Public adjusters could become harder to find if new Citizens Insurance payout policy spreads

Fewer public adjusters might be available to help policyholders settle claims with insurance companies if a new payout policy quietly being rolled out by Citizens Property Insurance Corp. becomes adopted across the rest of the industry, the director of the state’s public adjuster association is warning.

Like attorneys, public adjusters are hired by policyholders to represent them in determining values of insurance claims. Typically, they take over communication with insurance companies until agreements are reached and secure higher settlements than policyholders working on their own.

Adjusters in Florida say they were shocked to receive letters from state-owned Citizens Property Insurance Corp. alerting them that their names will no longer be included as co-payees on claims settlement checks sent to policyholders.

A letter from Citizens started going out to public adjusters early this month, worded as a response to requests for information about why their names were not on recently sent checks.

The letter states, “Our policy requires us to pay the insured unless someone other than the insured, such as a guardian or other loss payer, is legally entitled to the claims payment.”

It continues by noting that the adjuster’s right to payment is based on agreements between the adjuster and the insured, adding, “the insured is liable for the payment to parties with whom he or she contracts, not the insurer.”

Companies often follow Citizens’ lead in adopting unpopular policies. If they do, public adjusters might find other jobs, says Nancy Dominguez, executive director for the 750-member Florida Association of Independent Insurance Adjusters, told the South Florida Sun Sentinel.

If that happens, fewer will be available to help policyholders file insurance claims after hurricanes or other disasters, she said.

“If public adjusters find it difficult to get paid for their work since their fees are not being protected it is likely they will leave the industry,” Dominguez said. “This will make it much more difficult for policyholders to get a second opinion, find professionals to help and get fairly paid for their losses. I suspect that is the intended consequence.”

Citizens spokesman Michael Peltier said the decision was made by members of the company’s Executive Leadership Team, comprised of senior leaders across the company.

“This procedural change makes it easier for our policyholders to get back on their feet and does not impact any contract between a policyholder and their public adjuster, whose fees are governed by statute,” Peltier said.

Public adjusters are not concerned about most policyholders who will voluntarily pay the percentage of the claim specified in their written agreements, Dominguez said.

But a few might hold out if the adjuster’s name is not on the check, she said. “What happens if you have a policyholder who decides, ‘Oh, I’m not going to pay anybody. I’m keeping this money for whatever reason,’ you know? Now it becomes a dispute between the public adjuster and the policyholder. Why?”

The statement in the Citizens letter contradicts information posted on the company’s own website until recently, Dominguez says.

She provided a document copied from a “frequently asked questions” webpage on Citizens’ website that asked “Why is the public adjuster’s name on the claim check?”

The response explained that Citizens, the state’s so-called insurer of last resort, includes public adjusters on claim checks when a letter of representation signed by the policyholder and public adjuster is submitted for a claim. “Citizens must protect the public adjuster’s interest by including the public adjuster as an additional payee on the check,” it said.

That response was last updated on April 28. But on Monday, it was no longer posted on Citizens’ website.

An FAQ entitled “Why is the mortgage company included as a payee on the settlement check?” remained on Citizens’ site Monday.

The response explains that the mortgage company is required to be on the check if it has “an insurable interest in the damaged property.”

State law limits public adjusters’ fees to 10% on claims stemming from declared states of emergency and 20% for non-emergency claims.

Because public adjusters typically secure higher settlements than policyholders working on their own, insurers are often wary of their participation. In public meetings, Citizens groups public adjusters with plaintiffs attorneys when reporting cost differences between claims submitted by policyholders with or without “representation.”

A post on Dominguez’ Facebook page last Wednesday noted that she received so many calls from members on the issue that she had to turn her cell phone off so she could concentrate.

Amy Ruiz responded to the post by questioning Citizens’ stated reason for the new policy, noting that the company also does not have a contractual relationship with mortgage companies.

“The reason the mortgage company is placed on the check is because of the contract with the insured,” Ruiz posted. “The mortgage company is legally entitled to the payment per the Citizens policy. Same as the public adjuster.”

Another respondent questioned whether private market insurers would soon follow Citizens’ lead.

“They’re singling out our industry, which is not uncommon,” Dominguez says. “You know, we’re the scapegoats because we end up costing them more money, because we get people paid what they’re owed.”

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at [email protected].

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