Scott Johnson is an excellent leader for the Florida Association of Insurance Agents (FAIA). His father was President of the FAIA for 37 years. Scott Johnson has a keen and unique perspective on insurance in Florida. His views regarding the insurance landscape should be considered and not dismissed without analysis, even by those in strong disagreement.

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:




  • Gary Ahrens


    I believe the following statute gives the right to an agent of an insurer to adjust a claim. If they can do it correctly, remains to be seen.

    626.862 Agents; adjustments by.–A licensed and appointed insurance agent may, without being licensed as an adjuster, adjust losses for the insurer represented by him or her as agent if so authorized by the insurer. The license and appointment of the agent may be suspended or revoked for violation of or misconduct prohibited by s. 626.611(6).

  • Don Phillips


    This is one of your all time best blogs. I read Mr. Johnson’s articles and while well written they definately take a pro-insurer and anti- public adjuster slant. I especially did not appreciate his statement that all public adjusters charge a 20% contingency fee. That is simply not true. In at least 95% of my cases my public adjusting contingency fee is 10% and I have never charged more than 15%. I know there are many other PA’s who can say the same thing. Are there PA’s out there charging exhorbitant fees and committing fraud? Unfortunately yes. However painting the entire PA industry with a broad brush is simply wrong. You wouldn’t have to look very hard to find examples of insurance agents getting arrested for fraud. Does that mean that all agents are crooks? Certainly not. My fondest hope would be that the demonization of the PA profession by the insurance industry will stop. One way to help that happen is for PA’s to act in a professional manner, comply with the rules and regulations imposed on us and most importantly always put the client’s interests first.

  • Scott Johnson

    Chip, good to learn that you read my stuff and thanks for all the kind words even as you systematically pointed out alleged flaws in what I wrote:). Glad you read my book, too (so you’re the one). Some of what we are talking about with regards to licensing may be mincing words,I admit; but…agents perform the functions of adjusters all the time and are permitted by their license to do so–just as you are by virtue of your attorney’s license. Agents can even be paid by the carrier to adjust claims and sometimes are given “draft” authority to pay claims; though this practice has fallen by the wayside of late. Agents, just like Attorneys, however, would need to get an adjusters license whenever they hold themselves out to the public as an adjuster; not to merely perform the functions of an adjuster as part of their jobs, on an indcidental basis, or…with an agent on behalf of a carrier with which they are appointed. The statutes you cited are consistent with this. BTW–when I worked at OIR I was in charge of licensing adjusters, so I’m pretty sure I’m right on this one. As to the Replacment Cost hold back issue, you kinda argued my point for me. You’re right, some companies provide it when allowed to, in other states (maybe in the form of Functional Replacement Cost), on some lines, under certain circumstances, but…they are allowed not to provide it, if they don’t want to (So, I agree, let’s do like those other states). And, don’t forget those who choose to provide it do so at an extra cost, which is partially why the hold-back provision was instituted near the turn of the century; to allow replacement at a lower cost by keeping out the shenanigans that would otherwise accompany it. Frankly, nothing bad really happens when, as you said, a few people get a check with no holdback, but when the law prohibits any hold back for everyone, you’ve got an industrywide deterioration as we are experiencing. So, I agree with you, all that’s necessary here in Florida is to allow the choice as in the venues you cited. Finally, while I respect your push for more oversight and audits of PA’s, I’m really not advocating that. The Public Adjusters I’ve had the honor to know, are like you, good, honest, hardworking people interested in helping consumers. But, isn’t it possible that a statewide prohibition against holding back is attracting some bad apples? The good organization you founded has around 425 members but, there are another 2600 or so out there (more than the next five states combined); again, because of the lack of any hold back. Anyway, you are not only one of the most talented lawyers I know, but in our service together I learned you are also open to the idea’s of others and I respect you for that. Funny you quoted my favorite group, the Beatles. Maybe, as you noted and as John Lennon said, we can all “Come Together”, but…on this issue, I think their “Let It Be” album has the appropriate song; we need to “Get Back” to where we once belong; by allowing the choice of a holdback. :) Hope to see you again soon.

  • Al

    I am pleased as punch that Mr. Merlin took the time to clarify this article for me. I was perplexed for days trying to figure out what Mr. Johnson was trying to make.

    As a former journalist and public adjuster for over 15 years, I detest when articles are so poorly constructed and peppered with inaccuracies, especially when the facts are so obvious to an insurance professional. Most policyholder’s unfortunatly do not have the knowledge or time to research these issues on their own. It saddens me that many would consider what Mr. Johnson is stating to be truth. It is a shame that in today’s media, anything can be published online, and the facts fall by the wayside. I feel its abusive to mislead and misinform.

    What I find most curious is Mr. Johnson’s statement, where he claims that policyholder’s are essentially paying twice for employing a public adjuster.
    I’m sure Mr. Johnson’s father was a reasonable and well respected man, but when I read this article – which is completely riddled with cynicism – it makes me wonder how many people working for insurance companies or insurance organizations actually earn their positions. I really would have hoped that Mr. Johnson would have taken more time and put special thought into what he was writing. A special thanks for Mr. Merlin for clarifying this troubling article for me. It would be nice if all insurance professionals could coexist peacefully. From my experience, as long as men like Mr. Johnson continue to mislead, misinform and attack, the more it makes me want to sign up a claim and make the insurance company pay what is owed.

  • Scott Johnson

    Al, if a policyholder pays a PA, when they could’ve gotten their claim paid by just reporting it to the company or calling their agent, then they have paid twice; right?. I never said policyholders shouldn’t call a Public Adjuster, nor did I say all PA’s were bad (only the bad ones are); which is also what Chip acknowleged. Notice also; the statute cited above by “Gary Ahrens”, FS626.862; doesn’t that confirm my statement about agents being able to adjust? My bet is that Chip will acknowlege this as well. Next, notice the closing sentence of my newspaper piece, I said…”never sign away any portion of what you deserve until you first exhaust the options you’ve already paid for.” I hope you’re not saying that’s bad advice? I only had to say it because Mr. Bauman forgot to. Again, I bet that Chip would likewise acknowlege that logic as well. As a former journalist I’m sure you can see, therefore, that unless you have something else, my statements remain completely unrefuted and accurate. If you have any proof to the contrary I’ll respectfully admit I was wrong, but…so far you have provided none.

  • Don Phillips

    I had to respond to your comment asking Al to provide proof where you were wrong in the statements you made in your articles. How about your statement that public adjusters charge 20% contingency fees accross the board. That statement is just flat out wrong.

    Your statement regarding a policyholder paying twice for help with their claim when they hire a PA is also out of touch with today’s reality. I spent 25 years as a claims professional representing insurers and for the first half of that career I would say that the insurers and their agents did do a good job of advising a policyholder of all of the coverages available and assisting them with their claim. I saw agents advocating for their client when they thought a carrier was not being fair and carriers actually listened to the agent.

    Sadly those days are long gone. I can think of very few cases over the last half of my career on the insurer side or the 11 years that I have been a PA where the carrier allowed their agent to have any meaningful input on a disputed claims decision. It just doesn’t happen.

    So the question arises as to just who is going to effectively advocate for the policyholder if not a PA? Certainly not the carrier. Maybe the agent will try but probably not. It is not a matter of whether the carrier’s claims person or the agent have the claims knowledge and resources available to help the policyholder. Rather in today’s claims world they do not have the initative or desire to do so.

  • Chip Merlin

    I appreciate everybody’s interest and comments.

    I will have a post about some of this in the morning.


  • Scott Johnson
  • Al

    I’m sure there are a number of intelligent insurance agents out there. I cannot say I have met an agent that really knows coverage that well. It baffles me that some agents are pushing DP1 policies and not letting the insured know that it is basically worthless. So for me, it would be interesting to see an agent adjust a loss. I have some questions.

    Is he getting paid commission for adjusting, or does he work for free?

    To adjust he would go out to inspect, scope and do an estimate and turn in to the insurance carrier, right?

    Or will he be able to just issue payment on site? How does this work? If this is true, I am definitely going to surrender my PA license and get an Agent’s license.

    I hope someone could shed light on this. My interest has piqued.

  • Scott Johnson