Due mostly to  the proliferation and growing problems associated with Public Adjusters (PA’s), lawmakers directed the state Office of Program Policy and Government Analysis (OPPAGA) to study and report findings–which it did on February 1, 2010.  OPPAGA was careful to keep judgments and opinions out of its report but, not careful enough to prevent distortions of its  conclusions.

One data point attracting both attention and exploitation (by  “some” PA’s) misleads consumers to conclude a public adjuster averages 747% more payout on claims–a mistruth advertised by at least one PA as being…”according to a government study“.   Here’s the relevant paragraph from OPPAGA’s report:

Policyholders with public adjuster representation typically received higher settlements than those without public adjusters. Policyholders that filed catastrophe claims in 2008 and 2009 generally received larger insurance settlements than policyholders that did not hire these persons. The typical payment to a policyholder represented by a public adjuster was $22,266 for claims filed in 2008 and 2009 related to the 2004 hurricanes (see Exhibit 6). In contrast, policyholders who did not use a public adjuster received typical payments of $18,659. The difference in payments was larger for claims related to 2005 hurricanes, with public adjuster claims resulting in payments that were 747% higher. However, as policyholders pay public adjuster fees as a percentage of their settlement, their net settlement would be lower than this amount.

What was made clear by OPPAGA  but not so much in what “some” PA’s have circulated, is that the 747% was only for “Citizens”, and only for its 2005 storms. Implying it was a statewide figure is statistically and factually bogus.

Failing to recognize how such an inflated figure could be misused, however, is a failure by OPPAGA.  Though it was directed to examine only Citizens claims,  it could have highlighted that Citizens only insures around 17% of Florida’s homeowners and that the more statistically relevant 83% of the private market was not part of its report.

But…there’s more. Look at the graph from which the 747% figure was extracted–Exhibit #6 titled:  Public Adjuster Representation Typically Resulted in Larger Payments to Policyholders.”

Now figure this; OPPAGA didn’t mention what was happening with Citizens catastrophe claims system after the 04/05 storms.  Remember? It had thousands and thousands of complaints about delays and processing errors. There were even significant issues of fraud; a full scale investigatory panel appointed by CFO Gallagher (upon which I served) was charged to look into the whole mess and make recommendations. Perhaps you recall the very high profile “Kickback” scandal involving the Big Hog motorcycle with Citizens head of claims and an independent adjusting firm? There was evidence that Citizens telephone hold times were 45 minutes or longer and that  it was sometimes unable to  answer it’s phone at all.

But, not so much for the 83%. For the most part, private carriers closed claims and satisfied policyholders; albeit, some better than others.  For the starkest contrast figure that the largest homeowners carrier at the time, State Farm which, in my opinion, has the most sophisticated catastrophe response mechanism in the private market, had very little PA intervention compared to Citizens.  Had OPPAGA been directed to use State Farms data, or that of at least a representative sample of private carriers, there would be no 747% figure to exploit.

There’s more that discredits the 747%. During the time frame OPPAGA used there was no statutory restriction on PA fee’s.  Many were charging 40% of the claim payout; a few were found to have charged even more.  This means inflated settlements in order to provide the claimant a “net” to cover his/her repairs.  Today, PA fees are 75% lower for a catastrophe; limited to 10%.

Then this. If OPPAGA had printed the average of both storm years (per Chart #6) it would’ve been  more accurate than highlighting “only” the year with an obviously inflated result? For example, looking only at 2004 (instead of only 2005) reduces the 747% figure to one a disingenuous PA couldn’t exploit…11%, after allowing for the typical 2005 contingency fee.

To summarize; PA’s don’t mention that use of a Public Adjuster may cause a delay of three months in claim payments…according to a government study.  They don’t mention that after their fee is deducted claimants may have only netted an additional 11% in exchange for a delay of 90 days, again….according to a government study.

Here’s my question…”when a huge catastrophe creates understandable delays in the adjustment process can policyholders get help from their agent, who’s already been paid a commission, is qualified as an adjuster and prohibited by law from charging anything more?”

CONCLUSION:  OPPAGA is to be commended for not taking sides, however…its report should have anticipated misuse by those who do.  Using the information now available from Citizens, the OIR’s recent data call, and information from the private market, OPPAGA should publish clarifications to its February 2010 report setting the record straight and giving context to the 747% figure.


  1. I don’t understand. Why is 747% a bogus figure?
    If a public adjuster would state that according to an OPPAGA study, Florida PA’s involved in a Citizen claim during 2005 resulted in settlements 500% larger, would he be making a draudulent statement?

    Where are you getting your figures from regarding your State Farm statement? Was that just taken out of a hat or was it verified? I believe you are falling into the same “misrepresentation” trap of which you are accusing that public adjuster.

    Another question, why indeed is there a 2004 20% discrepancy between Citizen’s estimates and the public adjuster’s estimates? An insurer will not pay an additional 20% without every line item verified. Why are their estimates typically 20% lower than what they pay with representation?

    • First, Henry….congratulations on being the first person to ever respond to my blog, I hope this will be the beginning of a long relationship; though, based on your response, I suspect we may disagree often. I hope it will be educational for both of us.

      The 747% figure is bogus when applied to the entire marketplace as it has been in some instances. It should only refer to one of the storm years and only from Citizens which was experiencing a unique set of problems as the state insurer. It would not have been bogus to have stated it that way, unfortunately…that’s not how the figure was used by the PA in question.

      State Farm statement; was qualified by saying it’s my opinion, however…it comes from nearly 36 years representing those who compete with State Farm and its sophisticated cat response team. Point is–OPPAGA only studied Citizens. What good is that? I was appointed to serve on Tom Gallagher’s panel investigating Citizens claims problems and State Farm was often referenced as a model. Also, I figure if you had contrary information that State Farm was not one of the best in Cat Response you would have revealed it.

      The 20% estimate for Citizens may not apply in the private market, like you say, a carrier requires detailed verification; still doesn’t mean the PA isn’t trying to obtain such, however, so as to allow for repairs and still have something to be paid from. Citizens, on the other hand, is a whole different matter; as the panel I served on discussed. There were numerous discussions regarding overpayment. The reasons for such were myriad; including mistakes by the Citizens adjuster, fraud, political pressure (this was a big one) by a single politician, political pressure from DFS to “just get the claims paid”, etc. And, again, you can learn a lot by just fielding calls from independent agents, who told me time and time again, Citizens is paying flood damage and just writing checks. Perhaps, this is one of the reasons SB-408 limits PA payment for Citizens to only a percentage of the difference in what was obtained by the PA after Citizens makes an offer of settlement.

      Again, thanks for the comments. I hope you’ll continue to check here for more and tell all your friends about my blog. We’re just getting started and would love to increase readership. Scott

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