The last three months AAPIA has reported on draft legislation that will amend present Public Insurance Adjusters Licensing Act. AAPIA legal counsel Ms Holly Soffer along with AAPIA President have been working with the Executive Director of The House Insurance Committee Mr Arthur McNulty, Esq. along with many other interested parties to consider language that can be amended into HB 2370. The primse sponsor of the legislation is The Honorable Dom Costa from Allegheny County who has proposed changes to current law.

AAPIA will continue to work with all parties to insure the licensing act for public adjusters conforms with the NAIC Model Act.

Please remain in contact with AAPIA by visiting our web site on a daily basis for further updates.

AAPIA will issue a detailed report on Tuesday afternoon June 22. immediately following the Public Committee Meeting that is being held by the House Insurance Committee Chairman Anthony Deluca and members of the House Insurance Committee. The meeting will be held in the Irvis Building at 9:30 AM Room 50.
 

MAPIA Board recently sent a letter to AAPIA asking us to inform the House Insurance Committee Legal Counsel of their position relative to HB 2370.

The entire letter can be viewed under Pennslyvania Bill Tracking on our web site.

MAPIA Board wrote, "There are certain and specific areas and language contained in this bill which will be opposed by our organization. At the same time, we do in fact recognize that there are other areas of change which Mapia can and will support".

House Bills 2370 and 1736 were unanimously adopted by the Pennsylvania House Insurance Committee and are now on track to be adopted by the legislature if the Senate approves them in the Fall.

Quick Summary by Issue:
Fee Caps- none
Right of rescission: 5 business days
    Ownership in Restoration Company: ok if disclosed to insured
    Continuing Education: 24 hours every 2 years
    Bond Amount: $20,000.00
    Solicitor’s License: removed under new Act; current solicitors become adjusters automatically
    Contract: more disclosures needed, and every disclosure must be initialed
    Estimates: must be cc’d to insured
    Revocation: minor violations added: certain violations of Act a third degree felony
    Restriction on Solicitation: not during loss

AAPIA has been involved in negotiating some of these proposals, and a more detail on some of the changes in the law and a brief summary of those negotiations is below.

2370:   During the last few months I have worked with the AAPIA leadership to fight for the interests of AAPIA members, the industry as a whole, and the consumer in Pennsylvania regarding proposals for drastic changes in the public adjuster licensing law. A summary of the initial draft of the Bill has been on the website for a few months. Since then there have been other proposals and amendments offered that will directly affect the way you do business.
    One of the more dramatic proposals coming after the original draft of the Bill was the imposition of a fee cap of 12.5 percent on all claims. On behalf of its members, AAPIA strongly opposed the imposition of fee caps, due to the detrimental effect on the consumer as well as the public adjusting industry. Both Gene Veno and I have written extensively on this issue and attended stakeholders meetings in Harrisburg and successfully presented our position to protect both the consumer and the livelihood of public adjusters in Pennsylvania.  As a result of our efforts---no fee caps in the Bill.  
In order to win the battle on fee caps, we had to compromise on a few other issues, but as a whole, the Bill is something that is livable.  The original draft of the Bill contained a proposal for a fifteen day right of rescission for the insured, instead of the current four day period. Fifteen days is obviously too long and is harmful to the industry, since you have an ethical and legal duty to act quickly to appraise the damage to the insured’s property, and report to the insurance company. The fifteen day right of rescission would result in you being unable to get paid for work performed during that period. AAPIA fought against this provision, as well. In the end, in order to avoid fee caps, we accepted a five business day right of rescission.
    Another proposed addition to the law would have prohibited an adjuster from having an interest in or receiving profit from a restoration company or “similar business” entirely.  As you know, Pennsylvania law currently prohibits public adjusters from being involved in emergency repairs on an insured’s property, but does allow a public adjuster to receive a “referral fee” from someone engaged in the repair business, as long as such fee or compensation is disclosed to the insured in writing in the initial contract. Further, public adjusters may perform restoration work as long as it is after the claim has been completely resolved.  The new proposal would have done away with referral fees, and would also prohibit an adjuster or solicitor from working in the contracting, building and home repair business, at all, even if such work is unrelated to any insurance claim.  AAPIA argued that these restrictions are too broad, and suggested alternate language, from the NAIC Model Act, which was adopted into the Bill. The new law will allow an adjuster to have such an interest in a restoration or repair business, as long as such is fully disclosed to the insured, and keeps in place the prohibition on performing such work until after the claim is fully resolved.
    There is now a restriction on soliciting during the occurrence of a loss producing event.  This mirrors the language in the NAIC model Act, and does not affect your right to solicit in the twenty-four hour period after the event, or at any certain times of day or night. 
    There are some other changes with regard to licensing and the contract with the insured.   The separate license for a public adjuster solicitor has been eliminated, which does hurt some businesses, but the DOI would not compromise on that in order to allow Pennsylvania to be similar to and have reciprocity with other states.  To make that change more palatable, the people who are solicitors now are “grandfathered” in as adjusters, and we successfully asked for the bond amount to be lowered to $20,000.  Continuing education requirements will be 24 hours every two years, and copies of estimates will have to be sent to the insureds.  There are now more disclosures required in the contract, and those need to be initialed by the insured.  The new law will take effect 180 days after it passes. Your contract will have to be re-written entirely, and approved by the DOI, which I can help you with, after the Bill finally becomes law. 
1736:   This bill, also included in 2370, addresses violations of the Act. Certain willful violations of the Act, such as fraud, material misrepresentation, misappropriation of funds, and payments to non-public adjusters such as agents, brokers or attorneys to induce the hiring of public adjusters will now be considered a third degree felony. We fought to keep out the overly harsh proposals, such as making any violation of the Act a felony, and are responsible for adding the word “willful” into the statutory language. Also, the maximum fine is now $5,000.00.    
We will keep you updated on the status of the Bill, as it goes through its final stages in the Fall. In order to have these Bills become law, without fee caps, we need the Senate to pass the Bills.  You can help by contacting your State Senator and urging him or her to vote “yes” to pass these two Bills.

Holly Soffer

Click here to Download a PDF copy of the Model Act.

Click here to download a PDF of the Legislative bill 2010, Senate Bill 357

http://michie.lexisnexis.com/newjersey/lpExt.dll?f=templates&eMail=Y&fn=main-h.htm&cp=uanjadmin/1/667bd/667e1/67227

Allied Insurance, based in Des Moines, Iowa, announced new changes to its commercial quoting process that it says will allow independent agents to write business insurance quicker and easier. Among the new features:

    * 25 percent - 45 percent of previously asked commercial application questions have been eliminated (depending on the specific business-owners-product program);
    * Elimination of up to six supplemental applications;
    * Addition of clearer questions to improve underwriting efficiency and turnaround times.

Allied Insurance President W. Kim Austen said the "changes reflect direct feedback from our agents, so we felt compelled to take steps that make Allied easier to do business with."

Allied Insurance has also recently announced significant product changes with expanded coverage options and is now offering coverage enhancement endorsements for a wide range of industries and products.

With a new application process for premier business owners and business auto, independent agents will be better equipped to meet their clients' needs with superior service and coverage from Allied, the company said.

Allied operates in 34 states through a network of independent agents with regional offices in Denver, Colo.; Des Moines, Iowa; Lincoln, Neb.; Gainesville, Fla; and Sacramento, Calif. Allied has been a member of the Nationwide family of companies since 1998, and is responsible for Nationwide's independent agency system.

By Chip Merlin
Read the full post here

Florida's Third District Court of Appeal, which sits in Miami-Dade County, ruled yesterday that a public adjuster constitutional challenge to the public adjuster fee limitation and solicitation restrictions that was filed in Miami-Dade County should have been filed in Leon County. As noted in Sink Appeals Public Adjuster Suit: Delay Possible For Miami-Dade County Public Adjuster Lawsuit, this venue dispute slowed this lawsuit significantly. In the interim, a similar suit was not ruled on favorably by a Leon County judge, as noted in Public Adjusters Lose 48 Hour Solicitation Ban Case.

The appellate court opinion had some interesting facts about the case I was not aware of:

    The documents filed by the Adjusters show that the Department sent
    correspondence to Ameriloss and Premier advising them that investigations had been opened concerning their insurance-related activities in Florida.

    ...

    The Adjusters...also filed affidavits stating that Gene Cashier (“Cashier”), an agent of the Department, traveled to Miami-Dade County, visited and interviewed East Coast’s clients, interviewed a contractor used by one of the clients, and advised the clients that East Coast was being investigated on suspicion of fraudulent or excessive claims. In addition, the Adjusters produced the affidavit of Premier’s president attesting that a special investigator from the office of the Chief Financial Officer visited Premier’s business location, advised Premier that it was under investigation, and obtained copies of Premier’s files and fee calculation for a particular claimant. Lastly, the Adjusters indicate that while the lawsuit was pending, the Department sent a letter in January 2010 to Premier requesting information and documentation as to one of its contracts that contained a commission of 25 percent, despite that “[u]nder Florida Statute 626.854(11)(b)(2), the cap is 20 percent.

    It is noteworthy that the Adjusters’ affidavits pertaining to Cashier reference his activities as “investigating an alleged fraud by East Coast,” “investigating allegations that East Coast had filed an improper claim,” and advising East Coast’s former client that “an investigation had been initiated . . . because he believed that one of East Coast’s employees . . . had filed an excessive claim.” The affidavit filed by Premier’s president states that the Department’s agent was “investigating allegations that [Premier] had charged in excess of the fees allowable under Fla. Stat. 626.854.” We note that section 626.854 includes limitations on public adjuster fees outside of those in section 626.854(11)(b)(2). In response, the appellants filed two affidavits, including one by Cashier unequivocally stating that he had “not been asked to enforce, [nor had he] attempted to enforce or prosecute any person or entity with a violation of the 48-hour waiting period provision of section 626.854(6), Florida Statutes (2009) and the fee cap provisions of section 626.854(11)(b), Florida Statutes (2009).” Cashier further attested that “[n]one of the referenced investigations cited therein concerned allegations of misconduct pursuant to the above-referenced statutes.”

Filing affidavits that become public record and which indicate that the government is investigating your business for fraudulent or illegal conduct does not seem like a very smart marketing move. I suppose this was the only method the public adjusters' counsel could present evidence to keep the matter in Miami-Dade County.

These facts are timely in light of Tuesday's post, Insurance Agents Should Not Adjust Claims and Public Adjusters are Not Insurance Agents -- But They Need to Listen to One Another. It produced a number of private and some public comments about the regulation and reputation of public adjusters. I suggested a greater need for audit and closed claim file reviews of public adjusting firms by the Department of Financial Services. I indicated that review of files was rare, but maybe I was wrong about that in light some of these new facts.

Also, in that post, I was wrong about statutes not existing concerning adjusting by insurance agents. Writing publicly is a certain method to show ignorance and gain knowledge. A comment by Gary Ahrens noted:

    626.862 Agents; adjustments by.--A licensed and appointed insurance agent may, without being licensed as an adjuster, adjust losses for the insurer represented by him or her as agent if so authorized by the insurer. The license and appointment of the agent may be suspended or revoked for violation of or misconduct prohibited by s. 626.611(6). (emphasis added)

Please note that the insurance agents are acting as adjusters for the insurer under such appointment. Insurance agents should clearly indicate that to their clients. This statute may be useful to prove that actions, errors and omissions in the formation of making insurance contracts can be attributable to the insurer directly. It might also be used as negligence per se if the agent commits actions within the definition of adjustment without the appointment. I also agree with Gary that the "statute gives the right to an agent of an insurer to adjust a claim. If they can do it correctly, remains to be seen."

In my next life, maybe I will be as gracious as Scott Johnson. He acknowledged with a smiley face ":)" that I "systematically" critiqued his argument. Then, continued the debate which significantly included the following:

    Finally, while I respect your push for more oversight and audits of PA's, I'm really not advocating that. The Public Adjusters I've had the honor to know, are like you, good, honest, hardworking people interested in helping consumers. But, isn't it possible that a statewide prohibition against holding back is attracting some bad apples? The good organization you founded has around 425 members but, there are another 2600 or so out there (more than the next five states combined); again, because of the lack of any hold back. (emphasis added)

The answer to the question is "maybe," because how do you prove that? I have never heard a new public adjuster or one coming from another state say, "I got into the public adjuster business in Florida because Florida requires its insurers to pay replacement cost benefits right away rather than having to wait for replacement." The point is that Johnson and some in the insurance industry are using a mythical witch-hunt of "fraud" as a basis to overturn consumer protection laws that require Florida insurers to promptly pay replacement cost benefits. There is no proof to support what Johnson and others claim. Significantly, he wrote that the public adjusters he knows are "good, honest, hardworking people interested in helping consumers;"  this refutes his argument.

I am no lobbyist, but public adjusters should send this quote to every Florida legislator whenever any insurance industry leader or lobbyist wrongfully suggests that public adjusters are, as a whole, anything other than honest and dedicated professionals helping policyholders.

Click here to read Chip Merlin's Property Insurance Coverage Law Blog

Amendments to Public Insurance Adjuster Law