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You are here: Home / General Property Issues / AOB…a flicker of common ground?

AOB…a flicker of common ground?

September 21, 2014 - Opinion by Scott Johnson Leave a Comment

Common ground was visible recently between public adjusters and insurer’s. A brief flicker, sure. But, it was there.

Sparked by an article from Dick Tutwiler, CPCLA, PCLA opining on coverage reductions for water losses, abuse of Assignment of Benefits (AOB) by water extraction companies and the unlicensed practice of public adjusting.

Tutwiler, a respected veteran of public adjusting, is also a past president of FAPIA (Florida Association of Public Insurance Adjusters). The opinions he expressed in “The Unlicensed Practice of Public Adjusting–The Insurance Claims Keep Rolling In” were reproduced by The Merlin Law Group and received wide circulation.

Here’s a synopsis of Tutwiler’s comments, followed by my response.

1) He both regretted and criticized the general trend by insurer’s reducing coverage for water losses in residential property forms. One example cited was the exclusion of coverage if the loss isn’t reported within 14 days.

2) Assignment of benefits–“A license to steal” Tutwiler called it. “Water extraction companies and contractors preying on consumers and insurance companies by inflating water losses and hijacking the insured policyholder’s property policy…”.

3) Unlicensed public adjusters–mostly water extraction companies and other emergency remediators using AOB as a means to wrest control of the claim from the insured. Tutwiler referred to them as a “…cadre of unlicensed public adjusters.”

See the flicker?

It prompted the following email from yours truly.

Mr. Tutwiler:

I read with great interest your recent article on water losses, the one published on Chip Merlin’s blog site. It was insightful, well written and most befitting of your reputation, which is sterling.

Three observations came to my mind which are not inconsistent with the points you made but which come at the problem from a slightly different angle.  It occurred to me there may be some things the insurance industry and public adjusters with a similar mindset to yours could work on together.   

Here are my thoughts:

1) In the first part of your article you spoke of insurer’s (and thus, the regulator) reducing water loss coverage in their forms. You gave several examples; all of which I am familiar with. While not the sole reason, I would say that, to some extent, the trend to reduce coverage for the water peril is the result of the problems you outlined in the second part of your article regarding abusive practices by water extraction companies; especially from Assignment of Benefits (AOB).    

2) If the AOB reforms you referenced during the last legislative session were allowed to become law, I believe that the pure premium applied to water losses would drop considerably and the coverage cuts you described would either cease or at least be met with greater objection from the OIR.

3) I followed the AOB legislative debate last year pretty closely. One group appearing to stand against AOB reforms was the Florida Association of Public Insurance Adjusters (FAPIA).  If instead FAPIA was to embrace AOB reforms they might pass; and if they did, that might have the secondary impact of not only reducing the coverage reductions sought by insurer’s but, also reducing the problems regarding the practice of public adjusting by unlicensed water extractors.  

I know you are a past president of FAPIA and wonder what your thoughts might be on this and whether you think there’s any room for meaningful dialogue on AOB reform in the future.

 Again, a well written article.

I look forward to hearing your thoughts.

Scott Johnson

Mr. Tutwiler acknowledged the possibility of common ground saying “…the PA community has great dislike for all the folks who act as PA’s without having to get licensed, are not regulated, have zero requirements for CE credits, etc.”

But alas, he does not speak for all PA’s many of whom don’t want to get rid of AOB entirely “as it also allows for them to get their name on the check for services rendered.”

Like PA’s, insurer’s are also divided. Not so much on whether AOB needs reforming but, on the nature and extent of those reforms and the best strategy to achieve them. And, of course, on whether there’s any need to work with public adjuster’s at all.

Thus, the flicker, the mirage, was equally snuffed from both sides.

That doesn’t mean AOB reform is a pipe dream. Far from it.

Be sure to read my next blog. Learn what’s being done–in the courts, at the OIR and with individual insurer’s, to put a stop to this latest Florida consumer rip-off…Assignment of Benefits!

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