Battle Scars- Stay Strong! November 2, 2012

Battle Scars- Stay Strong!

We are all glued to the television for two reasons now – the presidential election and the aftermath of Hurricane Sandy.  Those of us Floridians have the battle scars from both the zillions of commercials that hammer our TV screens and the polling calls wondering how we will vote. I’ll leave that conversation for another time because the most important reason we are watching the news is because of Superstorm Sandy.   All of us reading this note support our claims colleagues, vendors, and so many insurance company executives who know how to rise to the occasion when the occasion is, unfortunately, a natural, catastrophic disaster.  I spoke to many of my insurer colleagues today and most are still trying to sort out what this storm means:  financially but most importantly, to the citizens of our great country.   I, for one, want to serve as bridge for many of you who have friends, family or customers in the affected states. So if you need anything to be communicated to the various states or want to help, simply let me know and I’ll get you connected if you want to be “boots on the ground.”  Before I give you a “Sandy” update I wanted to tell you quickly the latest in the property insurance assignment of benefits battle.
Homeowners insurance update: Unlicensed Public Adjuster activity/Assignment of Benefits

The attached is a Cease and Desist Order that clarifies that it is a violation for a water extraction company to practice as a public adjuster without a license.  This simple but powerful order lists 9 activities that Emergency Services 24 (ES 24) can’t engage in and the first is a prohibition from any organization or its employee to act like a public adjuster when it isn’t properly licensed.

The attached order comes from the DFS’ administrative  licensing and investigation area known as the Bureau of Agent and Agency (and adjuster) investigations.   DFS’ Division of Insurance fraud (DIF) has also given us guidance and as you know they are the criminal side of DFS and investigate unlicensed activity frequently upon cases being referred to them for review.

Some thoughts for you and your legal team to review as you determine cases to submit to both the Division of Insurance Fraud (DIF) and/or the Bureau of Agent and Agency (and adjuster) Investigations. NOTE:  When submitting cases to DIF, the referral can only come from a special investigations unit (SIU) and be sure to use the menu listing of alleged statutory violations.

Remember, a company must be licensed as a public adjuster under Section 626.854, Florida Statutes and pay special attention to subsections (1) and (16).  If a company is a licensed contractor or subcontractor (see Section 489.105, (3)), these individuals may not adjust a claim on behalf of the insured under 626.854 (16), FS.

Those using assignment of benefits unscrupulously can also be prosecuted under 817.234 if the claim is inflated and fraudulent.  And of course, we have seen files where there is clear material misrepresentation where individuals are not truthful with insureds and make false promises.

Assignment of benefits might not be valid pursuant to 627.405 because perhaps there is no insurable interest at time of loss? Partial assignment of benefits not allowed? Were 3rd parties (mortgage holder) not consulted or approved, so is the contract for assignment of benefits may be unenforceable?

Even if an assignment is valid, the remediation company would stand in the shoes of the insured assisting the insured in filing claim, preparing claim, or negotiating the claim therefore acting as public adjuster (PAs) under 626.854 (1). If they are unlicensed PAs, they could be prosecuted as unlicensed PAs under 626.8738.

I encourage each of you to stay strong and vigilant against this claims trend that is preying on unsuspecting policyholders who often have no idea that they are being taken advantage of in a variety of ways.   We can get ahead of this and there is a small team of us willing to help you. Just say the word!
Superstorm Sandy update

I asked industry veteran Bruce Howson, Executive Vice President, First Choice Insurance Intermediaries, Inc. in Jacksonville for a quick update.  He provided the following:


“Well, NJ, CT,  NY, and MD have outdone FL.  Because the national Hurricane Center reclassified Sandy as a Sub Tropical Cyclone, they have issued orders waiving the hurricane deductibles in those states.  In spite of the fact that Sandy made landfall in NJ with winds of 80 KTs or 96 MPH!  The reclassification by the NHC came as a result of the determination that the source of energy in the storm no longer comes from the tropics (hot, or probably the Gulf Stream that far north) but from cooler more temperate sources. Also Federal bureaucracy comes into play in that as soon as the storm was no longer classified as tropical, the NHC turned the forecasting over to local National Weather Service centers, although in prior storms the NHC has continued to monitor the storms after they became sub-tropical.  I’ve read some of the Advisories and this thing became a forecasting hot potato real fast.  Predicted outcome;

·         Years of litigation over the “intent” of hurricane deductibles, driven by insurance companies , climate change experts and consumer advocates.

·         A reevaluation of hurricane models and the need to change their titles to “ cyclone” models, to include tropical and subtropical storms.

·         A repricing of catastrophe reinsurance for the northeast, because of the exposure to basically first dollar losses by the reinsurers, if the storm definition is not changed to include all northern hemisphere cyclones.  Reinsurers can change their treaty definitions “on a dime” or at renewal for sure.  January 1 renewals are coming up for most of the major carriers up north.

·         Rates most likely will go up for homeowners insurance in these affected states, but we need to be reminded that their governors made the decision not 48 hours after the storm.

·         Market capacity will further contract in those states.  There is already a shortage on Long Island.

·         FEMA will not have to make as many loans against the hurricane deductibles saving a considerable amount, shifting the responsibility to the private sector.

·         I have attached my “Cyclone Sandy” advisories from the NHC as reference.  All readers should take note of the dates and times as well as the Watches and Warnings, which form some of the basis of the decisions made by the state regulators. I have taken the liberty of using the southern hemisphere terminology for this storm.”


Auto Insurance – House Bill 119’s (PIP) Supreme challenge

Recently, we read about the Florida Supreme Court challenge to the 2012 PIP law changes. For those of you following this line of coverage, this court challenge is much much more than a challenge to PIP reform. It has broader implications to other types of legislation being presented, debated and ultimately passed (or failing) in our legislative process. I’d like to discuss that with you who would want to brainstorm with me on how we can work together on new ideas to move meaningful legislation through in the coming months anticipating our 2013 legislative session.



The Plaintiffs in the PIP challenge are three chiropractors, two licensed massage therapists, an acupuncturist, and “John Doe” as a representative of all consumers.  The Defendant is Kevin M. McCarty in his official capacity as Commissioner of the Florida Office of Insurance Regulation.  The court challenge has twenty-seven (27) pages of allegations.  Stay tuned and I’ll be here to visit about it and where I think it might head.

Thanks for all you do and my best – am in your corner!


Lisa Miller, CEO

Lisa Miller & Associates, LLC

(850) 528-9229