such as Belfor USA work almost exclusively in major catastrophe insurance construction. The growth is largely due to the bottom line margins, which typically vary from thirty-five to forty-five percent of the total repair. Catastrophe reconstruction can be very lucrative, and the secret is out in the construction industry.

The National Association of Public Insurance Adjusters (NAPIA) has a longstanding ethical rule that its members not act as repairmen and contractors on losses they adjust. The reasons are obvious: the many conflicts of interest. Adjusters determine a theoretical amount of value of damage. The policy wording, benefits, timing of the benefits, laws and regulations affecting the policy all go to determine the amount the policyholder may take as money, repair as it was, repair differently or replace at another location. There are an infinite number of calculations which can be considered regarding the value of a loss such as scope of loss, values of materials, labor, skill of labor needed, time needed, and material quality. Adjusters determine the measures and make estimates to arrive quickly at a full and fair amount of value.

The people and entities doing the repair work have another mission, a defined repair determined by the policyholder at a profit. The policyholder obviously wants it done as inexpensively as possible, and the repairmen want that defined work done for the maximum willing to be paid by the policyholder. So, what happens when the party paying the repairman is the insurance company and not the policyholder? It does not take long for most to figure out that the policyholder may not be getting the full benefit of the insurance product. Even the insurer may subject itself to a bargaining party primarily interested in increasing profit. And this is the simple concern.

Contractors cannot practice law. They cannot practice public adjusting. Indeed, Texas recognizes the conflict: contractors cannot hold a license as a public adjuster, public adjusters cannot hold a license as a contractor. However, many restoration contractors are doing both. It is often illegal as well as unethical, but there is little regulation because few seem to be raising the issue.

In the field, I am finding many insurance recovery contractors that get construction jobs with one page contracts that ambiguously indicate they will fix the repair for the amount paid by the insurance company. To get the business, many promise they will do the job and "absorb" the policyholder's deductible. The work is started, and the contractor then "negotiates" the insurance claim with the insurance company adjuster. Whether the insurance policy is paying all benefits for the quality of the work anticipated or not, the contractor determines the quality of repair based on the amount of money the insurance company agrees to pay. Does anybody ever consider that the insurer could benefit by having a lesser scope of repair or lesser quality of repair and choose not to question unusually high construction costs? Would the insurance company question the construction costs if the bottom line was less than the full amount it owed? This happens frequently. The policy becomes a repair contract rather than one of indemnity.

Some insurers are realizing that the restoration companies are overcharging the entire job as well. Many insurers and contractors have close relationships; contractors have often introduced insurance adjusters to the policyholder. More than ever before, our firm is called by policyholders when the relationship between the insurer and contractor has broken down.

This issue deserves more discussion by everyone in the industry. It is clear though that only attorneys practice law, public adjusters adjust for policyholders, and contractors should do neither--they build and construct. Contractors have the education and licenses required to build; they do not have the education or licenses required to give legal opinions and interpret insurance policies.

During a break in my presentation at the NAPIA annual conference, Depreciation Should Not Be Taken for Partial Losses That Are To Be Repaired, Dick Tutwiler, a very experienced public adjuster, approached me regarding an ethical obligation he felt I overlooked in the discussion of ethical adjustment of glass door and window claims. He explained:

Public Adjusters have an ethical obligation to submit claims only after conducting a reasonable and honest investigation. Many older glass doors and windows have normal wear and tear and pre-existing loss issues which require the public adjuster to investigate the pre-existing nature of the items rather than to simply submit a claim for all damage seen.

His point is well taken. Adjustment requires investigation and evaluation of damage as well as coverage. Adjusters, whether for the public or the insurance company, are ethically obligated to complete these two primary duties of adjustment. Public adjusters should not place their policyholder clients in the position of having to explain or answer for fraudulently appearing claims without merit because of poor or non-existent investigation into the prior nature of items before a loss occurred.

I neglected to mention this very important point. There is a concern from many leaders in the public adjustment field that the poor work of some creates a public perception that public adjusters care about one thing--how big the claim can be made. A public adjuster’s job is to accurately determine the full amount of the insured's loss. Ethical public adjusting is not a wrongly evaluated claim amount following a cursory investigation. I am certain most professional public adjusters feel the same way and expect their colleagues to perform to this standard or get out of the business in order to maintain the integrity of the profession.

Most public adjusters active in NAPIA and FAPIA have expressed Tutwiler’s concern in a number of different ways. I should have addressed it better in my recent speeches in Florida, Texas and California.

On another note, Sandy Burnette correctly made a comment where I went too far. In response to my post, Is the State Farm Policy Really Worth Anything?, Sandy Burnette made the following observation:

"While I try to resist responding to all your posts, and it sometimes takes quite a bit of restraint to hold myself back, once again I find you have crossed the proverbial line.

Your opening sentence questioning "what is the value of insurance if it doesn't cover an insured loss" is beyond misleading, it is simply untrue. By definition, an "insured loss" is covered.

Suggesting that "insured losses" are not covered by insurance companies is an oxymoron. (Yes, claims are often wrongfully denied. But we have courtrooms to make sure that is corrected.)

It makes for sensational reading when you write those things and it creates a platform for you to once again rail at insurance companies, but unfortunately it just isn't true. This post is nothing more than an expression of the belief that anything bad that happens to somebody "ought" to be covered by their insurance policy."

His comment went on far beyond this quote, but that point is well taken. I wrongly wrote the following line in the context of that post:

"What is the value of insurance if it does not pay for insured losses?"

That is a great and accurate line I have often used in bad faith cases, but not accurate where there is no coverage. I should have written:

"What is the value of insurance if the policyholder is not informed that it will cover only a few losses? How would the public perceive the value of State Farm's product if it fully advertised its positions of what is not covered under the product?"

I think the point is obvious--the value is far less. The security advertised by State Farm in no way reflects how State Farm writes exclusions into its product. Some may say that the ads are disingenuous because they do not adequately warn State Farm policyholders about the common accidental risks of loss that State Farm excludes in its product form. That was my point.  

Policyholders and the public should be made aware of this in advance rather than after purchasing the product or after the loss when it is too late to do anything about it.

I do not want State Farm to be run out of business. As the industry leader, I would hope that somebody in its very able and bright management would critically review these issues. If State Farm changes, many other carriers will do the same. If not, I hope that others with me will raise the issue and make State Farm change through public policy or by purchasing from insurance companies that do not provide false promises of security.

There are other responses to Burnette's comment that need a reply in a later post. I will try to do better in expressing my opinions and not forgetting information. Thanks to all who comment.

Citizens was investigated in 2007 regarding its claims handling. The Citizens claims management explained how they went from an inept claims organization to one which maintained standards at least as good as any in Florida. While that was debatable, I agreed that Citizens responded better to the 2007 storms than it did in 2004.

Five months ago, there was a major change in the Citizens claims organization. Within the last month, we have received complaints regarding hardball, deceitful, and bad faith claims handling by Citizens with the full support of the new Citizens claims management. While Citizens publicizes that its intent is to provide "fast, fair, honest and accurate claims service," recent examples provided to me indicate that mission statement is false.

Insurance adjusters have to investigate coverage and evaluate damages. They are ethically bound to do this promptly, honestly, and in good faith. This is required of every adjuster as part of their license with the state of Florida. Today, Citizens adjusters are being told by its managers not to provide Citizens' estimate of damage to the policyholder or policyholders representatives. At the Florida Association of Public Insurance Adjusters Winter Conference last week, many public adjusters told me that Citizens refuses to provide its estimate of damage, claiming that it is "work product."

How a policyholder knows whether Citizens' payment is accurate without an estimate of how Citizens evaluates the damage is beyond me. It would be like getting an IRS refund and the IRS refusing to tell you how it figured the number. Or, imagine a scenario where a butcher takes the steak you select, tells you to give $20, weighs the steak, and then gives you back $2.02 in change, but refuses to tell you how much the steak cost per pound and its weight. Some may consider this a possible theft, yet this is what Citizens is doing to Floridians every day.

What is worse is that TWIA has been doing the same to its policyholders with a slight twist. It paid most slab claimants approximately 10% of the face value of the policy. It generally provided no estimate for this, but has indicated it was investigating. We have received dozens of calls from potential clients asking how long TWIA can take to investigate and not provide an estimate. Texas public adjusters are calling in furious because TWIA adjusters make up excuses for not providing any of its estimates.

The worst example is a Citizens policyholder now represented by Nancy Dominguez of Florida Adjusting Services Team, Inc. The policyholder was sent a check and complete release without an estimate. Citizens sent these, obviously hoping the client would take the check and sign the release. Nancy learned of this  and demanded an appraisal to resolve the amount of the loss because the check amount was far lower than the amount she estimated. In the appraisal proceeding, the Citizens estimate was finally turned over, and it was for an amount higher than the payment check it sent to the policyholder. The appraisal resulted in an award almost double Citizens' "hidden" estimate and about three times the amount of the fraudulent check.

Insurance adjusters should be prosecuted for this conduct. It is an attempt at insurance fraud.

Maybe our law firm should not complain. Our phones are ringing off the hook. Yet, while insurer bad faith is good for business, it is terrible when it is obvious these practices harm those who are already in desperate need of fair and honest treatment.

Motivated and trained claims professionals are needed to help policyholders obtain benefits the insurers are trying not to pay.  Some of my insurer colleagues may dispute this, but I have yet to read an internal insurer claims goal which increases the amounts paid to its policyholders.  The goals are just the opposite, and the pressure to reduce claims payments is often confirmed by adjusters who leave the insurance industry to become public adjusters.

Tuesday night, I spoke with three former State Farm adjusters.  All three spoke of the pressure to handle and close more claims, to closely read the policy language, and to not pay for certain items following disasters before actually adjusting losses.  They went so far as to have role playing scenarios where they practiced negotiating techniques which dupe customers into believing the insurer position regarding adjustment is proper.  Adjusters should be looking for ways in the policy and facts of the loss to pay more. 

Does any policyholder truly have a chance when all the training is geared towards non-payment? One public adjuster talked of going to a Haag Engineering seminar regarding roof damage.  These are generally attended by the insurance company adjusters.  The Haag trainer opened the seminar claiming that adjusters would learn techniques to pay for little, or possibly nothing, on roof claims where the adjuster would otherwise pay for complete replacement.  How insurance companies can repeatedly escape accountability for procuring outcome oriented investigations still amazes me.  Most policyholders have no clue that an adjustment is being made for the appearance of good faith, when it is anything but that.

These former insurance company adjusters revealed that all these wrongful activities were culturally accepted as proper.  Some admitted they were "brainwashed", by subtle motivation and goal setting on how they paid claims, into thinking they were the guardians of the insurance company treasury.  Without exception, I have never met a public adjuster who wanted to go back to the insurance company.  They all express much greater job satisfaction as public adjusters and genuinely helping people. To be fair, I see the denials and problem cases.  I do not have policyholders calling me when an insurance company adjuster goes out of his way to provide the service required by a good faith adjustment. 

I know there are many well-meaning and professional adjusters helping the company customers.  I am certain I see mostly the unethical adjusters and not those who do their job ethically. So long as the insurance industry promotes severity control goals and motivates its field adjusters to look for ways to pay policyholders less than what is owed, the public adjuster business will be a brisk and growing industry.  In today's claims environment, every policyholder with a significant loss should consider hiring their own claims professional.