Unlicensed Practice of Public Adjusting Post Draws Valuable Insights and Comments from Readers

Last week when I published the blog: The Unlicensed Practice of Public Adjusting, the Insurance Claims Keep Rolling In I apparently hit a nerve with a number of professionals from various parts of the property insurance industry that sent some very helpful comments that I’d like to share. Hopefully this may get a dialogue going that addresses this matter in a mutually beneficial manner.

First a comment from Mr. Scott Johnson, President of Johnson Strategies regarding his ideas on how to proceed.  He writes:

“Three observations came to my mind which are not inconsistent with the points you made but which come at the problem from a slightly different angle.  It occurred to me there may be some things the insurance industry and public adjusters with a similar mindset to yours could work on together. 

Here are my thoughts:

1) In the first part of your article you spoke of Insurer's and regulators reducing water loss coverage in their forms. You gave several examples; all of which I am familiar with. While not the sole reason, I would say that, to some extent, the trend to reduce coverage for the water peril is the result of the problems you outlined in the second part of your article regarding abusive practices by Water Extraction companies; especially from Assignment of Benefits (AOB).  

2) If the AOB reforms you referenced during the last legislative session were allowed to become law, I believe that the pure premium applied to water losses would drop considerably and the coverage cuts you described would either cease or at least be met with greater objection from the OIR.

3) I followed the AOB legislative debate last year pretty closely. One group appearing to stand against AOB reforms was the Florida Association of Public Insurance Adjusters (FAPIA).  If instead FAPIA was to embrace AOB reforms they might pass; and if they did, that might have the secondary impact of not only reducing the coverage reductions sought by insurer's but, also reducing the problems regarding the practice of public adjusting by unlicensed water extractors.  

I know you are a past president of FAPIA and wonder what your thoughts might be on this and whether you think there's any room for meaningful dialogue on AOB reform in the future.”

Scott, your outreach to me was not only timely but insightful as you have picked up on a possible avenue of agreement between some diverse groups. As to the path ahead, it no doubt will be challenging on all sides but hopefully we can find common ground on this one.

The common ground is that the PA’s livelihoods are impacted by those who break the law and act as PA’s without having to get licensed, are not regulated, have zero requirements for CE credits, etc. As it turns out, these are the folks that for the most part are the ones abusing the AOB.  But I think the PA community may have some objection giving up the AOB in total  as it (AOB) also allows (from a non-legal analysis) the right to get their name on the check for services rendered.  

But if an agreement could be reach to allow for some protection for the PA community to get paid with the upside that all the unlicensed , unregulated types who are de facto competitors are discouraged from the practice, then one would assume that we might have a very workable solution and perhaps enough common ground to get this done. This could be a win-win which in the end would benefit the consumer by giving back some needed claim coverage.

Let’s work with the powers to be to see if we can start the ball rolling.

Next, a comment from Stan Miller a Texas Public adjuster:

“Texas is rampant with this and I have been trying for years to get the insured to stop and read what is handed them to sign.  I do agree on how bad it is and want to thank you for the article.  Do you have any problems with my handing out your article to the insured?”

Anything we can do to educate the policyholder on this issue would be helpful.

Public Adjuster and activist Mark Boardman writes:
“I wish to extend my thanks in your position as to contractor and mitigation companies and add another point you may wish to add to your position is this: If these mitigation companies claim to be experts and state policy conditions (mitigation) then possibly we can we hold them responsible if the cost of their work is greater than the loss without such mitigation. I have put your position before the lawmakers for some time and it is slowly gaining traction."

Another good idea that might help solve this issue. Are you listening legislators?

Finally, an Orlando Public Adjuster offered some solutions and sited a couple of real life cases he is working on:
“Contractors should have to submit an estimate prior to having an insured sign their open ended contracts. I will site 2 cases, one of which has filed a complaint with the State of Florida.

Longwood Florida Fire – A devastating fire to a half million dollar home in January of this year, where the homeowners ultimately hired a contractor who made them all sorts of promises. This particular contractor is a preferred vendor for UPC Insurance. Long story short after weeks of allowing the contractor to run amuck with their claim, the homeowners ultimately reached out to a Public Adjuster. Policy Limits were paid less the $29K EMS bill submitted by the contractor. That's 29K less the homeowners have to rebuild their home. If the insurer would simply have sent an adjuster, this more than likely would not have happened. The contractor took full advantage of the insured! To add insult to injury, after the insureds hired a Public Adjuster the contractor resigned, and ultimately placed a lien on the property.

Clermont Florida Lighting Strike - The homeowners hired the same contractor from the onset, as the above mentioned loss. The insured informed me last night that the insurance company has deemed the house a total and is paying policy limits, less a $26K EMS bill that the contractor has submitted for payment. The insured is irate to say the least.”

Orlando Public Adjuster Brad Barrett also chimed in with an example:
“Christmas Florida Fire - Same contractor as previously stated has a lien on the property for $26K. Most likely the magic numbers they're using for EMS.

Are the insurer's guilty of favoring, and or pushing the unlicensed practice of public adjusting?

In case 1, home in Longwood Fl, the insurer recommended this particular contractor as their preferred vendor to the homeowners. The contractor in question had already told the homeowner they didn't need to hire a Public Adjuster, that he would handle the “entire” claim. So it’s possible under this scenario that the contractor is operating as both The Unlicensed Practice of Public Adjusting, and the Unlicensed Practice of Adjusting period. Bottom line, they're attempting to represent the insured under contract while representing the insurance company.”

I was told by FAPIA, that they now have a volunteer researcher who looks for and screens violation reports from the field and processes them for submission to DFS. Over the past two months over 50 UPPA reports. Another piece of the puzzle but shouldn’t DFS be on top of this? 

Finally another great comment from St. Petersburg attorney Robert Walton who contributed to our first article.

“I have copied a colleague of mine who is reviewing a proposal I made for a TPA to counsel and advise carriers on dealing with water mitigation and restoration companies. It seems to me that there also has to be some bridge to Public Adjusters and to insureds, (particularly that group of the elderly, retired policyholder with limited resources) to also have someone to turn to. 

I have obtained the permission of insurers to assign independent counsel to represent seniors on the insurer's dime to compel appraisal and bring closure to out of control claims. For example, I was retained to remove a lien imposed on a policyholder's property for an inflated water extraction bill where one of the crew was intoxicated and had to take breaks.

This is not just an insurance company problem. I have not figured out how to bridge something between policyholders, insurers and Public Adjusters yet. One thought I had was attacking a water extraction contract as an unlicensed public adjusting contract and void as contrary to public policy and the public adjuster licensing statute.” 

I will continue to update readers as this issue crystallizes. Let us know what you think.

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