For those who follow the news regarding Florida’s insurance market, the people of the Sunshine State are being warned as property insurance premiums are steadily increasing. To fix what is being labeled as a “broken” system, the Florida Senate continues to push for property insurance reform with the latest proposed bill, SB 1728, which is designed to allow insurers to sell policies that only pay either the depreciated value of the roof or its actual cash value. What this means is that while Florida policyholders might get the semblance of a slight premium decrease, they conversely will be the ones who will be forced to pay most, if not the entire, cost of a new roof in the event of a loss outside of a named hurricane.

The merits and effectiveness of such a bill are yet to be determined, as we are still waiting to see the visible changes from Florida’s last legislative session in which Governor Ron DeSantis signed Senate Bill 76 – the bill that created Florida Statute § 627.70152. No matter what side you represent – the insurers or the policyholders – reform should always be welcome, but the basis for such reform is being tainted by insurance companies and their lobbyists who continue to conflate the intentions of policy change, blaming contractors, public adjusters, and policyholder attorneys with their overuse of the “F” word: FRAUD.

Merriam-Webster’s definition of “reform” is:

Amendment of what is defective, vicious, corrupt, or depraved1

Today, we see insurance companies remain silent up until the legislative sessions begin – and then, all of a sudden, the number of news articles, LinkedIn posts from insurance executives, and lobbyists arise quickly. While reform means to amend what is “defective” or “corrupt,” the attempts to identify who is liable for the proclaimed “broken” system is being inappropriately directed to one side: Consumers and their advocates. Yet, it is the consumers who are paying the price with such types of legislative efforts as SB 1728.

With that being said, even as someone who continues to fight for policyholders day by day, it is undeniable that there are still some bad actors whose inorganic roof claims and less-than-genuine practices on behalf of Florida policyholders are being improperly utilized by insurance companies as being the sole reason why Florida property insurance policyholders are getting the short end of the stick. If you look up any recent article on the subject, there is one word continuously thrown front and center of the article as to why the market needs reform: Fraud.

When Avatar Property and Casualty Insurance Company and St. John’s Insurance Company announced liquidation in recent weeks, policyholders and their advocates were characterized as the villains who forced such companies into bankruptcy. And citizens of Florida continue to be misled to believe that the insurers’ downfall is due only to frivolous litigation and fraud by plaintiff insurance attorneys.

The simple fact is, it is not just those bad-apple policyholder advocates who are the sole vehicle driving this everchanging situation, but rather a multitude of issues (remember COVID? There are still widespread material and labor shortages everywhere) that are being blended together to create this idea that the “F” word plays a role every property insurance lawsuit in our state.

The “F” word is not a one-way street, however. Contrary to popular belief, insurance companies continue to avoid their contractual and statutory obligations despite their incessant concerns about defending “rampant” lawsuits.

Actually addressing the truly frivolous litigation is step one in beginning to solve our property insurance market issue, but why stop there? If legislative efforts are going to be targeted towards holding the bad policyholder actors accountable for “fraud,” then the same efforts need to be targeted at combatting the unspoken immunity that is insurer fraud: The ongoing Managed Repair Program schemes under the guise of a “Right to Repair,”2 racketeering lawsuits against insurance companies who disclaim their liability to “independent” third-party adjusters who are anything but independent,3 and the utilization of adjusters who have criminal records – and I’m not talking DUIs, but rather adjusters who have criminal convictions for fraud and theft by deception – a shocking reoccurrence that I never once thought could continue to show up in bad faith actions.

What is more concerning regarding insurer use of adjusters with a history of fraud and other criminal actions of dishonesty is that Florida has licensing requirements for adjusters and independent adjusters that permanently bar those with such a criminal history.

Applicants with Criminal Histories

Permanent Bar:

Persons who have committed certain felonies are permanently barred from licensure. Other felonies and certain misdemeanors require the applicant to wait for a disqualifying period to lapse prior to applying for licensure. The department may not issue a license to an applicant unless all related fines, court costs and fees, and court-ordered restitution have been paid. Upon a grant of a pardon or the restoration of civil rights pursuant to chapter 940 and s. 8, Art. IV of the State Constitution with respect to a finding of guilt or a plea, such finding or plea no longer bars or disqualifies the applicant from licensure unless the clemency specifically excludes licensure in the financial services business; however, a pardon or restoration of civil rights does not require the department to award such license.

An applicant who has committed a felony of the first degree, a capital felony, a felony involving money laundering, a felony of embezzlement, or a felony directly related to the financial services business is permanently barred from a licensure. This bar applies to convictions, guilty pleas, or nolo contendere pleas, regardless of adjudication, by any applicant.4

Despite these efforts to combat what is quite literally insurer fraud, policyholder attorneys only uncover that their client’s improperly mishandled claims were done at the hands of someone who should never have been licensed, only once they are in litigation, and often during the discovery phase. How is it that these applicants who were previously convicted of fraud continue to get licensed as insurance company adjusters and contribute to what is being labeled a barrage of “frivolous” litigation, all while policyholders and their advocates are being chastised during every legislative session?

It’s true: reform to the Florida property insurance market needs to be addressed to combat the myriad of issues plaguing our system – but if fraud is the backbone of these proposed bills being presented, then it should be addressed on every level. Accountability is not a one-way street.
3 Tower Hill Signature Ins. Co. v. SFR Services, LLC, No.20-000409-CA (Fla. Cir. Ct. – Martin County Jan. 18, 2022).