The Department of Insurance is looking to change the way adjusting is done in Florida. Rule changes to 69B-220.051 and 69B-220.201 have been proposed. Here is the summary from the Department:
The proposed changes to Rule 69B-220.051, F.A.C., clarify the responsibilities and requirements of public adjusters and public adjuster apprentices, define the terms “direct supervision” and “adjusting services,” specify the terms and conditions of public adjuster contracts, require the license number on advertisements, delete provisions that reiterate or paraphrase statutory materials, and prescribe practices to ensure fair dealing between public adjusters and claimants. The proposed changes to Rule 69B-220.201, F.A.C., update the code of ethics for all adjusters, delete provisions that reiterate or paraphrase statutory materials, and clarify the responsibilities and requirements of all adjusters.
The Department suggests that if there is a timely request, a meeting will be held on these proposed changed on May 9, 2013, in Tallahassee. The Notice of the Proposed Rule Changes makes it sounds like the Agency only wishes to have a hearing regarding estimated regularity costs, but public adjusters should request the hearing and travel to Tallahassee on May 9th to comment on the potential far reaching effects these proposed changes will have in our State.
The proposed changes impact two different Code sections, and these changes will become part of the code if public adjusters are silent. The changes would impact policyholders in Florida who need assistance with their insurance claims, but the reach is likely much more grand. Many states look to Florida as model for regulating public adjusters and follow our lead with their own regulations.
Certain Code Changes Impact All Adjusters in Florida:
One section of the Code that will be changed is 69B-220.201 “Ethical Requirements.” This section currently applies to independent, public and company or employee adjusters. The title of this Code section will change to reflect the complete application – “Ethical Requirements for All Adjusters.” Yes, this means insurance company adjusters are also regulated by this section of the Code (although there is a subsection that is specifically applicable to only public insurance adjusters).
Having ethical requirements for all adjusters as part of the Code is very important, but proposed deletions to Code would allow company and independent adjusters to run amuck.
In the proposed changes, the Department removed a subsection that says “an adjuster shall treat all claimants equally.” Why does this language need to be removed? There is a significant need for all policyholders in Florida to be treated equally, and this should remain part of the Ethical Requirements.
But wait, it gets worse.
The Department also deletes the requirement that “an adjuster shall adjust all claims strictly in accordance with the insurance contract.” There is no reason to delete this section of the Code. It doesn’t matter how you are paid to be an insurance adjuster, the insurance policy must absolutely be adhered to when adjusting and evaluating an insurance loss. If the policy is not used in the adjustment, what will be the standard?
Specific Changes for Public Adjusters:
The Department’s revisions have attempted to define what it means to directly supervise a public adjuster apprentice. The changes address business advertising rules and contract essentials, including a new requirement that a copy of the completed contract must be provided to the insured at the time the contract is signed. Triplicate contract forms or portable printers may now be the norm for public adjusters.
The requirements that public adjusters must follow when they settle a claim are also part of the proposed changes, but one of the most troubling paragraphs is a new duty imposed on public adjusters after their work on a claim is done. A public adjuster is hired to assist with claim presentation and claim negotiation. In Florida, as is the national trend, public adjusters cannot be involved in the actual damage repair or re-build, but now the Department wants public adjusters to ensure the contractors, architects, engineers and other professionals who are later hired to perform repair work are licensed by the Florida Department of Business and Professional Regulation.
The current rule only requires public adjusters to make sure professionals who were used as experts to estimate damage or participate in the adjustment of the loss (ie a forensic engineer who gives an opinion on causation of damage) are licensed. The current code language is completely acceptable; only licensed professionals should be hired to help show the damages to the insurance company in the claim presentation. But requiring the PA to regulate the professionals hired after the claim is settled is nonsensical.
Furthermore, it is improper to force a public adjuster to police the repair persons used; it is far beyond the common contractual duties for claim adjustment. In fact, overseeing work or performing work on the same claim a public adjuster negotiated violates Code. “A public adjuster shall not enter into a contract or accept a power of attorney which vest in the public adjuster effective authority to choose the persons who shall perform the repair work” Current Code Section 69B-220.201 (4)(d). Further, “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”. Current Code Section 69B-220.201(3)(a) These current sections of the code are in place to separate the repair process from the adjusting process to ensure remediation and repair companies are not influenced or connected to the retained public adjusting firm.
The goal of this Code change is understood. Insureds should hire licensed professionals for repairs, but requiring a public adjuster to police an insured’s contract with another professional is outside the scope of the PA employment contract and a violation of adjuster ethics. The drafters of the proposed changes lack first hand knowledge of negotiating a claim with an insurance company that wrongly delays or denies a claim. Because of this disconnect, it is up to public adjusters in field to explain how the process works and why this and other provisions are problematic in practice.
Make plans to attend the May 9, 2013, hearing and take 60 seconds to tell the Department your thoughts by using comments function. While not widely advertised, these changes are open for public comment. Just like filing a consumer complaint, this section of the website is not easily searchable, so we are proving the direct link for comments. Be specific but brief, and speak out about what should be added to the code and should stay the same.
Contact Barry Lanier directly regarding proposed changes to the Code:
Barry Lanier, Chief, Bureau of Investigations, Room 416, Larson Building, 200 E. Gaines Street, Tallahassee, FL 32399-0320, (850)413-5601 or Barry.Lanier@MyFloridaCFO.com