Gene G. Veno, President of AAPIA responded to the article in support of Commissioner McCarthy and his adminsitration for handling of this recent insolvency of an insurance company in their state.
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Large Insurance Bill Addresses Fees & Advertising by Public Adjusters, Deadlines for Filing Windstorm/Hurricane Related Claims, Policy Terms and Payouts by Carriers.
CS for CS for SB 2044 is a rather large bill addressing many aspects of insurance. It limits payments to public adjusters for supplemental or reopened claims to 20% of additional insurance proceeds obtained and prohibits public adjusters from charging more than 10% of proceeds paid by a carrier if the claim involves losses from events that are subject to a declaration of a state of emergency by the Governor. While the bill goes on to regulate advertising or solicitation by public adjusters and the form of contract between the public adjuster and the insured, more attention is being paid to three new provisions that, if they become law, impact property owner obligations, the carrier's ability to change the terms of the contract upon renewal and payment of claims.
These portions of the bill pertain to residential (personal lines) coverage. Policies issued to multi-family property owners/managers (the Association) are generally (if not always) classified as commercial policies.
One part of the bill purportedly bars homeowners from filing claims. It says that the insured must provide notice of any claim (including supplemental or reopened claims) based on a windstorm or hurricane loss to the carrier within three (3) years of the date of the storm. While it doesn't change the applicable statute of limitations for civil actions, in some cases homeowners do not have a full understanding of all the damages caused by the windstorm/hurricane until after demolition and reconstruction begins. Thus, the three (3) year time frame may result in loss of insurance proceeds, depending upon whether the homeowner has the ability to attend to reconstruction after the storm.
Another section of the bill allows the insurance carrier to change the terms of the policy upon renewal by use of a notice entitled "Notice of Change in Policy Terms". Payment of the renewal premium constitutes acceptance of the new terms.
Most importantly, the bill removes the prompt payment requirements on the part of carriers. It only requires the carrier to pay "actual cash value" minus the deductible, regardless of whether the homeowner paid for replacement cost coverage. The carrier then only pays additional amounts once a contract for reconstruction is in place and the costs are incurred (as the work progresses). Critics argue that this provision disproportionately impacts lower income families that do not have funds available to pay for reconstruction (along with all the non-insured items) and/or replacement of personal property without insurance proceeds.
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By Chip Merlin
Read the full post hereFlorida'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.
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The Senate has passed the Dodd-Frank financial services reform package that will have some impact on the insurance industry and add involvement by the federal government in the state-based insurance regulatory system.
The 2,300-page bill, which passed the Senate by a 60 to 39 margin yesterday, aims to address regulatory weaknesses blamed for the 2008 financial crisis. It gives regulators broad authority to rein in banks, limit risk-taking by financial firms and supervise previously unregulated trading. It also makes it easier to liquidate large, financially interconnected institutions, and it creates a new consumer protection bureau to guard against lending abuses.
The National Association of Surplus Lines Offices (NAPSLO) hailed the passage of the bill as a "big win," after several provisions were included to modernize the surplus lines industry.
Those changes would speed up and ease access to the surplus lines markets by consumers, and reduce administrative compliance issues by establishing that only the home state of the insurer can regulate multi-state transactions.
"These surplus lines reforms represent a nearly decade-long industry effort spearheaded by NAPSLO to modernize and reform surplus lines regulation. With the legislation now approved by Congress, we look to the states to implement its provisions in the way Congress intends and bring about, on a nationwide basis, the anticipated efficiencies in surplus lines regulation and tax payment mechanisms the legislation promises," NAPSLO President Marshall Kath said.
Ken A. Crerar, president of The Council of Insurance Agents & Brokers, echoed those statements, adding "passage of this bill is important not only for (agents) but also for their commercial clients… Now that multi-state surplus lines placements will be subject to regulatory oversight by a single state, a substantively streamlined process will be created for commercial consumers, regulators, insurers and brokers. This change will provide for a uniform approach to regulating the surplus lines market and once signed into law, will go a long way to addressing long-time marketplace problems."
The bill also establishes a federal office of insurance (FIO), which will increase the federal government's role in addressing insurance-related issues.
David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCIAA), said that the final version of the bill contained a number of changes that would lessen the impact of federal oversight of the state-regulated insurance system, but also said "deep concern(s)" remained over the impact of the legislation.
"It is important to note that this is still only the midpoint for financial services reform. We have a long road ahead of us as we move into the rule development phase," Sampson said. "We look forward to working with regulators to preserve a strong and stable insurance marketplace to protect home, auto and business owners."
Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), said the completed bill "largely recognizes that property and casualty insurers do not pose systemic risk," which she called "a meaningful acknowledgment for the many policyholders that rely upon our low-risk business model to provide them security in times of uncertainty."
Pusey also said the bill "takes necessary steps to prevent insurers from being lumped into many of the new 'bank-focused' provisions. This, too, is a substantial recognition of the insurance business model."
President Obama is expected to sign the bill.
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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.
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It is with very sad news that we report the passing of a wonderful man in Mr. Pattrick M. Catania. I never met the man but I spoke with him the past few months as Pat worked with much energy and vigor to oppose the recent legislative activities in Florida. Patrick represented his clients and his profession with integrity and class! Patrick M. Cantania will be greatly missed by his family, co-workers and friends. Patrick M. Catania known to many as "PAT" passed away on May 24, 2010 while courageously fighting a short but arduous battle with cancer while under treatment in Germany. Pat leaves his family and colleagues were he established East Coast Public Adjusters a legacy that is a testimony to his many accomplishments. Pat is survived by Susie Catania, a law student at the University of Miami; Danny Catania, artist and public insurance adjuster for the family company; Frankie Catania, preschooler. Pat, an entrepreneur, was the President of East Coast Public Adjusters and east Coast Appraisers for over twenty-five years where he was a passionate fighter and true advocate for the policyholder's rights. Pat was instrumental in affecting the interpretation of the insurance law in the state of Florida on behalf of the insurerd.
Please join Pat's family and friends at St. Theresa's Church of the Little Flower for the mass, June 4th at 2:30 PM 2711 Indian Mound Trail, Coral Gables. The family is requesting in lieu of flowers that all donations should be kindly made to Patrick Catania's Tribute at St Jude Children's Hospital www.stjude-tribute.org and please visit Pat's guest book at www.miamiherald.com/obituaries
Our deepest sympathy from the AAPIA Family goes out to Pat M. Cantania's Family during their time of deep sorrow,
May God continue to look over Pat and his family
One of Pat's friends
Gene Veno
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Regardless of the state you are licensed to work, you need to know that many new laws are being "proposed" all across the nation where the Public Insurance Adjuster is licensed. We mention this to our members so that they can be made aware of what is happening and what you can do to get involved with your profession. AAPIA is your advocate on a national level - we monitor all state legislatures and regulations as they appear and immediately review and comment on the efficacy and impact it may have on your profession.
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