First, let’s number this article PART II in the series dealing with Property Insurance Fraud, its’ precedent being PART I—Florida’s Pyramid of Property Insurance Fraud, which you should read first.
Next, don’t let the title or the startling image above mislead–this is not a critique of Florida’s Department of Financial Services (DFS). To the contrary, it’s meant to answer the question I am persistently asked…“Why doesn’t DFS stop all the illegal claim solicitations?” Answer: it hasn’t been given the authority needed to do so–which is a legislative failing.
Unlike PART I, where we explored the “trickle-down” moral hazard created by attorney fees, here we’re examining one of the more pronounced and, I’m sad to say, slippery, regulatory challenges… preventing the Unlicensed Practice of Public Adjusting or UPPA.
Public Adjusters hate UPPA. We should all hate UPPA.
After all, it’s the foundation for the confetti of flyers, yard signs, doorknob hangers and door-to-door solicitation scams that too often involve the breaking of numerous laws, especially ones requiring those who act like public adjusters to be licensed as public adjusters (PA’s).
PART I cites the current UPPA prohibition, Fs. 626.854(19), as follows:
No person, except an attorney at law or a public adjuster, may for money, commission, or any other thing of value, directly or indirectly: Prepare, complete, or file an insurance claim for an insured or a third-party claimant; Act on behalf of or aid an insured or a third-party claimant in negotiating for or effecting the settlement of a claim for loss or damage covered by an insurance contract; Solicit, investigate, or adjust a claim on behalf of a public adjuster, an insured, or a third-party claimant. (See NOTE #1 below)
As I’ve said, “the big dog has no teeth!”
What if someone is just advertising that they’ll “fight for your claim” and that they will get the insurer to “pay you more?” What if they only say they will “represent” you? What if they are soliciting your claim on behalf of an attorney or a public adjuster but, they aren’t an attorney or a public adjuster, what then?
These so called grey areas are currently clarified in HB-717 and its just released Senate companion, SB-1598. That’s good. However, what’s still not addressed is what specific authority DFS may need to levy fines on the unlicensed roofers, water mitigation firms, contractors, and others who “…act on behalf of or aid an insured” without a license as a public adjuster.
Example: The Maryland Insurance Administration (MIA) just issued fines of more than $500,000 to five individuals and four companies (roofers, contractors & PA posers) for “Fraud” and for “…acting as public adjusters without a license..”
Maryland’s Commissioner, Kathleen A. Birrane, said..
“… while most home repair and restoration services are honest and reliable, there are dishonest and predatory actors that lure homeowners into unnecessary or inflated repairs by suggesting that those repairs are covered by insurance, and then offer to act for the homeowner in negotiations with the insurer in violation of state licensing laws and often to the detriment of the consumer. Reports of these activities often follow disasters or storms and have certainly spiked during the pandemic.”
That’s the point, isn’t it? They “…lure homeowners.” In other words it’s a trap.
What would Florida look like if we could eliminate this trap?
One of the Maryland alleged culprits was found to have faced “…administrative action in other states for similar activities.” And, just like Florida, one company was allegedly eliminating deductibles by paying the homeowner an equal amount for placing a “free roof” sign in their front yard.
Another roofer was fined when video evidence showed him on a roof intentionally damaging shingles to support the claim he was planning to file.
Sounds like the opening chapter to a Florida hurricane novel: “..dishonest or predatory actors that lure homeowners into unnecessary or inflated repairs…”
HB-717 and SB-1598, contain good language making it clear that those who solicit claims and/or publicly adjust without a license are breaking the law, however, DFS still needs direct statutory authority to levy fines. Those who do not pay their fines or who assist those who are unlicensed in continuing to break the law should have other licenses they might hold (contracting, roofing, etc.) subject to suspension or permanent revocation as well.
Again, from Maryland’s commissioner…
“honest contractors help homeowners assess damage, make repair damages, and share information with insurers –but they don’t exaggerate or mischaracterize loss, kick-back fees, or take over the claim negotiations…”
Somehow these sentiments need to find their way into Florida statutes via one of the many property reform bills now circulating. Seems like the industry and the regulator could get together on this one issue.
Florida’s 6.5 million property insurance premium payers deserve no less.
##end##
NOTE # 1: Fs-626.854 (19); Except as otherwise provided in this chapter, no person, except an attorney at law or a public adjuster, may for money, commission, or any other thing of value, directly or indirectly:
(a)Prepare, complete, or file an insurance claim for an insured or a third-party claimant;
(b)Act on behalf of or aid an insured or a third-party claimant in negotiating for or effecting the settlement of a claim for loss or damage covered by an insurance contract;
(c)Advertise for employment as a public adjuster; or
(d)Solicit, investigate, or adjust a claim on behalf of a public adjuster, an insured, or a third-party claimant.
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For years I have reached out to DFS to uphold the Laws. So, Sir, agree the DFS has no bite. Unless you Piss it off. Very political. Now to be clear as a 35 year Public Adjuster, I now have no dog in the fight at this time of life. 74 and on a different path. But, Good Public Adjusters and Good Attorneys, provide a needed service.
Now, back to the current issue of UPPA. If the DFS would go after the carriers which provide Aiding and Abetting to this issue. Yes carriers rather work with the un-knowledgeable, un-licensed, contractors or mitigation person than a tested Public Adjuster.
Carriers (as well as anyone licensed in Florida) are required to report any violation of the Florida Insurance Statutes or Administrative Rule. However you never here of a carrier, screaming to the top of their collectives lungs. About contractors practicing UPPA. It was the carrier which put in statute allowing a contractor to explain the scope of damage. Will that lead to contractors thinking they could adjust. And the carrier let them.
WHICH LET THE AOB ISUSSE OUT OF THE BOX> So Mr. Johnson whos fault is it we are where we are. Carriers not paying claims properly, Carriers adjusting claims with un-licensed persons or passing legislation without seeing the long term OH (*)(*&)_
Mark, sorry to respond so late, I just saw this.
I agree good attorneys and public adjusters can provide a needed service. But, I often question why we need both. And, in fact, in some states the service received is performed quite well without having both.
SB-1598, which just passed, should be of some help in getting at the UPPA problem. Time will tell, but…a $10,000 fine (per occurrence) should be pretty motivating I should think.
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