Public Adjusters Take the Heat for Reopened Hurricane Claims

Public adjusters are being blamed for thousands of unresolved insurance claims in Florida dating back to the 2004 and 2005 hurricane seasons.

A Florida task force monitoring how state-backed Citizens Property Insurance Corp. has handled its claims suggests solicitations by public adjusters were behind many reopened claims.

Citizens reported that it had 3,330 claims remaining open from the 2004 and 2005 hurricane seasons as of June 17, 2007. Less than a year later, that number had more than doubled to 8,531. In addition, 1,828 new claims surfaced from damage that occurred in 2004 and 2005, according to the task force.

Florida law allows consumers five years from the date of a loss to file a supplemental claim. Public adjusters publicize this information.

Some of the claims that were reopened for additional payments can be attributed to the shortage of contractors, roofers and building materials, the task force reported. The rising price of building materials in the years after the storms also explains why some customers felt that Citizens original payment amounts were insufficient to complete needed repairs.

But according to the task force, many of the newly filed or supplemental claims can be traced to activity of public adjusters.

“Citizens, as well as other insurers, report that many of the newly filed or supplemental claims requests from the 2004 and 2005 hurricane seasons are attributed to mass solicitations by public adjusters,” the report says.

Charles R. “Dick” Tutwiler, a longtime Florida public insurance adjuster and board member of the National Association of Public Adjusters, resents the task force’s conclusion. “When the task force came into existence, I thought they were trying to investigate Citizens’ claims handling policies – not find someone to blame for the hurricanes,” Tutwiler said. “They should have included a public adjuster on the panel. I’m disappointed as a professional and as a property owner.”

Mark D. Boardman, legislative committee chairman for the Florida Association of Public Insurance Adjusters, said that many public adjusters do advertise but what really made a difference was the explosion in the number of adjusters in Florida. There were 400 public adjusters working in the state prior to 2004 but the number increased to around 3,000 when qualifications were significantly loosened during a 2004 legislative session, according to Boardman.

“We have since closed the loophole and beginning last year public adjusters had to take a state exam to get their license,” Boardman said.

Boardman said numbers provided by Citizens indicate that its insureds filed 307,490 hurricane claims between Jan. 1, 2004 and June 30, 2007. According to the report, Citizens paid an average indemnity amount of $17,205.58 per hurricane claim during that period.

At a June 10 Citizens cabinet meeting, prior to the release of the task force’s final report on June 11, Citizens Executive Director Scott Wallace said it is Citizens’ responsibility to properly adjust and pay the claims of its policyholders.

“For many months now, Citizens and other property insurers, the Florida Insurance Guaranty Association, the FHCF [Florida Hurricane Catastrophe Fund] Advisory Council and others have expressed concern about the alarming number of new and reopened claims from the 2004 and 2005 hurricane seasons,” Wallace said. “Mention was made at the cabinet meeting that some of these claims may be illegitimate.”

Wallace said Citizens would not knowingly or willingly pay fraudulent claims. “We have internal quality assurance processes in place to ensure that claims receive a thorough review with proper documentation before they are paid,” he said.

Boardman said approving an additional $625 million bond to pay supplemental and new claims and adding an extra two years onto a 1 percent assessment on privately insureds’ policies, across the state is equivalent to Citizens admitting that it shortchanged its policyholders from the beginning.

Florida law states that if cash on hand in the FHCF is not sufficient to pay losses, personal insurance lines will be assessed to fund bonds.

Gov. Charlie Crist told The Associated Press he was hesitant to release the bonds before knowing that there weren’t illegitimate claims. However Jack Nicholson, FHCF’s senior officer, said FHCF is obliged to pay while state auditors are examining the claims. Nicholson added that any payments for claims that are later found inappropriate can be recouped.

Boardman said insureds who may not have been fully compensated for 2004 or 2005 hurricane damage are running out of time to file a supplemental claim.

“Is Citizens going to let them know that?” he asked.

The task force recommends that Citizens review communications to ensure that the claims process is outlined for consumers in a “realistic step-by-step format and not only includes the claims handling process, but how to submit supplemental claims.”

The task force also calls for the Office of the Insurance Consumer Advocate to monitor the implementation of legislation relating to public adjusters “to ensure that consumer interests are adequately protected and to recommend additional legislation, if needed.”

Topics Catastrophe Natural Disasters Florida Claims Hurricane