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    Artiles (R)


    Property Insurance Appraisers and Umpires






    Relates to property insurance appraisers and property insurance appraisal umpires.






    Artiles (R)


    Property Insurance Appraisers and Umpires






    Relates to property insurance appraisers and property insurance appraisal umpires.




  • In February, state-run Citizens Property Insurance Corp. dropped below 1 million policies for the first time since 2006. Still, some lawmakers pushed for more reductions in coverage for Citizens policies to reduce the risk of assessments to Citizens and non-Citizens policies alike after a cataclysmic hurricane.
    Those efforts were whittled down in SB 1672, which bars Citizens from offering new multi-peril policies to condominium and apartment buildings.
    Other bills to reduce the size of the Florida Hurricane Catastrophe Fund, or Cat Fund (SB 482, HB 391) - favored by large insurance companies – and to allow the Florida Insurance Guaranty Association to directly assess policies (HB 143, SB  346) – favored by smaller insurers – failed to pass the Legislature.
    The main action on property insurance this session centered on SB 542. The measure, waiting the governor's signature, attempts to lure private companies to offer flood coverage to homes after a 2012 federal law boosted premiums for many coastal homes with National Flood Insurance Program policies.
    Chief Financial Officer Jeff Atwater pushed for SB 708, passed by lawmakers this year, which informs homeowners filing a claim of the process and their rights in seeking the claim.
    On the auto and workers’ compensation insurance fronts, bills to extend the amount of time for insurers to cancel policies from 30 days to 60 days (SB 490) and to allow companies to get back to work faster after being issued a stop work order for not carrying enough workers’ comp coverage (HB 271) made it to Gov. Rick Scott’s desk.
    Flood Insurance
    The 2012 Biggert-Waters Act, a federal law phasing out subsidies for National Flood Insurance Program policies near the coast, began to spook real estate agents in the summer of 2013. In October, homes bought or transferred began paying the new, higher premium for flood insurance. Although Congress would pass a law reducing the speed of the rate hikes during the legislative session, lawmakers still passed SB 542, which allows private companies to get fast-tracked rate reviews for flood policies until 2019. But the House’s refusal to accept a provision allowing insurers to offer coverage only up to the amount of the outstanding mortgage means some insurers might be hesitant to jump into the market.
    Citizens Property Insurance Corp.
    In addition to banning new multi-peril policies for condos and apartment buildings, SB 1672 limits the ability of public adjusters to receive referral fees as well as their ability to accept power of attorney from policyholders, and calls for all Citizens bid disputes to be handled in administrative court, rather than by its board. Lawmakers also passed HB 1079, which delays the ban on Citizens’ coverage of construction projects within the coastal construction line for one year, pushing the effective date back to July 1, 2015.
    Auto Insurance
    After court decisions shooting down challenges to a 2012 law aimed at reducing personal injury protection (PIP) claims, lawmakers shelved plans to move away from the current no-fault system to a mandatory bodily injury system. But the Legislature did pass SB 490, which would increase the amount of time insurers have to cancel policies from 30 to 60 days and would allow insurers to make changes to bodily injury, property damage and personal injury coverage so long as they don't go below state minimums.
    Florida Hurricane Catastrophe Fund
    The two competing visions for changes to the Cat Fund remained in stalemate this year. Bills (HB 391, SB 482) to reduce the total coverage of the fund, which acts as the state-backed reinsurance fund for Florida-based insurers, from $17 billion to $14 billion over three years fell flat, as did a bill (SB 228) to lower the retention level, or deductible, in the Cat Fund. Smaller Florida domestic insurers favored the latter approach which would have allowed them to draw down Cat Fund coverage for claims in a smaller size storm. Larger companies favored the reduction in the Cat Fund, which would have pushed other companies to purchase more reinsurance in the private market at higher prices.
    Florida Insurance Guaranty Association
    Like the 2013 session, bills that would have allowed FIGA, which pays out the claims of insurance companies that go bankrupt, to pass assessments directly to consumers failed to make it through the Legislature. The changes in SB 346 and HB 143 were favored by small insurers, since they would be able to pass through the liability of assessments after a company goes bust.
    Workers' Comp Insurance
    Lawmakers passed HB 271, which allows businesses to pay a $1,000 down payment on their fine and enter a payment plan to receive a release from a stop work order from the Department of Financial Services. Businesses will also have 10 days, not five, to respond to DFS requests for records before being subject to a stop work order.
    Property Insurance Rates and Regulation
    Backed by Atwater, SB 708 bans the practice of post-claims credit checks used by insurers to deny claims and allows claims-seekers to be informed of their rights in the process. But insurance companies were stymied when they tried to put restrictions on the “assignment of benefits” – the signing over of future claims payments to contractors in emergency situations, a practice insurers say is being abused – into the bill.
  • Florida Supreme Court Ruling Declared a 'Major Win' for Consumers  
    Florida Association of Public Adjusters applauds ruling declaring 48-hour ban unconstitutional

    TALLAHASSEE- The Florida Association of Public Insurance Adjusters (FAPIA) today applauded the Florida Supreme Court ruling that declared unconstitutional the state law banning public insurance adjusters from soliciting policyholders 48 hours after a damaging event - calling it a victory for consumers throughout Florida.

    "FAPIA has always been committed to working with the Legislature, the Cabinet and state insurance officials to promote policies and legislation that protect consumers," said FAPIA President Harvey Wolfman. "On behalf of FAPIA and the policyholders we serve, I am grateful that the Supreme Court ruled in our favor, agreeing with our position that the ban on solicitation is a violation of public adjusters' free speech rights - and more importantly, an unfair rule that put policyholders at a disadvantage. This is a victory for consumers in Florida."

    Today's ruling marks the end of a lengthy court battle, which began in 2008 when the Legislature approved the ban which was to be implemented and enforced by the Florida Department of Financial Services. The state law bars public adjusters from initiating contact directly or indirectly with policyholders during the first 48 hours after an event such as a hurricane, tornado or sinkhole that triggers a claim.

    An Oviedo-based public adjuster sued the state Department of Financial Services, maintaining that the first 48 hours after a damaging event are the most critical for a policyholder because it is the window when damage photos, paperwork and other important actions must be taken to protect evidence and make sure that the policy holder complies with all policy conditions.

    Public adjusters handle the preparation, presentation and adjustment of a policyholder's claim - and are the only insuranceprofessional that prepares comprehensive building damage estimates and personal property inventories on behalf of policyholders. Immediately after a damaging event, the Public Adjuster provides immediate claims handling assistance to the insured, helping the policyholder fulfill all obligations placed upon them by the insurance policy conditions.

    "FAPIA and its nearly 400 member public adjusters are committed to helping policyholders receive full and fair compensation following damage to their property," said Wolfman. "Thanks to this ruling, we can help more policyholders in those critical first hours when they need it most."

    We would like to take this opportunity to thank everyone who made this victory for insured Floridians possible.  FAPIA member Fred Kortum, Mark Boardman, all of the attorneys who represented this case, particularly  Wilbur Brewton who successfully argued the case in front of the Supreme Court.  We would also like to thank all of those FAPIA members who went above and beyond when asked, to help fund this lawsuit.  Without all of you, this victory would not have been possible.
    IMPORTANT NOTICE TO PUBLIC ADJUSTERS - The state has 15 days from the date of this ruling to request a re-hearing from the Supreme Court.  During that time, the solicitation ban is STILL IN EFFECT.  We will keep you informed as soon as the stay is lifted.  Until that time, please remember to continue to observe the 48 hour soliciation ban.

  • Claims Magazine is providing the following free guidelines and regulations in order to help adjusting professionals stay abreast of each state’s unique property and casualty claim-handling requirements. Each guideline features an explanation of the act to be performed, compliance timeframes for each act, and hyperlinked references to each state's insurance code. The links were compiled by compiled by Lynch & Associates, We hope you find them useful and informative. Please note that these guidelines were updated in 2010, but occassional changes in each state's code are to be expected. These guidelines should be used as a reference only, and do not supercede each state's published regulations.

    Just Looking for Each State's Deadline for Acknowledging Receipt of a Claim? Download PDF

    List of State Guidelines:

  • The 2012 legislative session is approaching quickly – and we will need to stand up in numbers once again. As many of you experienced during our recent victory against outrageous rate hikes, politicians in Tallahassee will only buckle under the pressure of our collective voice.
    But we shouldn't have to wait until harmful legislation passes to stand up. We need to be engaged now.
    Throughout my career I've always sought to bring consumers and insurance companies together to work for the good of our state. Please take a moment to watch this short video, where I answer the most frequent question I get about the property insurance climate in Florida: How do we fix it?

    Sean Shaw on Florida's Property Insurance Market | November 2011 from Kevin Cate Communications on Vimeo.

    Sean Shaw
    Founder, Policyholders of Florida

  • By Brian S. Goodman,  Esq., NAPIA Counsel, HODES, PESSIN & KATZ, P.A.
    Friday, October 7, 2011

    As the end of the year approaches, activity in the state legislatures is just heating up. In the coming term, many local legislators will be focusing on issues related to public adjusting. We know for a fact that bills are currently under consideration in Pennsylvania, and there is expected to be an added regulation addressed in Indiana focusing on the Unauthorized Practice of Public Adjusting. The Alabama legislature convenes in early 2012, and we are working diligently to th ensure that Alabama becomes the 45state to license public adjusters.

    If any NAPIA member hears of legislative activity in their particular state, please make us aware of this as soon as possible. Often, issues come up that touch on our profession, and the sooner we know about these the better.

    We are working hard with able counsel and lobbyists to protect the profession and to ensure the proper and ethical practice of public insurance adjusting. Gone are the days when public adjusters flew “under the radar;” we are now an accepted and respected player in the insurance industry and claims process. This gives all of us all the more reason to stay on top of legislative enactments and to insist that our craft is practiced in an ethical and proper manner.

    I will be talking about ethics and legislative issues in greater detail at the upcoming  First Party Claims Conference  in Providence, Rhode Island. We hope to see many of you there.

  • The American Association of Public Insurance Adjusters is busy getting the word out about how hiring a public insurance adjuster can add value to a policyholder’s insurance claim. AAPIA prides itself on being a professional organization representing public adjusters from all over the United States. AAPIA sponsors educational, social, and networking programs throughout the year.

    Recently, Gene Veno, the President of the American Association of Public Insurance Adjusters, was interviewed about the role of a public adjuster and the value a claims professional can add to a property damage claim when that professional is working on behalf of the policyholder.

    It is still not uncommon for me to hear from policyholders that they only became aware of the services a public adjuster can provide after they had a negative experience during an insurance claim and turned to a public adjuster for help. But the work of public adjusters is most valuable if people are aware of them early in the claims process. Individuals, families, condominium associations and businesses that suffer losses need to know that in most states they have the ability to hire their own adjuster to help navigate the claim process. As Veno explains in the interview, 44 states now have licensed public adjusters available to policyholders.

    One of the ways AAPIA is spreading the word is by doing radio and podcast interviews to educate the public. You may recognize Merlin Law Group’s very own Sean Shaw in the blogtalk radio show Legislative Wrap up with AAPIA's Gene Veno. AAPIA also interviewed Florida public adjuster, Dick Tutwiler, of Tutwiler & Associates.

    The AAPIA website provides many great resources for those who want to stay informed on issues relating to public adjusting.

    In prior posts, Chip Merlin has detailed some of the work AAPIA has been involved in during the last year.

    Take a listen to AAPIA’s The Value of Hiring a Public Adjuster:

  • October 18th

    Location: Holiday Inn Miami International Airport, 1111 S Royal Ponciana Blvd, Miami Springs, FL  33166

    Arrival: Noon

    Lunch: Included
    Meeting: 01:00 - 05:00
    Coctails:  05:00 to 07:00

    Please respond directly to with rsvp.

    This is a very important meeting to discuss the future of our Industry

  • Friends,

    We’re a few short months away from committee season – that means insurance industry lobbyists are already putting together the next crop of bills that aim to further line the pockets of Big Insurance. Those who may have thought Senate Bill 408 was the end of it are unfortunately mistaken. We know that the insurance industry will look to erode more consumer protections.

    With our organized effort, we managed to have some success last session in spite of the odds. It was only after several pro-consumer groups mobilized the last few weeks of session that we started seeing some compromise on the initially proposed legislation. We’re kidding ourselves if we think that, in the absence of real opposition, the industry won’t try to reach even further than they already have.

    Fortunately, Floridians across the state are waking up. Thankfully, with redistricting on the horizon, every legislator in the state is now up for reelection. Pro-insurance legislators may have been able to take policyholders for granted a few months ago, but they will not have that luxury in 2012.

    That’s why I strongly urge you to get involved. You wouldn’t be receiving this email if you didn’t already care, if you weren’t already active, or if you didn’t have a vested interest in this fight. But we need more than a few hundred to guard against the powerful insurance lobby – we need thousands.

    Nothing puts fear in a legislator more than hundreds of calls to his or her legislative office in a reelection year. They need to know that we’re watching, that we’re keeping score, and that they will be held accountable.

    The insurance industry has its high-paid lobbyists – but we have over 8 million policyholders on our side. If we can mobilize even a small fraction of these hard-working Floridians – Floridians from every walk of life – Democrats and Republicans – we can make sure that our voices are heard.

    Tell everyone you know to visit to get the latest breaking news about the fight.  We will continue to keep you updated with the most current information about new legislation and how to get involved. If you have a Facebook account, be sure to “like” Policyholders of Florida. If you have twitter, fire it up and follow @PolicyholdersFL. What we need to do isn’t difficult; it doesn’t require that much work; but with your help it will yield results.

    Policyholders of Florida will continue to fight against insurance company overreaches – I urge you to stay active so we can win this fight.

    Sean Shaw
    Merlin Law Group

  • By Joan E. Collier
    May 3, 2011
    Original article here

    SB 408 was heard on the Florida House of Representatives' Special Order Calendar this morning and was promptly "temporarily postponed" after Rep. John Wood, R-Winter Haven, filed a strike-all amendment.

    The comprehensive property insurance package, which has picked up the moniker the "cost driver bill," passed the Senate on a vote of 25-12 on April 28.

    There are a number of issues on which the two chambers disagree, including: the statute of limitation on property insurance claims; changes in non-renewal and cancellation of policy timelines; Florida Hurricane Catastrophe Fund reimbursement details; capital and surplus requirement; public adjuster reforms; actual cash value and replacement cash value proposals; and a long list of details and processes concerning sinkhole claims and coverage.

    The bill also includes language regarding Citizens Property Insurance Corp., Florida's largest property insurer with over 1.3 million policies. According to Katie Webb of the law firm Colodny, Fass, Talenfeld, Karlinsky & Abate, who has closely been tracking this and other insurance bills, the issues relating to Citizens include Senate provisions that:

    • State that public adjusters cannot make more than 10 percent of additional amount paid over original offer by Citizens
    • Change the name of Citizens High-Risk Account to "Coastal"
    • Make surcharges payable at cancellation or termination of policy
    • Outsource certain functions
    • State that policies cannot cover appurtenant structures in sinkhole coverage
    • Require that the agent get a signed form that insured is aware of surcharges/assessments
    • Include conflict of interest provisions for Citizens' board members
    • Exempt sinkholes from the 10 percent glide-path

    A day and time for moving the bill forward in the House have not been established. A new lobbying group called Florida Association for Insurance Reform is scheduled to hold a protest rally this afternoon in Tallahassee.

    [For those unfamiliar with how bills make their way through the chambers, Foley & Lardner LLP, offered this explanation in a March 14 newsletter: Article III, s. 7 of the Florida Constitution requires that bills be read three times, on separate days, before passage by either chamber of the Legislature. Reflecting the "three readings" requirement, the Legislature generally organizes bills by Calendars-the Second Reading Calendar (referred to as "2R"), the Special Order Calendar (referred to as "SO"), and the Third Reading Calendar (referred to as "3R"). Rule 10 in the House and Rule 4 in the Senate generally govern these calendars of the Legislature. A bill is placed on the Second Reading Calendar after having passed out of all of its committees of reference. A bill is placed on the Special Order Calendar by direct action of the relevant legislative committee that sets the Special Order Calendar. Once a bill on the Special Order Calendar is read on the floor of the relevant chamber and any amendments are acted upon, the bill is placed on the Third Reading Calendar. After the third reading on the floor, amendments may be taken up, the final form of the bill is debated, and a final "roll call" vote of the chamber is taken. Incidentally, the first reading of a bill is usually a non-event, accomplished by publishing the bill title in a journal of the relevant chamber.]

  • Original Article Here

    April 27, 2011
    By Joan E. Collier,

    Florida’s massive property bill SB 408 was taken up on the Senate floor for a second reading today, garnering yet more amendments on its way to a third and final reading. Its next appearance will entail a debate and a final vote in the full Senate.

    Supporters of the bill, sponsored by Sen. Garrett Richter, R-Naples, say the legislation is designed to create a more competitive private insurance marketplace. Opponents label it a “wish list for insurance companies.”

    SB 408 addresses a number of “hot topic” issues, including sinkholes, public adjusters, the Florida Hurricane Catastrophe Fund, replacement costs, and mitigation discounts.

    The sinkhole issue, in particular, has generated much debate. The bill currently contains language that repeals the requirement that private insurers include sinkhole coverage in their mandatory offerings. (The bill does, however, require the state-run Citizens Property Insurance Corp. to offer comprehensive sinkhole coverage.)

    The insurance industry has complained that fraudulent sinkholes claims have mushroomed over the past few years, and sought relief from the mandate. Sen. Mike Fasano, R-New Port Richey—perhaps the bill’s most outspoken critic and a legislator from the state’s sinkhole epicenter of Pasco County—claims that without the requirement insurers will not offer the coverage. That, according to Fasano, will leave homeowners with limited and expensive purchase options if banks and mortgage companies compel them to buy the coverage. An amendment by Fasano requiring all insurers to “make available, for an appropriate premium, coverage for sinkhole losses on any structure” failed during the second reading.

    The wide-ranging bill also reduces the timeframe that carriers must give notice of non-renewals to homeowners from six months to 45 days; places restrictions on public adjuster advertising; establishes a three-year timeframe in which a policyholder can file or reopen a claim or supplemental claim; and addresses mitigation credits.

    In the area of replacement costs, the bill allows insurers to use a replacement cost holdback on both the structure and contents, subject to certain restrictions. A similar provision was in the 2010 SB 2044 property bill, which was vetoed by then-Gov. Charlie Crist.

    This year’s much-debated bill has attracted 94 amendments, 24 of which were filed in the past two days. Amendments green-lighted at today’s reading include:

     Amendment 136604: A technical amendment relating to the definition of "structural damage" as it relates to sinkholes.

    Amendment 343842: Specifies that public adjusters must also make available to insurers the written estimates they are required to retain for five years.

    Amendment 488760: Provides a licensure exemption for claims adjusters servicing guarantee mortgages in regard to policies covering the mortgaged properties.

    Amendment 407132:Allows the Office of Insurance Regulation (OIR) to examine managing general agents that represent only one insurer. (The OIR has declared this amendment unncessary and currently does not support it.)

    Amendment 762998: Simplifies the educational requirements for "professional engineers" to only a bachelor's degree or higher in engineering.

    William Stander, assistant vice president and regional manager for the Florida office of the Property Casualty Insurers Association of America, has been closely following the legislation and attended the second reading. Stander noted the bill’s progress today and said, “SB 408 addresses the property insurance cost drivers, and at this time the bill's provisions, generally speaking, appear stronger than those in its House companion, HB 803.”

    The time and date for the bill’s third and final reading and vote has not been set, although it could come as soon as Thursday.

  • Miami, Florida – March 26, 2011 –

    Floridians in Action, a consumer advocacy group, will be holding a protest rally against anti-consumer insurance legislation. The protest will take place:

    Location: In front of Tropical Park (Palmetto Expwy and SW 40 Street, Miami, FL)
    Date: April 2nd, 2011
    Time: from 12:00 pm to 3:00 pm.

    The goal of the protest is to raise public awareness of the proposed property insurance rate increases and anti-consumer bills that are making their way through both, the Florida House of Representatives and the Florida Senate. Floridians must know how damaging these proposed bills will be to homeowners of our state.

    Bills such as SB178, SB1714, SB 1462, SB1330, SB408 and alike, effectually deregulate insurance markets, allow catastrophic rate increases and reduce coverage and representation for homeowners across the board. These bills will lead to job losses, foreclosures, vacancies in an already devastated real estate market. While the big insurance corporations will be generating exorbitant amounts of revenue - property owners, renters, businesses and our State will bear the brunt of these bills born from backroom deal between big insurance and their lobbyists and politicians in Tallahassee. We Floridians must stand together and speak with one voice and tell these politicians “This Stops Now.”

    Waldo Faura
    Floridians in Action

    Belen Valladares
    Vice President
    Floridians in Actions

    Original Press Release:

  • Public Insurance Adjusters Are the People's 'Good Guys'
    By David Beasley, Sunshine State News

    Click here for full article.

  • Links to the following bills are posted here for your reference:

    SB1714 - Relating to Citizens Property Insurance Corporation:

    SB1462 - Relating to Powers of the Consumer Advocate: 

    SB1330 - Relating to Residential Property Insurance:

    For more information on these bills, please listen to AAPIA President, Gene Veno's podcast posted on March 10, 2011 and read a brief analysis in Legal Corner. 


  • Mayor Carruthers was asked for her position and comment on Florida Senate Bill 408 and her thoughts on how this legislation if passed in present form will impact the citizens of Florida and not just Monroe County!

    Carruthers has been an outspoken critic against Senate Bill 408 and recently commented that the legislative process in Tallahassee” was a travesty”, in that many citizens were not heard after traveling a great distance to offer their testimony to Chairman Garrett Richter, Prime Sponsor of SB 408 entitled, “Property Insurance Bill”, known as the Sinkhole Bill!  The entire interview can be heard on web site under Pod cast Tab on our site.

    Mayor Carruthers' Bio

  • American Association of Public Insurance Adjusters (AAPIA) Champions the Consumer, Opposes Florida Senate Bill 408.  Download Press Release

  • Homeowners turned away from Senate meeting on insurer-backed bill

    By Julie Patel, for
    Click here for original article

    People who showed up Monday to weigh in on a sweeping bill backed by insurers were turned away when a Senate meeting ran out of time.

    Some were homeowners who had traveled to Tallahassee to speak up about the bill. Sen. Chris Smith, D- Fort Lauderdale, who was leading the Senate banking and insurance committee meeting, allowed two homeowners from the Keys to speak because they had traveled the furthest. (They said the bill does not do enough to protect consumers.)

    But Smith said state rules don't allow him to extend the meeting for the others.

    The bill, SB 408, aims to strengthen insurers by allowing certain rate hikes and lowering claims-related costs, including costs for sinkhole claims that have escalated in recent years.

    The insurance committee postponed a decision on the bill a second time because it hadn't gotten through changes proposed by Sen. Mike Fasano, R-New Port Richey.

    The changes, including requiring insurers to provide policyholders with a copy of an insurer's engineering report on a sinkhole, generated some debate and heated moments. A legislator remarked that requiring a copy of the report was probably drafted by attorneys for policyholders.

    Fasano shot back: "Why do we keep denying the homeowner something in this bill?...I can easily suggest this whole bill before us was written by the insurance industry."

    He also proposed defining damage from sinkholes instead of leaving it up to insurers.

    But Sen. Ellyn Bogdanoff, R-Fort Lauderdale, said Fasano's idea of defining damage as cracks larger than one-sixteenth of an inch is "arbitrary."

    Juan and Lorey Espinosa, Pasco County residents, said their insurer determined their home is on a sinkhole and reported that to the county so potential home buyers can be made aware of the information. But they said the insurer denied the claim, saying cracks in the walls and in a window, which is leaking, do not meet its definition of damage.

    Juan Espinosa said he could barely afford traveling to Tallahassee, much less fixing the damage. "No bank will loan money on an unrepaired sinkhole home," Lorey Espinosa added.

    Fasano, Sen. Gwen Margolis, D-Aventura, and Sen. Eleanor Sobel, D-Hollywood, voted for the change. But the majority, including South Florida Senators Bogdanoff, Smith and Joe Negron, D-Stuart, did not.

    At one point during the meeting, Fasano was asked why he was withdrawing one of his proposed changes. He replied, "I already know it’s already been predetermined that all of my amendments will fail. So I’m doing my best to get to the ones that truly have."

    "I haven’t been told to vote on any bills or any amendments," Negron said, triggering an apology from Fasano.

    As the meeting ended, Smith encouraged legislators to make time for those homeowners who stopped by their offices before leaving town.

    Policyholders can also weigh in by contacting their legislators.

  • Presentation on Florida Legislation SB 408 Download

  • Florida public adjusters won a constitutional argument that Florida Statute 626.854(6) wrongly banned all solicitation for 48 hours in violation of the Florida Constitution. The opinion is clear in its finding and conclusion: We reject the argument of the Department...Click here for more

  • News article from Herald-Tribune (Sarasota, FL)


    By Paige St. John



    Property insurers today are largely dependent on the secret algorithms of just a few simulation programs to determine who qualifies for home insurance and how much it will cost.


    The computer models created three decades ago as advisory tools have become so embedded, cautions University of Colorado professor Roger Pielke, a national expert on climate science, "they are treated like Black Box truth machines."


    But the catastrophe models at the core of just about every aspect of hurricane insurance, from rates to regulation, are flawed.


    Their creators warn the programs are imprecise, more useful for spitting out a range of possibilities than the single numbers insurance companies commonly select and cite as fact.


    But even the ranges are suspect. Studies conducted after Hurricane Katrina showed the models were stuffed with bad data. Industry leaders warn a "garbage-in, gospel-out" mentality has taken hold: Insurers plug in bad information about the property they insure yet accept the risk calculations spit out of the model as fact.


    Even further from their intended use, models are being used not to seek the most accurate picture of hurricane risk but to chase the highest profits.


    A Herald-Tribune review of regulatory filings and interviews with experts found insurers deciding which model to use, or how to use it, to produce higher rates. Several companies seeking rate increases used models that left out data about safety features on the homes they insure -- factors that would have reduced their expected losses and undermined their request for higher premiums.


    And 7 of 18 insurers surveyed had located their customers by ZIP code rather than street address, a practice also shown to raise loss predictions.


    While Florida regulators have limited control over what property insurers do with their models, they have no say over the offshore reinsurers that carry much of Florida's hurricane risk and help drive its price.


    "It's the Wild West out there," Howard Eagelfeld, a state actuary who sits on the only public agency in the U.S. given access to the confidential programs, testified at a national forum.


    So much of what comes out of the "scientific" models is wrong, or subjective, or can be manipulated, that experts caution they undermine efforts to regulate rates and give consumers a false sense of certainty about the bill they pay.


    Despite that danger, the realm entrusted to the model is growing. Since Katrina, catastrophe models have been expanded to include costs for political meddling, government ineptness and even human greed.




    Catastrophe models that insurers use to estimate their risk of hurricane loss come primarily from three vendors.


    The majority of what is within those models is confidential; external scrutiny is limited to a single public agency, a Florida commission sworn to keep most of what it sees secret.


    Its annual reviews show that inside the black boxes are a mash of real-world observations, theories and statistical formulas. At the core are programs similar to the models weather forecasters use to predict landfall of an approaching hurricane -- including a deceptively precise dotted line surrounded by a wide cone of doubt.


    Modelers have less than 50 years of reliable hurricane experience from which to draw. Many assumptions must be made, producing results that span wide ranges.


    Yet insurers and their regulators typically pick a single number from that cloud of possibilities, using it to set rates, buy reinsurance and determine where to cut coverage.


    "Models are seductive," Nonnie Burns told participants at a national reinsurance conference in 2009, when she was Massachusetts' insurance commissioner. "We've all been sucked into the fascination of models."


    The trap, said Burns and others, is believing the final number chosen from the range of estimates. For a specific insurance company riding out a specific catastrophe, it is almost always wrong.


    United Property & Casualty filed documents with state regulators showing its catastrophe model, applied in hindsight, estimated Hurricane Charley would cost twice as much as it actually did.


    The same program came close for hurricanes Frances and Katrina, but overshot Hurricane Jeanne by a factor of three.


    Another major Florida insurer, the Tower Hill Group, said the state-approved model it uses to set rates came close to actual losses only once. It overshot hurricanes Frances, Ivan and Wilma by a factor of two.


    Errors run the other direction, too. Tiny insurer Homesite told regulators its model underestimated four of the past five hurricanes as much as 60 percent.


    Despite the missed predictions, all three insurers told regulators they give the models "100 percent credibility" to support recent rate hike requests.


    Florida insurance regulators ask every insurer to compare actual losses with what the models predict. Scores of agency files reviewed by the Herald-Tribune show few comply.


    Former Renaissance Reinsurance CEO William Riker, a leader in the early adoption of models, accused the industry of what he called "delusional exactitude."


    "A lot of management, regulators, consumers, have gotten confused thinking these cat models are precise estimates of what can actually happen," Riker told the Herald-Tribune in an interview before his death last May.




    If a model is imprecise by nature, it is even more so if the information fed into it is wrong.


    After insurers reported widespread problems with their models underestimating Hurricane Katrina losses, modelers reviewed the data insurers had put into those models.


    AIR Worldwide discovered property values for commercial buildings off by as much as 90 percent. Other crucial details were missing, including roof type, building construction, window protection and height.


    A similar study by competitor RMS found an 80 percent error rate, a company official told the Royal Gazette, a Bermuda newspaper, in 2008.


    Among the most glaring of examples: floating gambling casinos in Biloxi, Miss., had been coded into models as land-built concrete buildings. Tossed by the storm, an RMS official said, they behaved more like mobile homes.


    After two decades of encouraging insurers to use and trust their models, AIR founder Karen Clark was alarmed.


    "Even the minimal amount of information the companies were putting in was lacking," she told the Herald-Tribune. "There is no way the models can even come close to giving accurate or precise loss estimates."


    Those errors do not just mislead insurers. They lead to added charges for policyholders.


    Bad data is so widespread that a survey by financial consulting giant Ernst & Young found reinsurers -- companies that sell coverage to insurers -- commonly tack on surcharges as high as 25 percent to cover potentially missed risk. The penalty is passed to policyholders, who pay for their insurer's inability to distinguish between a concrete bunker and a mobile home.




    How an insurer uses a model also greatly affects the results it gets. It is up to insurers whether to factor in storm surge, details of home construction and even the exact location of a property.


    Experts say such flexibility allows insurers to fit a model to their particular situation or tolerance of risk.


    But the Herald-Tribune also found insurers choosing models or using them in ways that boosted their bottom line, including to argue for rate hikes.


    Filings with Florida regulators show several insurers sought rate increases this year after using catastrophe models that left out loss-reducing details such as roof shape or storm shutters.


    Other insurers, including State Farm, modeled their policies at the ZIP code level rather than street address, a practice a former Lloyd's of London executive said generally increases the estimated loss. An analysis by RMS showed the hurricane risk within a single Miami ZIP code differs by as much as 250 percent.


    Which model insurers choose is crucial, potentially doubling the estimated hurricane losses, according to a 2009 Florida State University study.


    Confidential documents turned over to Florida regulators show Allstate in 2007 went so far as to develop a "Plan B" if it thought its catastrophe model would not support a rate hike.


    If that were the case, according to a company PowerPoint presentation obtained and cited by state regulators, Allstate intended to switch to a later model version known to produce higher losses.


    In a 2008 letter to Florida Senate leaders, Allstate lawyers said the company was not model shopping.


    They said Allstate planned to eventually switch to the higher model anyway and it was just a matter of timing.


    State Farm this year openly switched to a model that better supported its rate-hike request. After years of presenting other models, State Farm swapped to a seldom-used engineering-based catastrophe model to argue for a 21 percent rate increase on homes fortified against hurricanes.


    The company said it always uses multiple models, and chose this one to best support its evidence that home mitigation, such as storm shutters and modern roof design, is not as effective as regulators contend.


    A comparison by the Herald-Tribune shows State Farm's new model generates statewide loss estimates 18 percent higher than its previous model. Records show Florida regulators questioned the model switch but nevertheless approved the rate increase last week.




    Until 2006, Florida largely limited catastrophe models to meteorology and engineering.


    That changed when modelers successfully argued they had enough data from the 2004 and 2005 hurricanes to accurately predict what they call "demand surge."


    The label once included only the rise in price of materials and hourly wages that accompany the biggest storms. But with state approval came a large expansion of demand-surge factors.


    The model RMS created in 2006 calculated not only for a bundle of shingles, but for price-gouging by contractors, claims fraud by policyholders and sloppy work by harried adjusters.


    It also created what it called "Super Cat" charges for major storms RMS believed would trigger a series of follow-on disasters, as did Katrina in New Orleans.


    They include the economic meltdown of a community, botched disaster response, political interference with insurers, and unforeseen events, such as the collapse of the levees. The Super Cat category drove up insurance costs primarily for commercial policyholders.


    Eight cities, including Miami and Tampa, were designated as susceptible to such systemic meltdown, and their hurricane loss estimates increased accordingly.


    For some Florida businesses, these new model factors did more to increase premiums than the controversial assumption that hurricane frequency had increased.


    For a commercial property insurer, the Super Cat designation alone has the potential to more than double predicted hurricane losses, New Jersey-based insurance broker NAPCO warned clients in a 2006 review. RMS told the Herald-Tribune home losses typically increase less than 10 percent.


    The model expansion allows insurers to shield yet more of their rate from open scrutiny by regulators. Where they were once forced to justify such charges, it is now an automatic function of the confidential model.


    From 2006 to 2007, while the Florida modeling commission reviewed demand surge, it also ruled those discussions confidential to shield information from competitors.


    "If it's not logical, we would not approve it," said commission chairman Randy Dumm, who runs an insurance risk institute at Florida State University.


    Three commission members told the Herald-Tribune they believe demand surge is a real expense. Yet they also characterized efforts to model that cost as "evolving" and "not well-understood." They noted models can include false assumptions that inflate losses.


    Modeling commission actuary Martin Simons testified before Massachusetts regulators that the new RMS model presumed insurers will pay more to house storm victims in hotels -- but applied that charge to all policies, even vacation homes whose owners do not collect temporary living expenses.


    RMS in 2007 told the Florida model review commission it based its estimates for demand surge on data from hundreds of thousands of claims against its insurance company clients.


    Though the company said that at the time there was no published literature to support its methods, RMS vice president Claire Souch last week noted recent studies from a French economist.


    "You can be quite data-driven on this," she said. "It's human behavior, but it manifests itself through numbers."


    While the new charges are an attempt to make models better mirror the real world, they are "too blunt," and should not be applied to all policies as a matter of course, said modeling expert Karen Clark.


    Others worry that adding charges not based on independent research only makes models easier to manipulate.


    "It leaves the door open for all sorts of incentives to take root," said Pielke, the University of Colorado professor.




    There are no rules for how Bermuda reinsurers -- ultimately responsible for the bulk of private hurricane coverage and its price -- use their models.


    A survey by Bermuda regulators in 2008 found four of five reinsurers adjust their models in some way. Two-thirds increase the value of property as reported to them by the insurers they cover.


    A similar number add in storm surge, though insurers do not generally pay flood damage. A third apply their own increases for price-gouging and inflation.


    Though she said data quality is better among Florida home insurers than commercial carriers, Clark has pressed state regulators and national rating agencies for greater scrutiny of how insurers use models.


    At the minimum, she said, regulators should require independent audits of data fed into models.


    A rating agency, A.M. Best, agreed to ask insurers to declare what data quality checks they use.


    Otherwise, Clark said, there has been no fundamental change in how rating agencies or regulators address data quality.



  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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 and please visit Pat's guest book at
    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

  • 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.