Public Adjusters & SB-408–Pop Some Bubbly?

It’s hardly a secret the insurance industry would prefer having no Public Adjusters (PA’s) or certainly, having far fewer of them. Despite disappointment by some about this years’ bill (SB-408) with respect to PA’s generally, I think there’ll be cause to pop some bubbly in the not-too-distant future.

Dissenters, or rather; those who wished lawmakers had done more to directly curtail the practice of public adjusting, often refer to states like Alabama where it’s a crime. Or, Louisiana; where percentage fee’s by PA’s are statutorily forbidden.

Policyholders for one Florida carrier, organized as a mutual, have voted to disallow themselves from using public adjusters.  Other carriers, non-mutual’s, would like lawmakers to do for them what they cannot do for themselves; like in Alabama. But, Florida has already crossed the line. PA’s aren’t permitted in Alabama because it doesn’t require “any” adjusters to be licensed. They rely on lawyers or those hired by insurers, that’s it. Public adjusting, therefore, is the unlawful practice of law without a license.  Read more by control/clicking here.

The criticism is usually directed only at SB-408’s direct references to public adjusting; such as: placing additional restrictions on   unsavory advertising practices, additional requirements for their fee contracts and more responsibilities in their dealings with carriers after a claim. Good changes, but…to those who wanted barricades these are mere speed bumps.

However, it’s the indirect impact on public adjusting in SB-408 that will have doubters singing “Sweet Home Alabama”.  They are:

1)      Filing Deadlines

a)      Statute of Limitations (SOL)–runs from the date of loss rather than the date of breach (when carrier denies or makes offer) and substantially reduces the number of available claims.

b)      Claims Filing Deadline–limits time for filing “wind” claims to three years after the event and thus the number of potential claims available to PA’s.

2)      RCV Holdback–without the ability to receive cash instead of repairing damage there’s no money to pay a public adjuster.

3)      Sinkhole Holdback & Other Sinkhole Changes–similar to RCV holdback; no money to pay the public adjuster if repairs must be performed.

4)      Compensation

a)      Reopened/Supplemental Claims–PA payment clarified to be limited to 20%.

b)      Citizens–limits PA compensation for Citizens claims to 10% of the difference between the amount paid and the amount originally offered vs. the full amount paid.

c)      FIGA–claims from an insolvent carrier will not include either attorney or public adjuster fee’s and cannot exceed the face amount of the policy for sinkholes.

5)      Inspection Programs–specifically authorizes inspections and when approved by OIR allows carriers to decline to provide sinkhole coverage when there’s pre-existing damage.

6)      Citizens Glide Path Exemption for Sinkholes–the price of buying sinkhole coverage in Citizens will not be limited to the glide path increase of 10% annually.

7)      Citizens Sinkhole Definition–sinkholes in Citizens will no longer include driveways, patios, sidewalks, etc.

Let’s talk perspective.

Of these, reinstating the holdback provision for RCV claims dominates, in my opinion. Without a cash-up-front arrangement for the claimant, there is not only less incentive to file false, inflated or frivolous property claims, there’s also no money to pay a Public Adjuster. The difference this will make in the number of PA’s could be huge, in part because the definition of “building” also includes roofs and tile floors.

If the ability to “holdback” also applies to sinkhole claims via the separate provision requiring policyholders to repair damage according to the carrier’s expert recommendation, then the handful of PA firms responsible for the majority of sinkhole claims will have to seek another cottage for their industry. Few homeowners, I figure, will file frivolous sinkhole claims without the ability to pay off their mortgage or buy a new home with the cash. And, thus…fewer individuals will seek to become public adjusters.

Of course, with so much at stake  court challenges are assured and depending on the issue and the specific outcome, the full potential might be hamstrung, even entirely muted. But, there’s more.

Number 4b. above, limiting Citizens compensation, is viewed with disdain among the PA community, in part, because Citizens has been such fertile ground. Don’t discount its value.  Since the SOL  on Wilma claims expired last November, and since most carrier’s don’t write policies in sinkhole alley or provide sinkhole activity coverage without an inspection, Citizens has been the go-to market,  for consumers and thus, for public adjusters. Over 250,000 policies are in Citizens from sinkhole alley.  Only 22% actually purchase sinkhole activity coverage and are suspected of doing so in anticipation of filing a sinkhole claim.  And, currently, Citizens has no sinkhole inspection program to keep from providing coverage in even the most obvious cases with pre-existing damage.

The point is that Citizens may not need an inspection program, “if” PA’s have no funds to be paid  due to the claim dollar being spent on repairs, and “if” PA’s can only be paid on the difference between what was offered and what was finally accepted, and “if” new language excluding driveways, sidewalks, and patios from sinkhole damage (#7 above)  isn’t repealed by the courts.

Then there’s the biggie.  As mentioned, only one in five (22%) of Citizens policyholders buy sinkhole activity coverage today.  But, what happens when # 6 above takes effect?  Since the rate for such coverage will “no longer be limited by the glide path cap of 10%”, Citizens sinkhole premium could rise by 500% or more.

Only time will tell, but…do you see why I say that those who want to do away with PA’s may find cause to pop some bubbly…someday?

MEASURING POINT–My very first “grown-up” job was at the OIR (then the DOI) in 1972.  I was in charge(?) of licensing and qualifying adjusters, which included twelve (12) public adjusters.  At their height, after the 2004/2005 storms there were nearly 3,000 PA’s, 89% of which were in southeast Florida.  Due mostly to competitive saturation, the expiration of the Statute of Limitations on Wilma claims and perhaps a few other reasons; there are exactly 1888 Public Adjusters today.

Check back for updates on this number.



  1. I have to respond to a recent article that began with this headline, “Public Adjusters & SB-408–Pop Some Bubbly”? by Scott

    Let’s get real, Scott, on who will be popping the bubbly as SB 408, now Act 2011-39, will become known to the consumer in due time! Yes, homeowners will begin hearing that popping sound very soon as property rates climb upwards to 31% – and in some instances higher! More bubbly please! But not for the consumer whom the legislator was to protect, but more bubbly for the insurance moguls with their large annual profits who by enactment of this law will have more control on how homeowner and business property claims are resolved.

    The article struck a nerve, as you can see. Why do Insurance companies not want public adjusters to help consumers? Simple reason, according to the Florida OPPAGA Report: [[1]_0.pdf- click to follow link] when a public adjuster is not helping a homeowner the insurance industry pays little or nothing at all to the consumer.

    Champagne bottles were popping their corks throughout the long and arduous debate surrounding SB 408 and related legislation in the last legislative session. AAPIA was the only national association to go first on the record “opposing” this language because we knew that if the legislation was enacted as it was drafted, homeowners would be without adequate representation when a property loss occurred. I travel to many State Houses across America and see the insurance lobbyists walking the halls. They are certainly not there to protect the homeowner, and as we read in Scott’s blog, they are not there supporting public adjusters and the value they provide to homeowners. To the contrary, their only goal is to restrict the license of a public adjuster so that claims settlement can be cost efficient to the insurance company at the expense of the homeowner.

    Recent enactment of SB 408, now Act 2011-39, in Florida has made it difficult for homeowners to obtain adequate representation. AAPIA believes that homeowners in every state have the right to have adequate and qualified representation, especially when what is usually their largest asset is damaged by Mother Nature. A public adjuster offers that homeowner the peace of mind support, and expertise needed to take on the insurance industry adjusters whose job is to represent the interests of the insurance companies. How many times can you call the insurance company as a homeowner to address your property damage only to hear on the other end, “it is not covered in your policy”, “your rider does not cover the loss in question”, or better yet “we will issue you a check for $100.00 when your deductible is $1,000.00 and take it or leave it”, and that is if you can reach a “live” person on the phone. We have all been there and you know you have as well.

    Homeowners, what you need to do is pull out your homeowner’s policy or your business insurance policy and meet with a qualified public adjuster, because we do more than negotiate claims when an occurrence happens; we are experts in reading the very small and fine print in your policy and can work with your agent to make sure you are adequately protected in the case of an unforeseen loss.

    Let me now pass on to you a response to Scott’s seven points about the new law from AAPIA counsel Holly K. Soffer, Esq. – and when we are done with our analysis, I ask you this. “Are you going to pop the cork of a Champagne Bottle” in celebration or are you going to call your public adjuster to learn all you can on what you need to do to protect your prized asset, your property, from laws that are now “anti-consumer”!

    · Shortening the statute of limitations: The new law reduces the time period in which a homeowner can file a claim from five years to three, even though not all damage, such as mold, is always discovered within three years after a storm. Even structural damage from a severe windstsorm can take a few years to develop, and after the three years, a homeowner won’t be able to bring a claim, even if the homeowner has paid all premiums, and the damage would have been otherwise covered. Plus, the new time period runs from the date of loss, not the breach by the insurance company, forcing homeowners to bring the claim even sooner.

    · RCV Holdback: The new law will allow insurance companies to pay only the depreciated value of a property at first, “holding back” the full cash value until repairs are made. This rule makes it financially difficult to make the repairs, and could make it harder to hire a public adjuster, leaving the homeowner adrift in the sea of insurance rules that are difficult to understand.

    · Compensation to Public Adjuster: The new law dramatically changes the compensation of the public adjuster on Citizens’ claims. A public adjuster can’t be involved in the claim process at all until the insurance company has made an offer to the insured, and then the public adjuster’s fee is limited to 10% of the additional amount offered after the public adjuster is involved. This limitation directly impacts the homeowner’s ability to utilize the valuable service of the public adjuster and may lead to lower offers by the insurance companies, even when the homeowner has paid full premiums. If the insurance company offers close to the value of the loss, but less than the actual value, it may not be economically feasible for a public adjuster to help the homeowner for only 10% of the “new money”, and with no recourse, the homeowner will be forced to accept the low offer.

    · Sinkhole Holdback and other Sinkhole changes and premiums: Some of the changes to the sinkhole procedures are meant to prevent fraud, and are supported by AAPIA; however, the “holdback” rules also apply to sinkhole claims, forcing homeowners to make all repairs in advance before receiving all of the money, which many homeowners can’t afford. Further, Scott’s article actually gloats that: “sinkhole premium could rise by 500% or more”. We at APPIA are certainly not popping any bubbly over that, and we join with Floridians and consumer groups to decry any such premium increase. After seeing the full effects of the new law, we are willing to bet you will not be joining Scott in a rendition of “Sweet Alabama” as he has suggested. In fact, we find repugnant his scornful glee at the suffering of homeowners in Florida as they are faced with higher premiums for less coverage.

    • Thanks for your comments on my blog about the impact of Sb-408 on Public Adjusting. I’d like to give a detailed response to your many points and will devote an entire blog to doing so; if you can respond to this request. Your response was signed Am I correct in assuming you are with the American Association of Public Insurance Adjusters? If so, would you tell me your name or position there so I can respond directly to you and those who read the blog will know who has made the comments in your response?

  2. Scott,

    I thank you for you post. While I greatly disagree with many of your positions, they are a few I and many other PA’s agree with. Most importantly I want to thank you for reminding me why I became a PA in the first place. As an independent adjuster I realize there was very little independence involved. I grew tired of examiners and/or claim managers stripping damage estimates not for mistakes but merely to keep claim payments low. I grew tired of hiring engineers who’s initial questions were, “what do you want me to say….” when they were given an assignment. So I became a PA and I can assure you its very fulfilling, not just because of the money as many would guess, but because of the satisfaction I get when helping my clients, the very homeowners who are buying the bubbly your drinking. While I see your point in your example of how the PA industry has grown, I would like to know how much the lobbyist industry has grown in that same time frame. PA’s level the playing field pure and simple and that’s what the insurance carriers don’t want. No longer can an examiner just line item veto a damage estimate and not be called on it. No longer can an examiner simply say you did not exceed the deductible or its not covered, or its limited. Homeowners in Florida pay a lot of money in premiums to be treated as second class citizens and while your disdain for public adjusters is evident, SB408 also hurts the homeowner and you should not take joy in that. They are a lot of PA’s with very similiar backgrounds, why don’t you ask them why they became PA’s. I would dissapointed if they said they did it for the money. In conclusion I can assure you I sleep a lot better these days.

    • Thanks for the considerate and thoughtful comments.

      I understand and agree there is plenty of fault with industry claim practices. I also understand that, like yourself, there are many talented and caring public adjusters. In fact, I believe the profession, generally, to be an honorable one. My concerns have been with legislative enactments that gave rise to an enormous proliferation of public adjusters to the point Florida had more than the next four or five states combined–and, along with that proliferation, some unsavory practices and individuals. I can tell by your tone and sincerity, you know what I’m talking about.

      By virtue of these ill-advised past legislative enactments neither the public adjusting community nor policyholders have been well served. I dare say PA’s are suffering a bit of bad PR lately; deserved or not, and consumers are suffering the highest-ever rate increases and an insolvency crisis in tandem. The insurance consumer advocate just testified at a televised rate hearing that Castle Key (Allstate) should get a higher rate increase than the 30% it was requesting. And yet, we’ve had no storms. Again, I believe this is due to past legislation gone awry.

      SB-408 goes a long way to repairing the damage done by those past enactments and the result will be less activity from public adjusters; but, that doesn’t mean the public is harmed, automatically. There will still be caring, hardworking PA’s such as yourself, a state Consumer Advocate a consumer helpline for the DFS and the most active plaintiff’s bar in America.

      If someone actually pops some “bubbly” it will not be because there are fewer good public adjusters, but…because there are fewer who came to the scene only due to opportunism created by poorly thought out legislative enactments. They will depart. You and other like you will remain..and that’s what will allow all of us, including consumers, to sleep a lot better.

      Thanks for your response.

Speak Your Mind