For state insurance officials, the ‘p’ term is a dirty word

Shhh. There’s a term state insurance officials apparently dare not use right now.

That term is “public insurance adjuster.”

Public insurance adjusters are often seen by insurance companies as adversaries because — unlike regular claims adjusters who work for insurance companies inspecting damages and working up repair cost estimates — public adjusters work directly for policyholders and often challenge estimates by insurance companies’ adjusters.

In a tip sheet presented as a list of “myths” and “facts” about hurricane insurance released last week, Jimmy Patronis, Florida’s chief financial officer, avoided using the term even as he urged policyholders confronted with a claim denial or inadequate claim payment to “always get a second opinion to verify the cause of loss and/or the cost to repair or replace the damage.”

Providing second opinions — then helping manage the claim to ensure policyholders get every dollar to which they are entitled — is what independent public insurance adjusters do.

They work for a fee or percentage of the claim and, yes, they often work to the chagrin of insurers who would prefer policyholders accept their decisions as the last word. Disagreements cost more money — whether they result in expanding the scope of the repair, or fighting it out in court.

When it calls for new laws aimed at reducing costly litigation against insurers, state-owned Citizens Property Insurance Corp. often points out how much more money claims “with representation” cost the company. Its description of “with representation” refers to claims in which policyholders have hired either plaintiffs attorneys or public insurance adjusters.

Claims with representation cost Citizens, on average, three times as much as when customers don’t challenge estimates by Citizens’ adjusters.

It’s not just Patronis who apparently doesn’t want to be connected to the term.

The Sun Sentinel asked Patronis spokeswoman Anna Alexopoulos Farrar whether the “second opinion” that Patronis urged claimants to “always get” was an endorsement of hiring a public adjuster. Farrar responded with this statement:

“As with any major repair, the CFO recommends consumers get a second opinion from a licensed contractor or other licensed professional on repairs made to their home. For example, making sure you are getting the right types of repairs made, and the appropriate amount of repairs (not over repairing).”

Asked whether her response about getting a second opinion from a licensed contractor or “other licensed professional” could be interpreted as advocating hiring a public adjuster, Farrar said “yes” but again did not include the term in her second response: “Yes it could include but also licensed professionals like roofers or plumbers.”

Even Erin VanSickle, deputy chief of staff for Florida Insurance Commissioner David Altmaier — whose office is overseen by Patronis — refused to use the “p” term when asked whether Patronis’ tips sheet could be interpreted as endorsing use of public adjusters.

“If a claim is denied or if the claim payment is inadequate to effectuate covered repairs, a consumer has a number of options to pursue, including a followup call to a contractor or engineer, the consumer’s insurance agent, the [Department of Financial Services] Consumer Services helpline, or other professionals qualified to render an opinion on coverage or scope of damages,” VanSickle said.

Every occupation has its share of bad apples, and some public adjusters have been caught committing claims fraud. Insurers also don’t like when public adjusters solicit business from policyholders by advertising or canvassing neighborhoods — creating claims where none might have otherwise existed.

Earlier this decade, complaints by insurance companies led to new regulations governing public adjusters, which are compiled on the chief financial officer’s website.

A database on that same website shows there are about 1,800 public insurance adjusters licensed in the state of Florida, indicating there’s plenty of demand for the service they offer.

Paul Handerhan, who is senior vice president for public policy at the Florida Association for Insurance Reform and a licensed public adjuster, says the mainstream of the public adjuster industry takes a dim view of adjusters who canvass neighborhoods, “knocking on doors, saying, ‘I want to come in and look at your pipes and flooring,’ and incentivizing a policyholder to file a claim.”

An honest public adjuster will explain to policyholders, before filing a claim, that they will be responsible to pay a deductible and the public adjuster’s fee of up to 20 percent of the claim before they receive any claim settlement check, Handerhan said. An honest public adjuster will tell the policyholder that an insurance policy isn’t meant to be used as a home warranty contract, that all claims show up on the insurance industry’s equivalent of a credit report, and that filing three claims within 36 months could trigger a non-renewal and make it difficult to find another willing insurer, he said.

“They’ll tell [policyholders] that they need to be careful about filing claims,” Handerhan said.

State officials have sided with insurers over public adjusters before.

In 2008, the state Legislature enacted a law barring public adjusters from soliciting policyholders within 48 hours of a hurricane or other major event. In 2012, the state Supreme Court overturned the law, ruling it was unconstitutional and violated free speech.

Responding to a request for comment about Patronis’ tip sheet, Jimmy Farach, president of the Florida Association of Public Insurance Adjusters (FAPIA), pointed out that Patronis’ two predecessors didn’t hesitate to use the words. Farach provided videos of former CFOs Alex Sink and Jeff Atwateracknowledging the importance of public insurance adjusters.

“I understand the important place public insurance adjusters have in the whole scheme of the world of insurance. What would we do without public adjusters? Where would people go if they had no other place to turn?” said Sink, speaking at what a Florida Association of Public Insurance Adjusters spokeswoman said was a “political event” in 2010.

And Atwater, serving as keynote speaker at the association’s 2013 annual dinner, said: “The work of public adjusting is defined by the noble work of helping somebody navigate a path they have no way of knowing how to navigate themselves, and don’t believe they can.”

Plus, said Handerhan, not all policyholders use public adjusters for adversarial purposes. Some claimants who have busy work lives find it worth the fee to hire a public adjuster to handle complicated claims, he said.

“That can also benefit the insurance company,” he said, “to work with a public adjuster who understands the terms and coverages in the insurance contract and has the ability to evaluate damages.”

Here are Patronis’ “myths” and “facts” about hurricane insurance:

MYTH 1: I already have homeowner’s insurance, so everything on my property is covered and I’m financially prepared for the storm season.

FACT: All homeowner’s insurance policies contain limitations and exclusions. Also, you may need a separate policy for windstorm or flood if these coverages are not included in your homeowner’s policy. It is important to review your policy to understand your coverages and exclusions.

MYTH 2: When an insurance company denies a claim, or provides an inadequate claim payment, I must pay out-of-pocket to cover any additional expenses from damages that occurred to my property.

FACT: You should always get a second opinion to verify the cause of loss and/or the cost to repair or replace the damage.

MYTH 3: When contractors offer to waive my insurance deductible to provide repairs at a discounted rate, this is simply a kind gesture.

FACT: Waiving the deductible or providing a discounted rate directly to you is a form of insurance fraud.

MYTH 4: An Assignment of Benefits (AOB) agreement is the only way to get immediate assistance for Floridians who have damage to their property.

FACT: You do not need to sign an Assignment of Benefits to get your residence repaired, even for emergency repairs. You should make first contact with your insurance company by immediately reporting the claim.

MYTH 5: Insurance companies can take as long as they want to respond to an insurance claim filed by Floridians.

FACT: Typically, insurance companies must acknowledge your insurance claim within 14 days from the date the claim was reported and they must pay undisputed amounts of your claim within 90 days from the date of damage.

MYTH 6: If my neighbor’s property is blown into my yard and damages my own property, my neighbor’s insurance will cover the cost of damage.

FACT: The damage to your property is covered by your own homeowner’s insurance policy, unless you can prove your neighbor was negligent, then the damage would be covered under their homeowner’s policy.

MYTH 7: My insurance agent is the only person I need to contact when filing an insurance claim.

FACT: While you may call your agent, you should immediately report the claim to your insurance company. Most insurance companies have a toll-free claim number to report your claim.

rhurtibise@sun-sentinel.com, 954-356-4071, twitter: twitter.com/ronhurtibise