PUBLIC ADJUSTERS…On the Attack!

There’s been much ado between public adjusters and insurers of late.  PA’s don’t like managed repair programs (MRP’s).  Insurance companies do like them–a lot–especially in Florida.

Sparring was ignited by an op-ed from the Florida Association of Public Insurance Adjusters (FAPIA) that was highly critical of MRP’s and which, in typical PA fashion, also bad-mouthed insurers.

One of the most offensive statements from FAPIA president, Don Phillips, affirmatively stated that the only reason MRP’s save money is because insurers:

“…underestimate the amount of damage, skimp on the quality of materials and repairs, and frequently don’t pull permits and/or use unlicensed and/or uninsured contractors or subcontractors.”

I emailed Mr. Phillips about this serious, potentially libelous, accusation. No response.  I copied FAPIA and its lobbyist as well but, again, no answer and no transmission error was received.

Indeed, FAPIA rarely responds.  I’ve emailed its previous president numerous times. I’ve emailed its entire board of directors after the ICA’s water forum last year—also FAPIA’s administrator.  No one appears willing to even tell me how many members they have. (See Note #1 below).

In this case, Mr. Phillips seems unwilling or unable to muster even an anecdotal justification for the charges levied against Citizens and other insurers.

Citizens CEO, Barry Gilway, exposed Phillips many “mischaracterizations and inaccuracies” regarding Citizens MRP. (See Note #2 below).  But, the proof is in the fact that OIR approved the Citizens MRP including the $10,000 limitation on repairs just last week. Soon, insurers will “me too” the filing (as OIR knew they would) and PA’s like Phillips will have fewer paydays—making a legal challenge against the OIR likely. (See Orlando Sentinel article, here and Commissioner Altmaier’s Cabinet Presentation beginning at 1:36:36).

There was another article in FAPIA’s assault written for the Insurance Journal.  While extoling imagined evils of MRP’s, in “Floridians Will Pay More For Less” Phillips also blames insurers for the failure of recent AOB reform efforts–that is to say, the effort that included limitations on trial attorney fees.  Days later, his motives, and thus those of FAPIA, were exposed in an op-ed by William Stander, Executive Director of the Florida Property & Casualty Association labeling PA’s as the “middleman”, implying Phillips bluster is all about money.

But, when Phillips responds his distortions don’t abate.  In yet another op-ed, Managed Repair programs by Florida insurers a bad idea,  Phillips cites 12-year-old data from Citizens in a 7-year old study by OPPAGA (Office of Program Policy Analysis & Government Accountability) to imply that hiring a PA gets claimants more money.  He didn’t mention that PA’s receive a substantial percentage (capped today at 20%) of that total payment and the settlement process (according to OPPAGA) is delayed by nearly 9 months –between 132 to 296 days longer compared to only 10 days without a PA.  Talk about “mischaracterizations”. Not that it would matter, but…he may not even know the significant limitations and flaws of the OPPAGA study itself. (See Note #3 below).

But, here’s the thing.  PA’s attacking MRP’s needs no response in these pages. Stander stated the obvious:

“…Homeowners should first ask themselves, what is it about fixing my home with the help of my company that public adjusters vehemently oppose? Is it just their selfless commitment to me, the homeowner they didn’t even know until I had a claim, or could it just be that when a customer utilizes managed repair they (the public adjuster) are cut out of their middleman fee?”

Still, I’m glad Phillips brought all this up because it leads to a long overdue discussion. One about Florida’s unique fee structure for both attorneys and public adjusters fueling Florida’s abusive claims environment, including and especially AOB. (See Note #4 below).

Last year The Florida House of Representatives passed a bill limiting attorney fees in AOB claims.  Two trial lawyers roadblocked debate in the Senate for the same reason PA’s don’t like managed repair…it cuts into trial lawyer fees. (Related article: “Lawmakers need to solve the problem!”)

Next year lawmakers should also address the role that some PA’s play in Florida’s over abused property market. Such an investigation can begin with two consumer-centric questions:

1.) Is it appropriate for consumers to forfeit a percentage of their claim payment to collect what is owed under their policy

2.) Is it appropriate for Florida consumers to pay or forfeit among the highest percentages in America (20%) to collect what is owed under their policy?

Florida’s insurance code is among America’s most voluminous–hundreds of pages of statutes designed to guarantee only two things: one, that policyholders always pay the exact premium (no more, no less) and; two, that in the event of a claim, policyholders promptly receive the exact claim payment they paid for, (no more, no less).

Yet, PA’s get paid based on a percentage subtracted from what the consumer legally deserved under the policy.  Consumers with claims are, in essence, paying more for the promised benefits.  That’s wrong!  Worse, unless the carrier paid out more than it should, policyholders who hire a PA receive less than what’s needed to make repairs.  That’s wrong, too!

Keep in mind, this occurs in an environment where the policyholder usually has other, less costly, options. They could hire an attorney, for example, whose fees are usually in addition to the payment. Or, utilize state mediation available from DFS. They could even call their agent.

While some could argue that 10% is worth any assistance, even if it’s just paperwork, too many PA’s do very little, bill the carrier direct (via AOB) and the homeowner receives only 80% of what’s left.  Isn’t that one reason why lawmakers enacted a Homeowner Claims Bill of Rights (Fs. 627.7142).  Isn’t that one reason they provided “free” mediation in the first place?

Of all the avenues available for claim assistance, hiring a public adjuster may be the only way some consumers get less than what they deserve. Unless, of course, the claim is inflated and, for whatever reason, the insurer pays too much.

Then we all lose!

Our next discussion will be on alternatives to the percentage based approach for PA remuneration and—failing that—an examination of whether it’s appropriate to lower Florida’s 20% PA fee cap to levels used in other states.

Stay tuned.

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NOTE #1: FAPIA does not represent every Florida public adjuster. Far from it.  According to DFS records, in 2016 there were 1,413 licensed PA’s in Florida.  FAPIA’s 2016 membership list shows approximately 237 names, some of which work with the same firms, are not public adjusters or may have since dropped their membership.  It’s possible that others may have joined in recent months or that I miscounted, but…FAPIA doesn’t respond to my inquiries.   I think FAPIA may only represent 20% of Florida’s PA’s, some of whom may not even be active.  A cursory review of its membership list reveals that maybe around 90% have offices located in Florida’s lower east quadrant.

NOTE #2: You can read both the FAPIA (Florida Association of Public Insurance Adjusters) piece as written by its president, Don Phillips, and published by the Sun Sentinel titled “Citizens to Policyholders—‘Take it or Leave it’ and the refutation by Gilway to decide on your own how intentional Phillips “mischaracterizations” may have been.

NOTE #3:  You can read my analysis of the OPPAGA study; Public Adjusters 747%–BOGUS! And, you can read the OPPAGA study by going here.  Be sure to check my math on PA claim settlement delays beginning on page 6.

NOTE #4: Both the insurance code and the Office of Insurance Regulation (OIR) permit managed repair, when conscientiously applied.  Some relevant background is available in a piece I wrote titled The War Against Managed Repair.  To some this is a chicken/egg equation.  Which came first, the abuses MRP’s are alleged to reduce, or the MRP’s the public adjusters complain about?  Are MRP’s the result or the cause?  To me the answer is as obvious as it is dispositive: Florida pioneered and proliferated property managed repair programs in response to a level of abuse that is the highest in America.

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