– Lisa Miller Associates

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Independence Day….More than Fireworks and Barbeque
July the 4th came and went as it does each year and we each celebrated in our own special way. Of course, here in the south we had lots of great bbq events with all the fixin’s….yummy ribs, chicken, potato salad, baked beans, banana pudding and our “only in the south” REAL sweet tea! What a feast, what a celebration! Then for those who have kids/grands or are kids at heart, lots of “legal fireworks” popping all through the neighborhoods.

I do wonder sometimes though how often we stop and think about the blessings of independence that we enjoy in this amazing country we live in. This year I did stop and reflect a bit and even took a little quiz about our U.S. History, which found me ashamedly lacking for knowledge in several of the questions. So, we thought, even though the 4th has already passed, you might like to test your U.S. history knowledge. We’ve included just a few of the questions on the quiz. You’ll have to read the entire newsletter for the answers, but here goes and good luck. (If you are like me, this “test” will give you a moment of reflection.)

1) Where is the Declaration of Independence kept?

2) What year was the U.S. Constitution ratified?

3) What year did the Revolutionary War end?

4) Who drafted the Bill of Rights?

5) What rights are protected by the First Amendment?
Citizens Chairman of the Board Reappointed
Last week House Speaker Will Weatherford (R-Wesley Chapel) reappointed Chairman of the Citizens Board, Chris Gardner, to a three-year term to the board. Speaker Weatherford commented that, “Chairman Gardner has the experience and understanding of Florida’s insurance market necessary to continue leading Citizens Property Insurance Corporation through this period of transition, which is why I am proud to reappoint him for another term”. Gardner’s original appointment as Chairman to the Board was August 2013. Gardner is a managing shareholder of Kuykendall Gardner, LLC, a Winter Park based insurance brokerage firm. We applaud Chairman Gardner’s work at the helm of Citizens. LMA attends EVERY Citizens’ board meeting and all of their committee meetings and Chairman Gardner is tireless during the grueling two days when these meetings occur. He is always respectful of all those in the audience, making sure to ask for public comment as he goes through the Board’s agenda and most importantly, there is no issue too small when it comes to his ability to listen and be respectful of all views. We look forward to our continued work with Chair Gardner and all of the Citizens board and staff.
Renewal Policies will be up for Clearinghouse Review in the fall 2014
During Citizens’ June 25th Board of Governors meeting, Corporate CEO and Company President Barry Gilway announced that the state-run insurer will delay processing renewal policies through the Citizens Clearinghouse until the fall of 2014. Gilway said that policies up for renewal won’t start to be run through the clearinghouse until around November 1, rather than in August or September, as has been reported several times in recent months.” There were a few areas we felt needed to be improved,” Gilway told the Corporation’s Board of Governors during its meeting in Winter Park. “But very clearly we’ll be ready by the end of the year.”

The delay was prompted by a request from Bolt Solutions, Inc., the Information Technology contractor, that received a five-year contract last year to design the software for the clearinghouse. Under the statute which created the clearinghouse, if a participating insurer offers a renewing Citizens policyholder a premium within 15 percent of Citizens’ renewal premium, the property is no longer eligible for coverage with Citizens and the private market insurer takes the risk. Since the clearinghouse went live in January, nearly 3,300 first-time policies that had been submitted to Citizens have been placed with private vendors, Gilway noted and the clearinghouse is expected to have a bigger impact once the renewals are put into the system. However, around 80 percent of the policies coming through the clearinghouse at this time are not receiving a private market offer and Citizens is looking closely into the cause for this high percentage. Thus far there have been 78,000 policies submitted to the clearinghouse but the data suggests that often agents will submit a policy several times, so this number could be inflated. We’ll continue monitoring Citizens’ efforts to process renewal policies through the clearinghouse and keep you posted on developments.
Study Focusing on Attorney Handling of Auto Claims Yields Interesting Results
Wednesday 7/9/14- According to a study published by the Insurance Research Council (IRC) attorney involvement in auto insurance claims is on the rise and varies significantly by state. The percentage of auto injury claimants represented by attorneys rose to 36 percent of personal injury protection (PIP) claimants in 2012, up from 31 percent in 2007 and more than double the rate found in a similar study in 1977, according to the IRC. The rate of attorney involvement among bodily injury (BI) claimants rose slightly, to 50 percent in 2012.The IRC study also examined the factors associated with attorney involvement and found that represented claimants:

•Were much more likely than those without representation to receive treatment in a pain clinic and to undergo magnetic resonance imaging (MRI) for similar injuries

•Were more likely to be involved in apparent claim abuse

•Received, on average, lower net payments (total payments adjusted for claimed economic expenses and applicable legal fees) than those who did not hire attorneys

•Waited longer for payment of claims

The rate of attorney involvement varied significantly by state. The highest rate among no-fault states was in Florida, where more than half of PIP claimants hired attorneys in 2012. The lowest rate was in Kansas, where just 12 percent of PIP claimants hired attorneys. “The attorney involvement trends shown in this study undercut two of the envisioned benefits of no-fault auto injury systems: a less adversarial settlement process and more timely payments,” said Elizabeth Sprinkel, senior vice president of the IRC, in a press release. “The role of attorneys is implicated in many of the factors driving up the cost of auto insurance.” IRC said that the study, Attorney Involvement in Auto Injury Claims, is based on more than 35,000 auto injury claims closed with payment under the five principal private passenger coverages. Twelve insurers, representing 52 percent of the private passenger auto insurance market in the Unites States, participated in the study. The study represents yet another good reason why the Legislature should take a strong look at radically overhauling or completely repealing Florida’s current no-fault auto insurance system.
ASK LISA
We are excited to present our first “Ask Lisa” column and we received a great question to start us off. Hope you enjoy our new venture into “asking Lisa” and please, please send us your questions.

Q: What does Florida Law say regarding when to “total” a car when damaged in an accident?

Generally, automobiles are supposed to be “totaled” when the cost of repairing the vehicle is higher than the ACV (actual/current value) of the vehicle before the accident. In the real world of automobile claims, it’s not always practical to repair a vehicle, even if the cost of repair is less than its ACV. For example, a vehicle worth $6,000 which requires repairs of $5,000 most likely would be considered “totaled” by the insurer even though the cost of repair is less than the car’s value. Many insurers would consider such a vehicle to be a total loss in this instance. When this occurs the insurer takes ownership of the totaled (salvaged) vehicle and obtains a “salvage title” for the vehicle. After it pays the insured the pre-loss ACV of the vehicle and forwards the certificate of ownership, the license plates and a required fee to the Florida Department of Highway Safety and Motor Vehicles (DHSMV), the DHSMV then issues a Certificate of Salvage Title for the vehicle. If, however, the insured wants to keep the “totaled” vehicle, the insurer will deduct the value of the salvage from the claim payment. The criteria for deciding when a car is a total loss in Florida changed as of July 1 of this year as a result of Senate Bill 754. This bill, entitled Certificates of Title, revised the requirements for the DHSMV to declare motor vehicles un-repairable and to issue a “certificate of destruction” when a damaged vehicle is seven years old, or newer with a retail value of $7,500, and the insurer determines that the estimated cost of repairs is at least 90 percent of the value of the vehicle. So you ask, how do they determine the 90 percent? This is calculated by the insurer using the total loss ratio (cost of repairs/actual cash value) compared to limits set by state law. If the sum of the first two quantities is greater than the ACV, the car can be declared a total loss.

So with that information, we hope “Ask Lisa” gave you some good general guidance regarding when cars are to be considered totaled and how the law works in Florida.

Send us more questions….this is fun!
Guest Author Andrew Rock, Esq. Focuses on Critical Case Law Updates
It is LMA’s pleasure to welcome well known insurance attorney Andrew Rock among the ranks of our guest authors who help make our firm’s newsletter so informative and popular. Andrew owns the Rock Law Group, a statewide civil litigation firm based in the Orlando area with particular emphasis on insurance defense and fraud prevention. He recently delivered an outstanding insurance case law update during an annual gathering of the Florida Insurance Fraud Education Committee and we asked him to write an article for our newsletter addressing the highlights of his presentation. The following is Andy’s article:

It has been an eventful year for insurance cases in the Florida courts. This article will address several noteworthy decisions dealing with fraud, misrepresentation, and/or concealment. An insurer may discover facts unrelated to an insured’s loss, but which may nevertheless affect the insurer’s decision regarding coverage. A misrepresentation in the application process, for example, may void the insurance policy. Florida Statute §627.409. In Ocean’s 11 Bar & Grill, Inc. v. Indem. Ins. Corp. of DC, Risk Retention Grp., 522 F. App’x 696 (11th Cir. 2013), subjectivity came into play. The insurer rescinded an insured restaurant’s policy after determining that there were misrepresentations concerning the restaurant’s square footage and owner’s years of experience. The Court determined no misrepresentation occurred, as the restaurant owner provided truthful answers to the questions as he had reasonably interpreted them. But compare Stewart Title Guar. Co. v. Roberts-Dude, 497 B.R. 143 (S.D. Fla. 2013) (misrepresentation when insurer issued policy based on faulty affidavit, even when investigation would have uncovered the falsity). See also Sunderland Mut. Ins. Co., Ltd. v. Comastro, 2014 WL 60015 (S.D. Fla. Jan. 7, 2014) (no coverage when ship operator not disclosed in application as a potential captain, but policy not void because insured did not purposefully or negligently omit captain as listed operator). In determining materiality, courts consider whether the misrepresentation affected the insurer’s decision to issue a policy to the insured. In Darwin Nat. Assur. Co. v. Brinson & Brinson, Attorneys at Law, P.A., 2013 WL 2406154 (M.D. Fla. June 3, 2013), the insurer rescinded a professional liability policy when the applicant failed to truthfully answer application questions regarding bar complaints and incidents that may result in lawsuits against his firm. The Court held the misrepresentation was material, as the applicant knew of the complaints and potential lawsuits when applying, and the insurer likely would not have issued the policy or would not have issued the policy as written. See also, Zurich Am. Ins. Co. v. Diamond Title of Sarasota, Inc., 2013 WL 6283684 (M.D. Fla. Dec. 4, 2013) (not disclosing mortgage fraud was material, as objective insurer may not have issued the policy). In determining fraud or misrepresentation when an insured fails to comply with a condition precedent, Florida courts analyze the extent and severity of the insured’s noncompliance. In Garden-Aire Vill. S. Condo. Ass’n Inc. v. QBE Ins. Corp., 2013 WL 864570 (S.D. Fla. Mar. 8, 2013), although the insurer’s claim investigation was substantially prejudiced by insured’s deficient examination under oath, it did not rise to the level of fraud or misrepresentation. The Court held being uncooperative, obstinate, and reticent does not show the requisite mindset to void the policy for fraud. See also, 200 Leslie Condo. Ass’n, Inc. v. QBE Ins. Corp., 965 F.Supp.2d 1386 (2013) (policy not void for fraud because no purposeful misrepresentation by being unprepared for EUO). Fraud-related issues have been asserted in both affirmative and defensive contexts. See Geico General Ins. Co. v. Hoy, 2013 WL 6690683 (Fla. Dist. Ct. App. Dec. 20, 2013) (even if insurer misinformed insured about amount received for signing release, insured sustained no loss in reliance on the representation); State Farm Mut. Auto. Ins. Co. v. Williams, 2014 WL 1465726 (11th Cir. April 15, 2014) (departure from previous opinion due to intervening change in controlling authority holding insurers may deviate from §627.736 requirements when known billing fraud is involved); Guarantee Ins. Co. v. Brand Mgmt. Serv., Inc., 2013 WL 6768641 (S.D. Fla. Dec. 20, 2013) (not fraud for insurer to request additional security as condition to reinstating policy). With insurance fraud on the upswing, these decisions are sure to come into play in the coming year. If you have any questions about the insurance cases covered in Andrew’s article or are interested in retaining his firm’s services you may reach his office by calling 407.647.9881
LMA, Industry Reps Meet with DBPR Execs to Discuss Remediation Claims Fraud and Mold Rules
In our on-going efforts to help rein in abusive AOB practices and other fraudulent activities by certain remediation businesses involved in the claims process, LMA CEO Lisa Miller and a number of industry representatives recently met with executives of the Department of Business & Professional Regulation (DBPR) to seek their support and discuss the agency’s current administrative rules governing the licensure of Mold Remediator. In attendance from the industry were representatives of two leading domestic insurers, Citizens, highly recognized remediation experts, professional claims consultants and a veteran former regulator. In attendance from DBPR were the Director of the Division of Professions, the Deputy Secretary and the Chief Attorney for the Division of Professions. During the meeting we reviewed Rule Chapter 61-31, “Mold Related Services” which was written in conjunction with sections of Chapter 455 and Chapter 468, Florida Statutes. The industry was keenly interested in ways we could work together with DBPR to stop the claims abuses we are seeing in water claims as well as those we are anticipating after the storm with mold claims and their relation to water claims abuses. DBPR was very open to working with us including ways to use the statutes and rules with respect to professions in stopping claims abuses. The hour long meeting resulted in a commitment from DBPR to help the industry in pursuing “low hanging fruit” among those who perpetrate statutory and/or administrative rule violations. The most significant are those cases where the vendor or their employees participate in activities that would constitute unlicensed contracting. For example, any individual or firm holding themselves out as mold remediator or mold remediation specialists and contracting to perform such work must possess either a mold remediator or Division I contractor (i.e. General, Building or Residential contractor) license from DBPR. Additionally, anyone making an alteration which is structural in nature or performing work which requires separate licensing (HVAC, Plumbing, Electrical or Roofing) would also fall under the unlicensed contracting category if not properly licensed. DBPR encouraged the industry and its adjusters to be on the lookout for such unlicensed activity and to submit complaints with copies of related documents (written agreements, contracts, correspondence, etc.) to their agency as quickly as possible. DBPR said it’s important to note that payment can be withheld for work performed by persons requiring a contractors’ license but who fail to possess such a license. Also, unlicensed contractors are prohibited from effectuating liens against property. Our meeting with DBPR was the first of its kind and we intend to have further meetings to discuss other potential solutions that could come in the form of legislation, enhanced licensing requirements and more cooperative efforts between regulatory and criminal investigators. We’ll keep you updated as our work continues.
Feds May Pursue Recovery of Forced-Placed Coverage Kickbacks
According to a recent industry trade report the federal government is contemplating whether to file law suits against banks and other mortgage servicers to recover its losses from alleged insurance kickbacks that may have cost government-controlled mortgage giants Fannie Mae and Freddie Mac hundreds of millions of dollars, according to an internal report. The Federal Housing Finance Agency, which is responsible for guarding Fannie and Freddie’s finances, told its inspector general’s office that it will consider filing the lawsuits and will make a formal decision over the next year. Fannie Mae and Freddie Mac, which have been under the FHFA’s conservatorship since 2008, lost an estimated $168 million from the fees in 2012 alone, according to the report by the FHFA’s inspector general. The FHFA didn’t accept the inspector general’s estimate of damages, but the agency’s official response to the report said it “does not object” to the recommendation that it consider suing. Though the FHFA barred banks and other mortgage servicers from collecting payments from insurers on June 1, the agency does not normally discuss prospective litigation and has not previously indicated that it might consider suing over past misbehavior. Should the FHFA decide in favor of such litigation, the lawsuits could reopen a controversy over how the country’s biggest banks profited from what is known as “force-placed insurance,” a high-cost version of property insurance that protects the homes of uninsured borrowers. Typically purchased by banks when a borrower falls behind on mortgage and insurance payments, force-placed insurance ballooned into a $1 billion-a-year industry after the 2008 housing bust. According to a 2012 investigation by New York’s Department of Financial Services and a slew of private lawsuits, large banks and insurers colluded to inflate the price of force-placed insurance, splitting the profits. Insurers paid banks for referring business. Struggling homeowners and mortgage investors like Fannie Mae and Freddie Mac bore the cost in the form of higher insurance premiums, often many times the price of normal homeowners insurance.

Since insurance kickbacks are illegal, major banks and insurers allegedly contrived to mask the payments as legitimate business transactions. The FHFA inspector general’s report did not name specific institutions. But some banks, including JPMorgan Chase, Wells Fargo and Citigroup, set up insurance agencies to accept supposed commissions from the two dominant force-placed insurers, Assurant and QBE. But as the New York Department of Financial Services and private plaintiff’s attorneys separately uncovered, these bank-owned insurance agencies were little more than empty shells. In one example, JPMorgan’s own employees stated in court documents that a bank-owned insurance agency did not employ a single insurance agent. In other instances, insurers rewarded banks through generous reinsurance deals or simple, lump-sum multimillion-dollar payments, New York State found. In the wake of the New York investigation, other state probes and private lawsuits, many of the country’s largest mortgage servicers including JPMorgan, Wells Fargo and Citigroup renounced commissions in 2012 and 2013. The FHFA’s potential lawsuits against banks and insurers would not be automatic victories, its inspector general said. But similar class-action lawsuits brought by private attorneys representing homeowners have been successful, indicating the government would be in a strong position if it were to sue. Over the past three years, mortgage servicers and their force-placed insurers have paid out $674 million to settle such cases, preventing a single one from reaching trial. In September of 2013, JPMorgan and Assurant reached the biggest single settlement, a $300 million payout. According to New York’s Department of Financial Services, JPMorgan Chase took in more than $600 million from force-placed reinsurance deals since 2006.
As Boomers Retire in Massive Numbers Industry will Suffer Major Talent Gap
According to a recent report in the Insurance Claims Journal in less than a decade, the insurance industry is set to experience a major talent drought when a large portion of baby boomers retire. According to Insurance Business America, one-quarter of the insurance workforce is set to retire by 2018. The Bureau of Labor Statistics anticipates over 200,000 new jobs within the insurance industry by 2022, with unemployment in the sector at less than half the national average. The insurance industry, however, is struggling to meet the job demand. The average insurance professional is 45 years old, and only 5 percent of students within the millennial generation describe themselves as “very interested” in working in the industry, according to a 2012 study from the Griffith Insurance Education Foundation. Experts anticipate the advancement in technology to further demarcate the talent gap, creating a significant need for skilled workers within technology-based insurance jobs such as customer service representatives, insurance sales agents, business analysts, claims adjusters, insurance underwriters and actuaries. IT professionals and employees who are very comfortable with a variety of technology are expected to benefit from the upcoming insurance boom.
Wright Flood Executive Honored with Award
Patricia Templeton-Jones and Wright Flood were recently honored with the Property and Casualty Insurers Association of America’s (PCIAA) 2014 Political Involvement Award for working tirelessly to diminish the negative impacts on the housing and insurance industry of the federal Biggert- Waters Flood Insurance Reform Act. Ms. Jones’ extensive technical expertise in the NFIP and engagement with congressional staff in Washington DC during a critical time helped Congress provide relief to homeowners across the nation. As Ms. Templeton-Jones accepted the award, she acknowledged that “reaching out to lawmakers in Washington with technical aspects to lessen negative impacts of the recent flood reform laws while still advancing the goals of placing the NFIP on a sustainable path was a driving force in her efforts.” As noted by David A Sampson, CEO of Property and Casualty Insurers Association of America to PCIAA membership, “The expertise and engagement of our members in our advocacy efforts are essential. Patty Templeton Jones and Wright Flood played a vital role in not only working on quelling the unintended consequences of the Biggert-Waters Flood Insurance Reform Act, but also with the passage of Florida’s flood legislation. LMA worked closely with Patty and the entire Wright Flood team in ultimately protecting homeowners and providing relief to our real estate and insurance industries during struggling economic times.
 We Always Love Hearing from You
So it was awesome to hear from many of our readers regarding the article entitled, Texts Can Now be Protected under Florida’s DO-NO-CALL Program, that we included in our June 30 newsletter. You will recall in that article that we published how our readers in Florida could be a part of Florida’s DO NOT CALL list and we are sure there are similar lists/programs in other states. Sarrah Carrol, Assistant Executive Director of Operations with the Florida Sheriff’s Association said, “Thanks for the intel!!! I signed up for the DO NOT CALL list and my phone stopped ringing.” We loved hearing from her AND, we were excited also to hear from some out of state readers who immediately responded by saying, “Please help us get on the DO NOT CALL list in our state. To them we say, you can count on us to help!!!
Our Travels Since the Last Newsletter
Our team stays on the road in one form or another, making sure we cover the news that is news to you. One such trip took us to Florida’s Property and Casualty Property Insurance Task Force meeting that comprises over 300 claims and insurance fraud experts. Attorneys, claims executives, field adjusters, independent adjusters, Division of Insurance Fraud team members, and many more “fraud fighters” convene 4 times a year in the Orlando area to talk about issues such as Assignment of Benefit reform, ways to educate the public on the cost of insurance fraud, how to educate prosecutors and judges about what truly is insurance fraud and how to recognize it within statutory parameters, and lots more. This quarter’s meeting focused on ways to collect data to demonstrate the problems the industry faces with nefarious actors who abuse the use of assignment of benefits to perpetrate fraud through claims inflation or misrepresentation of the claim. In addition, the division of insurance fraud discussed its proposed 2015 legislative ideas. We are happy to share more about this distinguished group of professionals but take a peek at www.stompoutfraud.org. There is an excellent 5 page primer on assignment of benefits and ways to stop the abuse of it. LMA is proud to serve with the fraud fighters who are a part of this group and so much more!

So, How Did you do?
1) Where is the Declaration of Independence kept?

The National Archives, The Declaration, along with the U.S. Constitution and Bill of Rights, can be viewed in the Rotunda for the Charters of Freedom which is part of the National Archives Museum in Washington, DC.

2) What year was the U.S. Constitution ratified?

1788. New Hampshire was the ninth state to ratify, making adoption official. The last state to ratify and join the union was Rhode Island in 1790.

3) What year did the Revolutionary War end?

On April 15, 1783, Congress ratified the Articles of Peace that ended warfare and outlined terms of a treaty between Britain, France and America.

4) Who drafted the Bill of Rights?

James Madison. Raised in Virginia, he served in the Continental Congress and the Constitutional Convention and wrote, with Alexander Hamilton and John Jay, the Federalist essays that helped promote ratification of the new constitution. He also served as fourth president of the United States.

5) What rights are protected by the First Amendment?

Freedom of speech, free exercise of religion, freedom of the press, peaceful assembly and petitioning government for redress of grievances. The amendment says, ”Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for redress of grievances.”

We hope that this gives you, like it did us, a desire to know our history better and appreciate even more the “independence and freedoms” that are ours.

As always, Lisa and the Team

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