The rain and wind had barely stopped when I received my first inquiry regarding Public Adjusters (PA’s). Then came Milton and more inquiries, mostly from agents contacted by their clients who had been contacted by a PA, sometimes several PA’s.
In the past agents have told me they have advised some clients to call a PA, even suggesting they could get more money–enough to cover the PA fee which, after a Florida disaster, is only 10% of the claim versus the non-cat standard of 20%.
Frankly, I thought that advice was so bad it warranted an article reminding agents of the bigger picture and their unusual role in the claim process.
Here are some random thoughts for when/if an agency receives inquiries regarding Public Adjusters.
- Never recommend hiring a PA to any client. Doing so could prejudice the carrier’s case if the claim is controverted and could lead to termination of the agency appointment.
- For those clients who inquire, agents should recommend the consumer brochures on Public Adjusters available from Florida’s Insurance Consumer Advocate (ICA) here. The ICA document titled “Working With A Public Adjuster—Your Consumer Rights” is more comprehensive than verbal or written information from the agency and minimizes E&O exposure.
- The ICA material also contains information on how agency clients can cancel a PA contract they’ve already signed. You’ll also find an “interaction log” for keeping track of PA communications and a sample letter for proof of cancellation.
- For agency clients who have a disagreement on the “amount” of a claim, Florida state sponsored mediation can be helpful, see Mediation. It’s my understanding that access to state sponsored mediation (which is free) is explained in the carrier’s response to the First Notice of Loss. But, either way, agents should use the explanations from the ICA when explaining mediation
- It’s not unusual, in my opinion, for PA’s to advertise that policyholders can get as much as 747% more for their claim, if they hire a PA. They assert that this statement is… “According to a government study.” However, the 2010 study is from the Office of Program Policy Analysis & Government Accountability (OPPAGA) and has been debunked numerous times (See Citizens PA’s—According to a Government Study). Also, note that even the OPPAGA study states it can take an average of 9 months “longer” to settle a claim handled by a PA. And, don’t forget you have to forfeit 10% of your claim payout (20% non-cat) as the PA fee (See OPPAGA p. 6).
- Again, recommending a PA to a client is something I believe an agent should never do, especially when they could hire an attorney with fee’s paid by the insurer or use free state sponsored mediation.
- Agents should always check with their carrier regarding each claim where there is controversy and follow the carriers instructions carefully.
- Agents should keep complete logs on every conversation regarding claims and claim advice given and maintain an exhaustive written record of every transaction or exchange.
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NOTE #1: WFTS Tampa Bay: https://www.abcactionnews.com/weather/hurricane-ian/homeowners-say-hundreds-of-public-adjusters-and-contractors-are-knocking-on-their-doors-post-hurricane-ian
NOTE #2: ICA Public Adjuster advice: https://www.myfloridacfo.com/docs-sf/insurance-consumer-advocate-libraries/ica-documents/public-adjuster-consumer-tips.pdf?sfvrsn=9ad3e6b4_18
NOTE #3: See the ICA explanation of Florida’s Hurricane Deductible.
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Scott
Good idea, let the agents handle the claim and get sued. Oh I forgot, the Florida legislature took care of that little detail. As to PA cost, I have been a licensed PA company for 30 plus years day in and day out. You cannot stay in business this long (and yes having agents send clients to us) if you did not make your way economically. So let’s see how two major hurricanes in 13 days square with the agent class and most importantly the political class in Tallahassee. Will it be full steam ahead or will we have a new steady hand on the helm that steers the state population away from the rocks. I so vividly recall insurance agent Boyd, a senator from Sarasota/ Bradenton area, who pushed all the so called insurance reforms through the legislature. In the process when asked, he honestly replied I never had a major hurricane on my watch in my area of business. So now he does, let’s see what the folks he wrote policies for will do. Will they come in mass with roses or pitch forks?
Scott, I have supported a lot of the your articles/positions over the years, but in this case IMHO you should have written if you are going to hire a PA, check them out, do the due diligence. But on the other hand, people have such distrust and I suspect in this case after this mess, hatred toward the insurance industry. Finally, your advice and article may in fact drive folks to the PA’s, paradoxically some of whom may not need them.
Dick Tutwiler