Florida Public Adjusters May Face More Restrictions; Cat Fund Bond Approval Deferred

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February 24, 2010 Wednesday 04:37 PM EST

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Florida Public Adjusters May Face More Restrictions; Cat Fund Bond Approval Deferred

Chad Hemenway

TALLAHASSEE, Fla.

Two Florida lawmakers have proposed similar legislation to regulate public adjusters, who have more than quadrupled in number since 2004.

State Rep. Janet Long, D-St. Petersburg, and Sen. Mike Bennett, R-Bradenton, have each proposed legislation to limit how much public adjusters can solicit business -- down to the font size and ink color they are allowed to use in mailings. The bills would also limit the amount of time a homeowner has to file a claim against an insurer to three years instead of five years, which is the current law.

Sam Miller, executive vice president of the Florida Insurance Council, said tens of thousands of claims have been re-opened by homeowners looking to get more money from the 2004 and 2005 hurricane seasons. Public adjusters are independent contractors who work directly for homeowners to settle claims with insurers.

The Florida Insurance Council has endorsed the legislation. "Three years is more than enough time for a homeowner to know if they had damage from a hurricane," said Guy Marvin, president of the insurance council, in a statement.

Re-opened claims prompted the Florida Hurricane Catastrophe Fund to ask for $710 million in bonds to reimburse insurers for claims from past hurricane seasons. The State Board of Administration on Feb. 24 deferred its approval of the bonds, which would have triggered a statewide assessment. Officials worry that state residents are "paying more on their insurance because of improper claims by some homeowners and some public adjusters," said Marvin.

Also, approval of a cat fund surcharge increase to 1.3% from 1% was also deferred. The surcharge is in effect on all homeowners, commercial and automobile policies.

According to the Florida Property and Casualty Association, the new legislation concerning public adjusters spells out how they can advertise. Communication cannot look like a legal document and it cannot contain information about past history in obtaining claims payments. No solicitations can be mailed less than 30 days after an event.

William Stander, regional manager for the Property Casualty Insurers Association of America, said in a statement the trade group supports the "common-sense reform legislation, and we look forward to working with them to get it passed and signed into law." He said public adjusters are "taking advantage of the existing five-year time frame, and consumers are falling prey to these unscrupulous solicitations."

In addition, public adjuster fees would be based on insurer repair or replacement cost value rather than claim payment amount, the FPCA said.

The top five writers of homeowners multiperil in Florida in 2008, according to BestLink, were: State Farm Group, with a 17.7% market share; Citizens Property Insurance Corp., with 16.2%; Universal P&C Insurance Co., with 7.2%; USAA Group, with 5.1%; and Tower Hill Group, with 4.5%. BestLink provides online access to A.M. Best's Global Insurance & Banking Database.

(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)

February 25, 2010

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