Public Adjusting of Insurance Claims from Hurricane Wilma

 

DEPARTMENT OF FINANCIAL SERVICES

Division of Insurance Agents and Agency Services

RULE NO.: RULE TITLE:

69BER06-2 Public Adjusting of Insurance Claims from Hurricane Wilma

SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE: The Department of Financial Services hereby states that the following circumstances constitute an immediate danger to the public health, safety, and welfare: This emergency rule is necessitated by the property damage resulting in Florida from Hurricane Wilma, Florida’s eighth hurricane in 15 months, which came ashore in Florida at 6:30 a.m. ET on October 24, 2005, as a category 3 hurricane near Cape Romano, 22 miles south of Naples. Hurricane Wilma came ashore with sustained winds up to 125 miles per hour. It remained a category 2 hurricane as it traveled across the entire southern peninsula of the state with winds of up to 100 miles per hour. The Governor of Florida declared a state of emergency (Executive Order # 05-219). The President of the United States signed a disaster declaration to provide federal disaster assistance to the damaged areas. According to information reported to the Office of Insurance Regulation by insurance companies, 836,408 insurance claims were filed by Florida residents as a result of Hurricane Wilma. Due to the huge number of claims, over half of these claims have not yet been settled by insurance companies and 345,297 claims have not even had damages assessed by the insurers claims adjuster. These figures show that the emergency created by Hurricane Wilma continues to impact a large number of Floridians. Excessive public adjusting fees are a source of injury to the public health, safety, and welfare by substantially impairing the financial ability of insureds to effectuate repairs to damaged property in a timely fashion, to commence or complete repairs, or to make proper and adequate repairs meeting building code requirements. In order for complete rebuilding to occur, insurance proceeds cannot be eroded by unreasonable public adjuster fees. As a result, there is a need to limit the fees imposed by public adjusters to a reasonable level. This rule limits fees charged by public adjusters to 10 per cent of the amount of the insurance policy proceeds paid to the policyholder. The rule also contains provisions relating to required contract terms and other ethical requirements. These provisions are reasonable and necessary based on the Departments experience with public adjuster abuses after prior hurricanes. The Legislature recognized, in Section 626.8698, Florida Statutes, that the interest of the public demands that public adjusters be prohibited from soliciting or otherwise taking advantage of a person who is vulnerable, emotional or otherwise upset as a result of trauma, accident or similar occurrence Hurricane Wilma has placed a great number of people in a state of vulnerability, including many Floridians who live and work in areas previously impacted by Hurricane Rita, Hurricane Katrina, and Hurricane Dennis in the three months prior to landfall of Hurricane Wilma, as well as the four hurricanes which struck the state in 2004. The emotional stress of claimants may lead them to make imprudent decisions in the context of contracting with public adjusters. In consideration of the emergency conditions that continue to exist, and given the Departments responsibility to protect the public interest, including insureds, and implement the Insurance Code, an emergency rule is necessary.

REASON FOR CONCLUDING THAT THE PROCEDURE IS FAIR UNDER THE CIRCUMSTANCES: The Department of Financial Services believes that adopting an emergency rule is the fairest method to protect the public because the nature of the destruction caused by Hurricane Wilma requires an immediate response. The conditions from Hurricane Wilma will require the Department to exercise its authority to provide protection to consumers from unethical conduct of certain public adjusters. The provisions of this rule provide needed guidance to public adjusters. A Department bulletin addressed to all licensed public insurance adjusters would reach them, but would not be legally binding. In addition, the Department has initiated permanent rulemaking for some of the provisions of this and previous emergency rules for public adjusters in the aftermath of hurricanes. A Notice of Proposed Rule Development was published in the Florida Administrative Weekly on October 21, 2005. The Department plans to publish a Notice of Proposed Rulemaking in the February 9, 2006, issue of the Florida Administrative Weekly. SUMMARY OF THE RULE: This emergency rule adopts emergency ethical standards to be applied to claims resulting from Hurricane Wilma. The rule limits public adjuster commissions to a maximum of 10% of insurance proceeds regardless of whether the risk is residential or commercial. The rule also prohibits public adjusters from requiring, demanding, or accepting payments prior to settlement of a claim. The rule requires certain standards for public adjuster contracts to reduce risk of deception. The rule establishes ethical standards to avoid incompetence, conflict of interest, or deception. The rule also establishes a 14-day rescission period for public adjuster contracts. Additionally the rule prohibits public adjusters from entering into a contract to adjust a residential property claim that has been declared a total loss, unless the public adjuster services can reasonably be expected to benefit the claimant.

THE PERSON TO BE CONTACTED REGARDING THE EMERGENCY RULE IS: Barry Lanier, Chief, Bureau of Investigation, Division of Agent and Agency Services, Department of Financial Services, 200 East Gaines Street, Tallahassee, Florida 32399-0333, [phone]

 

THE FULL TEXT OF THE EMERGENCY RULE IS:

 

69BER06-02 Public Adjusting of Insurance Claims from Hurricane Wilma.

(1) General provisions.

(a) This emergency rule sets forth specific limits on public adjuster commissions and provides other ethical standards to protect insureds under stress due to loss.

(b) The provisions of this emergency rule are intended to supplement the requirements for conduct of public adjusting and ethical requirements placed on public adjusting as set forth in Rules 69B-220.051 and 69B-220.201, Florida Administrative Code, as promulgated pursuant to applicable law. These provisions are intended to provide needed guidance to public adjusters and assure ethical public adjusting claims practices under the specific circumstances caused by the impact of Hurricane Wilma.

(c) This rule applies only to losses occurring as a result of Hurricane Wilma.

(d) This rule applies for 90 days from the date filed with the Secretary of State, Bureau of Administrative Code.

(e) The provisions of this rule are ethical requirements binding upon public adjusters, in addition to those requirements established in Rule Chapter 69B-220, Florida Administrative Code.

(2) Definitions.

(a) “Public Adjuster” is defined for purposes of this rule as defined in Section 626.854, Florida Statutes.

(b) “Public Adjusting” is the activity described in Section 626.854, Florida Statutes.

(3) Limits on Commissions.

(a) As to any one insured or claimant, no public adjuster shall charge, agree to, or accept as compensation or reimbursement any payment, commission, fee, or other thing of value equal to more than ten percent of any insurance settlement or proceeds.

(b) No public adjuster shall require, demand, or accept any fee, retainer, compensation, deposit, or other thing of value, prior to settlement of the claim.

(4) Required Contract Terms. Public adjusters shall ensure that all contracts for their services are in writing, and contain the following terms:

(a) The contract shall legibly state the full name as specified in Department records of the public adjuster signing the contract.

(b) The contract shall be signed by the public adjuster who solicited the contract. If the public adjuster is licensed by the Department as an emergency public adjuster, the contract shall show the public adjuster’s:

1. Permanent home address and home phone number;

2. Permanent home state business address and phone number; and

3. Florida adjuster license number.

(c) The contract shall show:

1. The insured's full name and street address;

2. Address of loss;

3. A brief description of the loss;

4. The insured's insurance company name and policy number, if available.

(d) The contract shall show the date the contract with the public adjuster was actually signed by the insured or claimant.

(e)1. The full compensation to the public adjuster shall be stated in the contract.

2. If the compensation is based on a share of the insurance settlement, the exact percentage shall be specified.

3. Any costs to be reimbursed to the public adjuster out of the proceeds shall be specified by type, with dollar estimates set forth in the contract.

4. Compensation provisions in a public adjusting contract shall not be redacted in any copy of the contract provided to an insurer. Such a redaction shall constitute an omission of material fact in violation of Section 626.9541(1)(e)2., Florida Statutes.

(5) General Ethical Requirements. Public Adjusters shall adhere to the following requirements:

(a) An adjuster shall not undertake the adjustment of any claim concerning which the adjuster is not currently competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the adjuster’s current expertise.

(b)1. No person shall, as a public adjuster, represent any person or entity whose claim the adjuster has previously adjusted while acting as an adjuster representing any insurer or independent adjusting firm.

2. No person shall, as a company or independent adjuster, represent him- or herself or any insurer or independent adjusting firm against any person or entity that the adjuster previously represented as a public adjuster.

(c)1. A public adjuster shall not represent or imply to any client or potential client that insurers, company adjusters, or independent adjusters routinely attempt to, or do in fact, deprive claimants of their full rights under an insurance policy.

2. No insurer, independent adjuster, or company adjuster shall represent or imply to any claimant that public adjusters are unscrupulous, or that engaging a public adjuster will delay or have other adverse effect upon the settlement of a claim.

(d)1. No public adjuster, while so licensed in Florida, may represent or act as a company adjuster, independent adjuster, or general lines agent.

2. No independent adjuster or company adjuster, while so licensed in Florida, may represent or act as a public adjuster.

(e)1. A public adjuster’s contract with a client shall be revocable or cancelable by the insured or claimant, without penalty or obligation, for at least 14 business days after the contract is entered into. For the purposes of this rule, business days means Monday through Friday, except for state or national holidays.

2. The public adjuster shall disclose to the insured that the insured has the right to cancel with prompt notice within the revocation period.

3. If the insured elects to cancel the contract, prompt notice shall be provided to the adjuster.

4. Nothing in the provision shall be construed to prevent an insured from pursuing any civil remedy after the 14-day cancellation period.

(f) A public adjuster shall not enter into a contract or accept a power of attorney which vests in the public adjuster the effective authority to choose the persons who shall perform repair work.

(g) A public adjuster shall ensure that all contracts for the public adjuster's services are in writing and set forth all terms and conditions of the engagement.

(6) Total Loss Claims. No public adjuster shall knowingly enter into a contract to adjust a residential property claim subsequent to an insurer declaring the property a total loss, unless the services to be provided by the public adjuster can reasonably be expected to result in the claimant obtaining an insurance settlement, net of the adjuster’s compensation, in excess of what the insured claimant would have obtained without the services of the public adjuster.

Specific Authority 120.54(4), 624.308, 626.878, 626.9611 FS. Law Implemented 624.307(1), 624.307, 626.611, 626.621, 626.865(2), 626.8698, 626.878, 626.9541(1)(e),(i) FS. History–New 2-1-06.

 

THIS RULE TAKES EFFECT UPON BEING FILED WITH THE DEPARTMENT OF STATE UNLESS A LATER TIME AND DATE IS SPECIFIED IN THE RULE.

EFFECTIVE DATE: February 1, 2006