Policyholder Rights & a 10% PA fee cap!

You’ve read my posts on the abuse of Assignment of Benefits (AOB) by emergency remediators, contractors, roofers, et.al.  Emerging legislative shenanigans might be better understood if you read them again–especially one titled “Another Rip-Off”. 

Likely you know  that, due to exorbitant referral fees for first responders like plumbers and pervasive fraud from secondary responders like water extraction companies, Florida loss costs are among America’s highest. Indeed, contrary to some political views, abuse and  fraud from cottage industries drives costs as much as reinsurance. In part, because large chunks of reinsurance are driven by retail level fraud from the same cottage industries.

Former Insurance Consumer Advocate (ICA) Robin Westcott’s claims task force exposed massive abuse from emergency remediators.  Now there’s a slate of recommendations championed by CFO Jeff Atwater and the current ICA, Steve Burgess.

Opposition from public adjusters, water extraction companies and trial lawyers was predictable.   They’re pulling out all stops to keep their golden ox from being gored by the AOB reforms once contained in CS/CS/SB-708 or those in its companion HB-743.

It’s disheartening to hear some lawmakers feign various levels of confusion or outrage to justify voting against these common sense consumer protections. In fact, after senators on the Banking & Insurance committee deadlocked (6 to 6) on Wednesday of last week,  the AOB reforms were reluctantly removed by the bills sponsor the next day during the Senate Appropriations Committee–reforms simply intended  to help consumers. (See NOTE#1 below)

Consumer friendly AOB reform language, however, was adopted in the house the day before. That’s good. But, it only sets the stage for lengthy negotiations that often evaporate any premium savings.

Unfortunately, language in both bills acceptable to insurers (as long as needed AOB reforms are included) and passionately embraced by CFO Atwater, called the Policyholder Bill of Rights, is caught in the crossfire. And, to a lesser extent, so is post loss underwriting reform spawned by Universal Property & Casualty Insurance Company (UPCIC) and a few other helpful reforms. (See NOTE#2 below)

So much consumer benefit at stake. What to do?

Let the process work…or not work, as the case may be?

Maybe.  But, I do have one suggestion. It’s both strategic and consumer centric.

Based on public adjuster testimony in New Jersey and elsewhere there’s a direct correlation between higher fee caps and fraudulent claim inflation and the manufacturing of claims “where none existed.”

Therefore, at the first available opportunity amend both bills to reduce the fee cap for public adjusters to the recognized standard of 10% across the board; instead of 20% for non-catastrophic claims. It is, after all, America’s highest percentage cap.

Makes sense. CS/CS/SB-708 & HB-743 deal with property claims and at 20%  Florida consumers lose more of their non-catastrophic claim dollar, sometimes twice as much, as claimants in any other state with caps.

At one point a reduction was part of HB-743. Moreover it was supported by Steve Burgess and several public adjuster groups. (See: “Florida Consumers pay too much). 

Seems like a bill that provides claimants with a bill of rights should also make sure they have the same rights and protections provided to claimants in other states.

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NOTE #1: Language stricken from SB-708 reads:

For a residential property insurance policy, an agreement purporting to assign post-loss benefits for repair or
replacement is a valid assignment only if the agreement:

(a) Requires the assignee to notify the insurance company

within 48 hours of the assignment. If the contact information

for the insurer is unavailable for the first 48 hours, the

assignee shall contact the company as soon as practicable;

(b) Limits the assignment to the contracted work to be

performed and is restricted to claims for damage to structures

covered under the policy;

(c) Specifies the estimated scope and price of the work

before it is performed;

(d) Prohibits the assignee from charging the policy owner

for any portion of the repair or replacement beyond the

applicable deductible contained in the insurance policy;

(e) Prohibits a person performing any portion of the repair

or replacement on behalf of the assignee from charging the

policy owner;

(f) Prohibits the assignee from retaining insurance proceeds that are earmarked by the insurer for payment of work to be performed by vendors other than the assignee; and

(g) Requires the assignee to guarantee that the work performed for the loss event conforms to the most recent, accepted industry standards.

NOTE #2: Language in CS/CS/SB-708 dealing with post loss underwriting prevents insurers from denying claims or canceling an insurance policy based on credit information available in the public record if the insurance policy or contract has been in effect for more than 90days.

CFO Atwater’s Bill of Rights also contained in CS/CS/SB-708/HB-743, requires insurers to provide claimants within 14 days after the notice of a claim a copy of the Policyholder’s Bill of Rights explaining the right to:

• Receive acknowledgment of the reported claim and necessary claim forms within 14 days after the claim is communicated to the insurance company.

• Receive confirmation within 30 days that the claim is covered in full, partially covered, or denied, or receive a written statement that a claim is being investigated.

• Receive within 90 days full settlement payment for the claim or payment of the undisputed portion of the claim or the insurance company’s denial of the claim.

• Receive free mediation of the claim by the DFS under most circumstances and subject to certain restrictions.

• Receive a neutral evaluation of a disputed sinkhole claim covered by the policy.

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