Illegal adjusting clarified
Another tool to fight fraudulent claims practices has also become Florida law in the past two weeks – SB 1598. The bill includes important language clarifying that only an attorney or licensed public adjuster may prepare, complete or file an insurance claim for a policyholder or third-party claimant or negotiate on their behalf in a damages claim. It also gives the Department of Financial Services (DFS) new powers to pursue administration action and impose fines on those bad actors, including solicitors and those performing related services.
Here’s a handy summary of the new law, which became effective on June 16, 2021 with specific sections referenced below:
Subsection (9)(a) requires adjusting firms, including public adjusting firms, to be licensed. Subsection (9)(b) creates an exemption if the licensee is a sole practitioner who operates under their own name and has no employees or uses the services of other licensees. Subsection (9)(c) states If an adjusting firm is required to be licensed but fails to apply for licensure in accordance with this subsection, the department must impose an administrative penalty of up to $10,000. – Subsection (10) states any person who aids or abets in unlicensed claims adjusting is guilty of a felony in the third degree.
Subsection (6) allows policyholders 10 calendar days to cancel a public adjuster contract for all perils. Additionally, public adjuster contracts are now required to have the disclosure language above in 18-point bold type. This section applies to residential and commercial residential policies.
Subsection (11) requires public adjusters to provide a preliminary estimate of damages within 60 days after the date of the contract. This section applies to residential property and condo unit owner claims.
The new language (15) adds advertising, solicitation, handling and offering to handle claims as prohibitions for licensed contractors. The ability of a contractor to discuss or explain a bid remains only ‘if the contractor is doing so’ for the ‘work to be performed as stated in the contract between the contractor and the insured.
The language in (19) is expanded to include the word ‘licensed’ before public adjuster. Subsection (c) includes a prohibition on making an ‘offer to initiate or negotiate a claim’ and Subsection (d) further expands the prohibition to include advertisement of ‘any services that require a license as a public adjuster’.
Additionally, the newly created sections (20) specifically provides the Department of Financial Services with the authority to take administrative actions against violators of this section.
Newly created section (21) creates a prohibition against payment of fees from any source to a public adjuster or apprentice who solicits a claim but does not enter into a contract with the insured. This language is in direct response to the activity of loss consultants who are not signing public adjusting contracts and colluding up with attorneys to solicit claims.
You can read more about SB 1598 in this special section of our final Bill Watch of the legislative session.
As with SB 76 (Florida’s new property insurance reform law), violations of SB 1598 should be reported to DFS using its Insurance Fraud Portal. This includes unlicensed activity. The fact that solicitation prohibition language is in both bills reminds me of the old adage, “Anything worth saying is worth repeating!” Please share this information with your employees and other insurance colleagues and customers! It bears repeating: If you see something, say something! These two laws are only as good as their enforcement.
LMA Newsletter of 6-28-21
