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

Let’s take a look at the crop of insurance bills, and where they stand:

• HB 245, Relating to Depopulation Programs of Citizens Property Insurance Corporation
  • Sponsored by Boyd
    • Next Cmte: Economic Affairs, 12/8/11 from 9 – 11am in 102 H

• SB 578, Relating to Depopulation Programs of Citizens Property Insurance Corporation
  • Sponsored by Richter
    • Next Cmte: Banking & Insurance, 12/7/11 from 9:30am – 12:30pm in 412 K

HB 245 and SB 578 would allow surplus lines carriers, which are not subject to the same state regulation as admitted carriers, to participate in the Citizens Property Insurance Corporation depopulation program. If implemented, surplus lines brokers would have the ability to review Citizens policyholder underwriting and claims information, then cherry pick the policies they wish to take off Citizens books, leaving the state run insurance company with an even more risky pool of policies. Once a policyholder leaves Citizens, there appears to be no real mechanism for reentry. A surplus lines carrier could conceivably renew the policy with exorbitantly higher rates, free from the rate regulation of OIR.

The House version of this bill has already cruised through its first committee, and is scheduled to be heard on Thursday, December 8th at 9am. The Senate version was scheduled to be heard in the Banking and Insurance committee on December 7th at 9:30am.

• HB 243, Relating to Expert Testimony
  • Sponsored by Metz
    • Next Cmte: Civil Justice, 12/7/11 from 1 – 3pm in 404 H

• SB 378, Relating to Expert Testimony
  • Sponsored by Richter
    • Next Cmte: Judiciary, 12/7/11 from 2 – 4pm in 110 S

HB 243 and SB 378 aim to bring the state of Florida’s evidentiary standard (the Frye standard) into line with federal Daubert standard. Under the Daubert standard, judges would be given more leeway as “gatekeepers” of science. These bills will both be heard in committee for the first time on Wednesday, December 7th.

• HB 427, Relating to Civil Remedies Against Insurers
  • Sponsored by Passidomo
    • Next Cmte: Civil Justice 12/7/11 from 1 – 3pm in 404 H

HB 427, the controversial “Bad Faith bill” is scheduled to be heard in its first committee on Wednesday the 7th at 1pm. This law would effectively chip away at the state’s bad faith statutes – statutes that exist to protect you if your insurance company chooses not to fulfill its end of the insurance contract or act unreasonably when adjusting your claim. Erosion in bad faith laws lets insurance companies evade their contractual obligations and harm policyholders without recourse.

• HB 761, Relating to Property Loss Appraisals
  • Sponsored by Artiles
    • Next Cmte: Not Assigned

• SB 846, Relating to Property Insurance
  • Sponsored by Fasano
    • Next Cmte: Not Assigned

HB 761 and SB 846 have a few things in common. First, they are the only pro-consumer property insurance bills that have been filed for the 2012 legislative session; second, they are the only two property insurance bills that have yet to be assigned a committee.

Coincidence? I think not.

Senator Fasano’s bill would require insurance companies to provide reasonable information to consumers in a timely fashion – hardly a controversial concept. Similarly, Representative Artiles’ bill would simply require Citizens Property Insurance Corporation to comply with conditions & procedures relating to participation of umpires & appraisers in loss appraisal process – a very modest proposal. Yet neither of these bills are scheduled to see the light of day.

That is simply not fair. I will be in Tallahassee this week to listen to the proceedings and to discuss the importance of maintaining legitimate consumer protections in statutory law. If at all possible, I urge you to join me. Even if you can’t make it to Tallahassee, you can make a difference. Call your legislator’s office. Write a quick email and voice your concern. Your opinion matters, and the only way to make a difference is to make yourself heard.

Fresh off his first term in the State House, Representative Artiles has already proven to be a fierce advocate on behalf of the state’s eight-million policyholders – a veritable bulldog who will always let you know how he feels about the issues.

We sat down with Representative Artiles to get his take on some of the most pressing issues facing Florida’s eight million policyholders. Representative Artiles impressed us with his strong pro-consumer inclination and, true to his reputation as a no-nonsense legislator, Representative Artiles proved to be a true champion for Floridians, both in his district and across the state.

Q. Why is property insurance always such an important issue in the state of Florida and, more specifically, in your district?

Representative Artiles: Property Insurance will always be a hot topic in our state. First, Florida isn’t the most appealing state for insurance companies to write policies because of the amount of risk the state poses for natural disasters. Our climate and geographic location put Florida on a different playing field than other states. Now if you look at my district, I represent parts of Miami-Dade County, which includes parts of Country Walk, Homestead, Red Lands and West Kendall. My District was ground zero for hurricane Andrew and many of my residents experienced the claims process after a natural disaster.

Q. What causes insurance rates in the state to be so high?

Representative Artiles: As I mentioned before there are several factors in our state we are unable to control such as the weather and our distance from the water table. However, there are things we can control which are attributed to the high rates in our state. Those things include the investigation and prosecution of fraudulent insurance claims and more importantly the insurance industry’s fascination with deeming everything to be fraud in order to avoid paying covered perils under policy. What our state needs is standardized policy language so consumers and companies can compare apples to apples.

Q. In the most recent legislative session, insurance lobbyists and even some legislators implied a presumption of guilt with regard to fraud among those policy holders submitting insurance claims. Does that strike you as troublesome?

Representative Artiles: Absolutely, when you sit down and actually read through the data of confirmed instances of fraud it is amazing how low the numbers really are. Yet, unfortunately, legislators buy into the misconceptions the insurance industry is selling and support their perceptions of fraud. The consumer has a right to be made whole and insurance companies deny, delay and do not pay claims in order to increase their profitability. If you’ve determined everything to be “fraud” it makes it a lot easier not to pay out claims and even easier to justify rate increases or bad policy such as in Senate Bill 408. What other word triggers that knee jerk reaction?

Q. What are your thoughts on how the state can reduce insurance rates and increase insurance availability?

Representative Artiles: I believe my fellow legislators and I can play a dramatic role in reducing the insurance rates in our state. Unfortunately, my colleagues had it wrong this session. First, the mentality of, "if you build it they will come" is unrealistic and has no place in any business model. We need to look at our fellow high-risk states and see what models work and what models don’t. Whichever plan we decide on must be well thought out and executed. However there are some quick fixes such as standardized policies, appraisal clauses, management company disclosures and transparency regarding insurance companies’ expenses.

Q. What role should Citizens play in the state?

Representative Artiles: Citizens Property Insurance Corporation was created because of the disproportion of natural disasters affecting our state. Citizens was created to protect those on the coast line who after a few bad hurricane seasons found themselves unable to find any coverage. Citizens, as it was intended, should be the insurance company of last resort and it has morphed into the largest insurance company in Florida. Recently, Citizens has even changed policy language astronomically increasing litigation and attorney fees.

Q. What are your constituents telling you about property insurance issues?

Representative Artiles: My constituents aren’t telling me, they are begging me for help. Every day my office receives dozens of emails, phone calls and letters regarding property insurance. Their desperation is simple. Why would the Florida Legislature vote to pass pieces of legislation like Senate Bill 408 when times are so tough? Unfortunately, having voted against the bill several times, I don’t have a simple answer for them. 

Q. What do you think the next legislative session holds for property insurance policyholders in the state? Should they be worried?

Representative Artiles: It will be interesting to see how things play out in the next couple of months with the enactment of the new property insurance laws. It’s interesting to see the amount and depth of bad press surrounding the recent changes. With that being said, I’m hopeful for this coming Session. I know I’m not alone in the amount and severity of complaints I’ve received from my constituents. Our job as legislators is to do what is best for those who elect us while we are in Tallahassee. I truly believe meaningful, consumer friendly insurance reform is possible and I look forward to fighting for the consumer next legislative session. 

Q. Is there anything else you would like to add about property insurance issues facing the state?

Representative Artiles: Something must be done to negotiate fair and transparent laws that protect consumers while keeping insurance companies profitable. Unfortunately, when the insurance industry invests over five million a year in lobbyists, experts, reporters, editorials and campaigns it makes it difficult to get them to the table. It is up to our state legislators to the right thing and listen to both sides, not just the side with the largest piggy bank. I have faith that the newly elected legislators will have what it takes to make the right call. 

For more information on Representative Artiles, you can visit his website at http://www.frankartiles.com/. You can contact his Legislative Assistant, Raena Wright, HERE and his District Secretary, Beatriz Lopez, HERE.

How many politicians give out their personal cell number inviting people to call about important issues? Frank served in the Marine Corps, worked as a public adjuster and has studied law. He is not a professional politician, which is pretty obvious to everyone that knows him. He is also an independent thinker and is not shy about telling others about those thoughts.

The insurance industry may have worked very hard to defeat the election of Frank Artiles. I suspect that their professional and full time lobbyists will be working hard to influence Frank because he has first hand knowledge of the terrible treatment some policyholders receive when the insurance product is called upon to perform.

The big question for Frank is how effective he will be convincing his Republican colleagues that insurance consumer protection is paramount to wrongfully derived profits. Insurance companies should never derive additional profit by failing to promptly and thoroughly investigate a loss and adjust the claim so the full amount of benefits are paid as fast as possible. They should also not be allowed to derive wrongful profits by deceptively selling replacement cost insurance which is not truly replacement cost insurance. Honesty and good faith should always come before profits at any cost or we are simply inviting insurance companies to break promises and obtain an economic advantage by not playing by the rules and following the law.

Newly-elected State Representative Frank Artiles, a public adjuster, appraiser and umpire by trade, held a teleconference on November 22, 2010, with the goal of introducing himself to Florida insurance industry representatives and other interested parties and discussing their concerns, such as fraud and other issues impacting the property and casualty market.

Joined by Paul Handerhan, president of a new insurance advocacy group (founded by Representative Artiles) called "Florida Association for Insurance Reform," Representative Artiles explained that, through various working groups he has facilitated, he has learned there are ways to compromise on the issues, while advocating for consumers.

"I didn't come to Tallahassee to represent public adjusters," he emphasized several times, "I came to represent my district."

After discussing his background at length, Representative Artiles touched on general Florida insurance issues, such as Citizens Property Insurance Corporation ("Citizens"), which he said puts private insurance companies at a competitive disadvantage, principally because it is immune from bad faith claims.

"I want to protect insurance companies to make sure they do make a profit, because at the end of the day, I am a Republican," he added.

Representative Artiles also said he wants to "stamp out fraud," because of its negative impact on the State, as well as on insurance policyholders.

The meeting participants quickly prompted a discussion on claims-related issues and public adjuster fraud. The subject of insurance-related Special Investigative Unit ("SIU") personnel also was touched upon.

"There are good public adjusters and bad SIU people," Representative Artiles said.

In regard to ongoing Hurricane Wilma fraud, Representative Artiles said that there is no reason insurance carriers should be getting newly reported losses from several years ago, when claimaints have had ample time and opportunity to do so earlier.

Arson, he said, is also an issue in certain parts of Florida because of the economic situation. "When someone buys a house in the foreclosure process for $40,000 and insures it for $250,000, the policy alone motivates them to burn down the house," he explained. "We are also limited by the Valued Policy Law."

Further, because of the way Florida's laws are written, he continued, many claims are not technically classified as fraud.

...

On the subject of public adjusters, he referenced Florida's requirement that each public adjuster must carry errors and omissions insurance and said that, since this mandate, nearly 1,000 public adjusters have vacated the field.

Together with Mr. Handerhan, Representative Artiles discussed the licensing of appraisers and umpires. Apparently, many of those who currently hold appraisal and umpire licenses, or "consider themselves appraisers" have been convicted of Medicare fraud and "been literally unlicensed in every aspect."

Representative Artiles alluded that SIU investigators should be licensed as stringently as public adjusters and appraisers. It was pointed out that many of these independent people are not even trained as thoroughly as their counterparts at private corporations.

He added that, in the context of a claim, the SIU representative doesn't make an ultimate decision, but has a significant impact on the process.

One meeting participant said that public adjusters canvassing neighborhoods present a danger to policyholders, who have no screening process to determine their qualifications.

Another meeting participant said he would like to see licensing standards for SIU personnel that are comparable to those applicable to public adjusters and appraisers. The large disparity in requirements sends mixed signals, he explained.

...

"Citizens is literally eating its cake and hurting the entire industry," Representative Artiles said.

...

Representative Artiles remarked that many cases of fraud don't involve public adjusters, adding that a change in Florida's replacement cost value ("RCV") statute has "turned the claims industry on its ear." He explained that, because Florida is the only state that requires insurers to pay RCV up front, the law is anti-consumer, since the costs of these payments are passed along in higher premiums.

He went on to say that Florida should adopt an "Arizona-style" law that would mandate a comprehensive inspection prior to selling a home. The information would be kept in a database and, according to Representative Artiles, would provide a long-term savings for insurers that have access to this type of information. It also would help takeout companies, he said, which he described as "flying blind" from the outset of assuming a policy.

...

 He also remarked that many general contractors are out of work and would welcome the opportunity to be employed as public adjusters.

Candidate Frank Artiles wrote a guest post on this blog, Everyone Must Participate In The Political Process. There he was quite emphatic about the number one problem regarding insurance:

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.

Time will tell what laws Frank Artiles will support on that agenda. Privately, I will do what I can to explain fully the various issues Frank Artiles raised in the teleconference.

I absolutely disagree that the current Replacement Cost law is anti-consumer. It makes insurance companies pay for what they sell: replacement cost insurance. Most consumers will never believe that  allowing insurance companies to sell Replacement Cost Insurance and not requiring that replacement costs be paid is a pro-consumer law because it is not. Such a change in the law promotes deceptive advertising and avoids the legal problems noted in Prevention of Performance with Replacement Cost Value:

…the 11th Circuit Court of Appeals did not agree that the doctrine of prevention of performance should be applied to replacement cost value provisions in insurance contracts when an insurer fails to pay at least actual cash value. The 11th Circuit recognized that it would have been costly, inconvenient, and most certainly a hardship for the association to pay for millions of dollars in repairs without the assistance of insurance benefits, but held that the hardship would not excuse the contractual requirement to actually repair the property before replacement cost value damages could be awarded. The appeals court reversed the trial court’s award for replacement cost value, but affirmed the trial court’s award for actual cash value damages, finding that they had been sufficiently proven.

This decision leaves many unanswered questions for policyholders. For starters, where is one who suffers a large loss supposed to get money to make repairs in order to get replacement cost value? Other issues are equally unsettling in the case, including the supposed election of remedies between ACV and RCV when making an insurance claim that the 11th Circuit discusses.

The flaw in the type of law Representative Frank Artiles now proposes was explained in QBE Insurance Case Rewrites Replacement Cost Adjustment, where I said:

The practical impact of such legal reasoning is that insurers, absent consumer protection statutes requiring payment of replacement costs, can now underpay losses and get away with it.

The existing law protects Representative Artiles' constituents; the law he proposes would essentially allow insurance companies to delay paying or even fleece the difference between replacement cost and actual cash value from policyholders who are at a financial disadvantage when it is time to rebuild or repair after a loss. 

Given that Representative Artiles stated that the number one insurance problem was delayed and denied claims, I cannot imagine why he would support changes to insurance laws that encourage this wrongful behavior.

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.

I wrote about Frank Artiles in Merlin Law Group Hosting Public Adjuster Ethics Seminar Followed by a Political Fundraiser for a Public Adjuster Running for Public Office and noted:

“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.”

As a personal philosophy, I believe in that highlighted sentence and applaud a true consumer advocate for taking the jump into politics. Frank Artiles is engaging, with strong conservative beliefs and a true sense of the need for accountability. Please join us next Tuesday night.

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.

On Thursday, August 13, we are co-hosting a fundraiser for Frank Artiles with Miami-Dade County Commissioner Jose “Pepe” Diaz in our Coral Gables office from 6 pm to 7:30pm. Frank is a wonderful person and will make a devoted public servant. We need more bright individuals like Frank Artiles in our legislature who are willing to stand up for the average insurance consumer as Senator Mike Fasano does.

The Merlin Law Group is also presenting a continuing education seminar for public adjusters earlier the same day. At 4:00, I will make an hour-long presentation, Ethical Issues in Presenting Claims. I expect this class to be very interactive, as they usually are when a roomful of public adjusters come together to learn and share with fellow professionals. I have applied for 1 ethics credit for public adjusting continuing education for this class. The following topics are on the agenda:

• Unauthorized/Unlicensed Practice of Law: How to recognize it and to ensure you do not do it

• Unauthorized/Unlicensed Public Adjusting: The legal ramifications of contractors and others associated with the building trade who are not licensed public adjusters and who negotiate insurance recoveries with insurance adjusters

• Code of Ethics: Discussion of the public adjuster's ethical requirement to "put the duty for fair and honest treatment of the claimant above the adjusters own interests in every instance."

• Public Adjusting Contracts: Discussion of waiting periods, signing proofs of loss, appearing for EUOs, excessive fees, and all questions you may have on these topics.

The seminar is in the Westin Colonnade Hotel immediately adjacent to our Coral Gables office. We will host a cocktail party/fundraiser thereafter in our Coral Gables office at 6.

Everybody is welcome to attend the fundraiser. All public adjusters along Florida's east coast should make their way down that afternoon for education, political support, and fun.

You never know what can happen in life until you try. We need your help on this endeavor for Frank.

Public Adjusters can register for the Ethics Seminar by clicking here.