Monday, October 5, 2015


Excuses, Excuses, Excuses


Don’t we just hate to hear excuses? And don’t we hate it even more when we hear ourselves making excuses. Nothing good comes from hearing or giving them. We lose respect for others and yes, ourselves, when they flow from our very own mouths. A good friend and colleague in the biz sent me a prose recently that made me decide to talk today about this “excuse phenomenon”.

With everything that has happened to you,

You can either feel sorry for yourself,

Or treat what has happened as a gift,

Everything is either an opportunity to grow,

Or an obstacle to keep you from growing.

You get to choose.

Wayne Dyer

Another word we can use for excuse is “alibi.” And we all have our own go-to alibis. Those alibis are what we use to get out of things and get so far away from accepting responsibility for our actions that we can’t find the way back. They allow us to prove that we were “elsewhere” when our crimes against ourselves were being committed. It’s sad but true that many of us use our “dysfunctional family-life” as the big excuse for everything. We grew up with nothing, or very little, or with not enough love, or, yada, yada, yada. And while these events may be true, we cannot use them as currency to excuse ourselves from responsibility.   Looking for an easy way out or escape from uncomfortable situations never works in the long run. These emotional camouflages are our own worst enemy…reasons to delay, stall and avoid doing the things we need to and should do. And then comes the busy work-alibis masquerading as important activities. We all know the first step in combating this problem, as in all problems, is recognizing that it exists and knowing that something must happen if change is to take place. Maybe we can start with practicing being truthful with ourselves and hopefully start ditching those alibis. I think we’ll like ourselves and everyone else much better.


Commissioner McCarty Honored with Lifetime Achievement Award


We were happy to share in the festivities on September 17when our very own Florida Insurance Commissioner Kevin McCarty was honored with a Lifetime Achievement Award at the Florida Association for Insurance Reform’s (FAIR) 3rd annual awards dinner. FAIR said McCarty, the state’s first non-elected insurance commissioner, “is recognized as a champion for consumers and a stabilizing force in the property insurance market.” FAIR also said that McCarty had steered the industry through numerous challenges since 2003, including “balancing consumer protections with the need to return Citizens Property Insurance Corporation policyholders to the private market and reduce the risk of additional assessments for all Floridians.” In addition, the Commissioner was touted as overseeing the reduction of workers’ compensation rates by more than 50 percent, “navigating the changing regulatory environment resulting from the Affordable Care Act” and helping the state “overcome the unprecedented 2004-05 storm seasons.” Jay Neal, Executive Director of FAIR, stated, “For over a decade, Commissioner McCarty has consistently and successfully guided the transformation into a robust competitive property insurance market to the benefit of consumers. Despite an often difficult political environment and multiple hurricanes, he has earned recognition as one of the most effective state regulators in the country. His award from FAIR was well earned.” The dinner was at The Kovens Conference Center at Florida International University’s Biscayne Bay Campus in North Miami. As you know, we have worked very closely with Commissioner McCarty for many years and can in a very close up perspective, share that he has done a great job for the citizens of our state of Florida. We applaud his commitment and dedication.




Supreme Court’s Eight Page Decision Scrutinizes Attorney Referral Services


The Florida Supreme Court has finally taken aim at the non-lawyer owned, proprietary attorney referral services, some of which that have been burning up the advertising airwaves in recent years soliciting accident victims. In an eight page decision issued by the state’s highest court on September 24th, the justices described certain referral service activities as posing a significant risk for the public and dictated more stringent regulations than those proposed by the Florida Bar Board of Governors. The high court directed the State Bar to promulgate a rule to prohibit lawyers from taking referrals from any referral service that isn’t owned or operated by a member of the Bar. The requirement that the Florida Bar establish such a rule was clear evidence of the Supreme Court’s dissatisfaction with a plan recommended by the Florida Bar Board of Governors that didn’t go far enough. The high court’s justices referred to the Bar’s Board of Governors as, “having disregarded the potential harm to the public that non-lawyer owned, for-profit referral services present”.


While the Supreme Court’s ruling failed to mention the name of any attorney referral service, its decision did conclude that it is absolutely necessary to protect the public from referral services that improperly utilize lawyers to direct clients to undesired, unnecessary, or even harmful treatment or services. Further, case records from this past November show a document submitted by Broward County’s 1-800-411-Pain Referral Service taking issue with the Bar’s proposal stating that existing rules already address conflicts of interest.
The Supreme Court’s September 24th action was founded by work performed resulting from a 2011 Florida Bar special committee looking into complaints about advertising by attorney-referral services. In 2012 that committee issued a report containing recommendations; however, more recently the Bar’s Board of Governors gave its approval to a less robust plan to address the problem, a plan the Supreme Court has clearly rejected.


DFS Moves to Tweak Rules on Neutral Evaluation


The Department of Financial Services’ Division of Consumer Services recently issued notice of its intent to make a small number of changes to rule chapters

69J-8.008, Selection of a Neutral Evaluator and 69J-8.009, the Evaluation Process.
The Department proposes to increase the amount of time that an insurer has to contact an insured after notice of a request to have a neutral evaluation of a sinkhole claim from 3 days to 5 days. The proposed rule amendment also clarifies that failure to comply with the 5-day requirement does not invalidate a party’s right to neutral evaluation or to disqualify proposed evaluators without cause.
If requested in writing, a rule development workshop will be held by the DFS on Thursday, October 22, 2015, at 10:00 a.m. in Room 142 of the J. Edwin Larson Building, 200 East Gaines Street, Tallahassee. Please contact our office should you have any questions about the proposed rule changes.


Construction Litigation Becoming Major Issue for Insurers


Most P&C insurers writing commercial coverage for the construction industry have seen the significant upswing in litigation against building contractors, often for what is alleged as defective construction. Further, reports indicate that more recent court decisions have had the effect of expanding coverage for what constitutes covered property damage. In one such recent case, the court ruled that defective workmanship was covered by an insurance contract because the supposed defective work had to be remediated in order to repair other damage caused by defective work. Should this legal trend be adopted by state courts in Florida, insurance companies will be in the position of having to investigate and ascertain whether defective work, something beforehand not covered by insurance, must be remediated in order to repair property damage by defective work. LMA is closely monitoring litigation in this area and will bring you updates and developments occur so, stay tuned.



Court Applies Broad Interpretation of “Direct” Causation 


We found the court’s interpretation of “direct causation” interesting in a finding recently in Arizona. The plaintiff’s detached garage was consumed by a fire that occurred near their property. The same fire burned vegetation on a nearby hill and a month after the fire was contained, a mudslide on the hill destroyed the house. The plaintiff’s insurance policy covered direct loss by fire but excluded coverage for water damage and earth movement, including mudslides. The plaintiffs sought to recover insurance proceeds for the garage and the home and the company did cover the loss to the garage but not the home and denied the claim on the home because it was a loss due to flood water and earth movement. Of course the plaintiffs claimed that the loss of the home was due to fire, thus covered and brought suit against the insurance company. The court eventually granted the insurance company’s motion for summary judgment and plaintiffs appealed. In deciding issues of causation, Arizona does not follow the “efficient proximate cause” doctrine. Arizona requires that all fire insurance policies conform to a standard policy which provides coverage “against all direct loss by fire, lightening and by removal from premises endangered by the perils insured against in this policy.” (This is based upon New York’s standard fire policy of 1943.) So the question for the court was whether the mudslide that damaged the house was directly caused by fire. The court looked to treatises for a definition of “direct,” along with New York law. What they found was that loss by fire within the policy’s coverage is not limited to fire damage; rather, all losses are covered which are directly, proximately, or immediately caused by a fire or combustion. In other words, the damage for which fire insurers are liable is not confined to loss by actual burning and consuming, but they are liable for all losses which are the immediate consequences of fire or burning, or for all losses of which fire is the proximate cause. This follows from the fact that the fair and reasonable interpretation of a policy of insurance against loss by fire will include with the obligation of the insurer every loss which necessarily follows from the occurrence of the fire, to the amount of the actual injury to subject of the risk, whenever that injury arises directly and immediately from the peril, or necessarily from incidental and surrounding circumstances, the operation and influence of which could not be avoided. Fire insurance is intended to cover every loss, damage, or injury proximately caused by fire, and every loss necessarily following directly and immediately from such peril or from the surrounding circumstances, the operation and influence of which could not be avoided. In the case, the plaintiff produced evidence that no mudslides or flooding had occurred on the property before, that mudslides are often caused by wildfires, and that rains were not heavy the year of the loss. The finding of summary judgment for the insurance company was reversed.



DFS Fines Insurance Agency $45,000 for Illegally Exporting Insurance Coverage


Recently, the Department of Financial Services (DFS) fined an insurance agency $45,000 for unlawfully exporting insurance coverage to the surplus lines market. The settlement stipulation agreement between DFS and the insurance agency reads, in part, “the agency exported insurance coverage for risks that were procurable from authorized insurers and failed to provide proof that a diligent effort was made prior to procuring surplus lines coverage.” We all know that illegally exporting risks to the surplus lines market when coverage for those risks in the admitted market already exists or is obtainable isn’t a good outcome for anyone, particularly consumers. If you would like to obtain a copy of the settlement stipulation agreement and resulting disciplinary order please contact our office.




Citizens’ Consumer Services Committee Meets; Updates Numerous Issues


The Citizens Board of Governors’ Consumer Services Committee met on September 24th and covered a lengthy agenda of issues. First, the committee welcomed Sha’Ron James, Insurance Consumer Advocate, as a new committee member.Vice President of Communications, Legislative and External Affairs Christine Ashburn and Chief of Consumer and Agent Services Steve Bitar presented updates on the Call Citizens First campaign. The campaign, created to promote the impact of proper and thorough claims handling practices, will be launched in two phases. Phase 1 will begin in the fourth quarter of 2015 and will promote the benefits of contacting Citizens to initiate the claims process. Phase 2 will begin when Contractor Repair Services vendors are finalized.


Steve Bitar and Director of Consumer Services Jeremy Pope presented an update on the Voice of the Customer (VoC) program. Results were tabulated during June through August 2015 on Customer Care Center and Claims overall customer satisfaction result scores, top five feedback responses, combined data, service recovery and service recovery testimonials from customers. Next steps include finalizing the VoC team, beginning quarterly analysis meetings, and implementation of new key performance indicators.Director of Market Services Adam Marmelstein presented an update on Citizens’ depopulation efforts. Marmelstein gave figures on the number of policy assumptions by Office of Insurance Regulation-approved takeout companies for 2015, the effects of depopulation on policy counts and 2015 assumption estimates. Efforts to enhance the depopulation process for policyholders and House Bill 1087-related efforts of provision of premium estimates and coverage comparison were outlined. Please click HERE if you would like to review the meeting materials and documents.



Citizens Actuarial and Underwriting Committee Meeting Brief but Productive


On Tuesday, September 29th the Citizens Actuarial and Underwriting Committee met via conference call for approximately thirty minutes and in doing so addressed two important issues of interest to a number of observers. The first of the two issues concerned language in the Appraisal Section of the personal lines policy form that the Board of Governors in March of this year approved being added to the section. The language in question provided insurers a 60 day review period prior to the inception of the appraisal process. During the September 29th meeting Citizens staff recommended and the committee concurred to eliminate the 60 day insurer review period language from changes under consideration by the Board. Please click HERE if you would like to read a detailed summary and analysis of this Appraisal language issue as prepared by Citizens staff.

The second issue of significant interest covered by the committee concerned the inability of Citizens policyholders to obtain comprehensive coverage for secondary habitational structures located on the same property. This matter has been under review by Citizens staff and their findings and recommendation were presented. As a result, committee members adopted a staff proposal that Citizens’ underwriting rules be modified to allow for separate policies to be written covering secondary habitational structures located on the same property and further authorized staff to make all necessary filings with the Office of Insurance Regulation to implement this underwriting change. Click HERE if you would like to review the material prepared by Citizens staff addressing this coverage issue.



Getting Closer Every Day


 It’s already October 5 and we are all starting to say, “where has 2015 gone so quickly?” Yes, only a few months left in this year and we are already in the midst of the work that takes place before the gavel opens the 2016 legislative session. Along with planning for those holidays that we love, enjoying the Fall breezes that are coming our way, and thoughts of football every weekend, we are making time to get our ducks in a row for committee meetings, visits with our legislative leaders and their staffs, and keeping a very close tab of what bills are being filed that impact our insurance industry. We will provide as much intel as we get closer to January 12. Please, please, please give us a call, email, text or a personal visit and share your thoughts on the upcoming session. We not only want your input, we NEED it.


Lisa and the LMA Team