Is it possible out-of-state folks have read my articles on Public Adjusters—articles about the highest PA fees in America being permitted in Florida?
Or is it more likely they don’t read my articles at all and still reached the same conclusion, which is a 20% contingency is an incentive for fraudulent inflation of claims or the creation of claims when they would otherwise not have existed. (See NOTE #1 below)
Either way, some states are beginning to “SEE THE LIGHT.”
According to a blog by Chip Merlin, head of the Merlin Law Group and a founder of the Florida Association of Public Insurance Adjusters (FAPIA) the Kentucky legislature, for one, introduced a PA reform bill (H-232) that, among other improvements, defines the fee available to public adjusters as follows…
“… two and one-half percent (2.5%) of the first twenty-five thousand dollars ($25,000) of the total insurance recovery of the insured; and… ten percent (10%) of the total insurance recovery of the insured that exceeds twenty-five thousand dollars ($25,000); or…for catastrophic claims, ten percent (10%) of the total insurance recovery of the insured.”
This means a $25,000 claim has a fee cap of $625. In Florida that PA could’ve received $5,000. Kentucky’s proposal also specifies the calculation must be on the “total insurance recovery to the insured” which I assume means, no attorney fees, no deductibles and no shenanigans.
Also, according to Merlin’s post in the same section the Kentucky proposal states something else…
“(a) Any fee charged to an insured by a public adjuster shall be…Collected by the public adjuster after the insured has received the insurance settlement proceeds from the insurer.”
Sounds like a good idea that might allow policyholders more control. In too many situations, like a litigated claim, the PA has “dibs” on his take and the policyholder, who hired the PA, has no say on whether the work was even performed.
PA’s call this approach “Direct Payment,” a concept they vociferously defend. I call it “Assignment of Benefits” a concept the legislature just made illegal for most everyone else in the property claims field.
While some of Florida’s recent property insurance reforms address some of the differences between this trend in new PA laws (Delaware also has a similar 2.5% cap) Florida’s law still allows “direct payment” to the public adjuster and a non-catastrophe fee cap that’s the highest in the country. (See NOTE #2 below)
We’ve got to thank Merlin for his post as it may help some here in Florida SEE THE LIGHT as they have in Kentucky and Delaware.
His timing was also impeccable. Florida’s lawmakers are set to convene March 7.
Chip Merlin encouraged public adjusters in all states to read the entire Kentucky bill. Good advice I think. And I also hope he’s right when he says…
“The language of insurance laws passed in one state have a way of being copied into the insurance laws of other states.”
Thank you Chip Merlin for helping us all see the light!
Cc; Florida Senate and Florida House of Representatives
NOTE #1: Read my suggested PA reforms in Note #3 at the bottom of Supreme Court Rules…FINALLY! Also listen to legislative testimony from Public Adjuster representatives (NAPIA and NJPIA) regarding fraud incentives from contingency fees (of 20%) here.
NOTE #2: The consumer group CARe states “A public adjuster may not be your best option” …“…in most cases the amount of the work they do is not nearly worth the money they charge.” And, confirming the value of the internet and programs like Florida’s zero cost mediation “…all you really need to settle your claim is available for free.” See my article Public Adjuster Conundrum—AOB & Direct Pay
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