Special Notice: Public/Company/Independent Adjuster Rule

LMA representatives attended the rule hearing this past Thursday on your behalf. The two proposed rule amendments which prompted concerns to be expressed by public adjusting industry representatives in attendance are the two in bold below. They relate to the creation of a definition of “direct supervision” of an apprentice public adjuster by his or her supervising adjuster and the requirement that public adjusters verify proper licensure of any contractor, architect, engineer, etc. used to perform repair work under the claim.

Regarding the “direct supervision” issue, we learned from attending the hearing that DFS is considering amending this language to some degree in an effort to reach a compromised but effective definition. Concerning the proposed requirement that public adjusters verify the licensure status of contractors and related professionals who perform repair work under the claim, we actually showed Wilbur Brewton, Esq., one of the public adjusting industry representatives in attendance, just how easy this verification process can be. Using a cell phone/hand-held data device, we quickly pulled up and demonstrated for Mr. Brewton and others the Department of Business & Professional Regulation’s licensure verification portal.
Even with this demonstration, Mr. Brewton continued to express concerns about potential liability issues for public adjusters who are required to engage in licensure verification of contractors and related professionals and ultimately indicated that it might be preferable if the rule prohibited public adjusters from recommending contractors and related professionals altogether.

The Department left its official rule hearing record open for ten (10) days in order to receive further written comments from interested parties. We plan to provide DFS with comments by the record closing date of May 20 and would appreciate receiving any comments you have regarding the Department’s proposed rule amendments by May 20. You may access the full text of the Department’s notice and proposed rule HERE (69B-220.051, F.A.C. and 69B-220.201, F.A.C., respectively).

The key rule changes DFS is proposing regarding public adjusters and their apprentices are as follows:

• Establishing that rules prescribing proper conduct by public adjusters apply across the board to both public adjusters and public adjuster apprentices.
• Clarifying the definition of compensation to be: “Compensation or remuneration means anything of value, whether received directly or indirectly, in return for adjusting services performed.”
• Defining person to mean natural persons or legal entities.
• Establishing that the definition of “direct supervision” of an apprentice means, “the physical presence of the supervising public adjuster when soliciting or executing a contract for public adjusting services.
• Creating for the first time in rule a definition of “adjusting services” to mean, “the preparation, completion or filing of an insurance claim form with the respective insurer for an insured or third party claimant.”
• Adding the use of brochures, advertisements and electronic media to the list of activities which constitute “solicitation of public adjusting business.”
• Clarifying that an unlicensed person working at a public adjuster’s place of business can answer in-coming calls as long as the person is only handling administrative matters and does not engage in solicitation with regard to any insurance contract, public adjuster contract, claim or potential claim.
• Creating a requirement that all public adjuster advertisements must include the licensee’s full name and license number. Further, that advertisements in whatever form shall legibly state the full name and license number as specified in Department records of the licensee causing the ad to appear. Additionally, any printed license number or disclosure shall be in typeface no smaller than the typeface of the main body of the text in the advertisement. Also, should a public adjusting firm with multiple licensees cause an ad to appear, the designated primary adjuster of the firm must include his or her full name and license number in the ad.
• Codifying in rule that in addition to current required contract provisions, contracts between public adjusters and consumers must include:  active phone number and other contact information for the insured; a description of the loss to include actual date or, if not known with certainty, the approximate date and nature of the event causing the loss;  and identification of any costs to be reimbursed to the public adjuster which shall be specified in either the contract or an addendum and be signed and dated by the parties. This area of the rule also contains a proposed requirement that a copy of the completed contract be provided to the insured or claimant at the time he or she signs the contract in addition to a prohibition against a public adjuster settling a claim without first obtaining signed and dated authorization from the insured.

In addition to the provisions noted above, the following  provisions relating specifically to public adjusters are being added to the Code of Ethics Rules for all lines of adjusters, Rule Chapter 69B-220.201, F.A.C.

• No public adjuster or public adjusting firm shall require, demand, charge, or accept any fee, retainer, compensation, commission, deposit other thing of value prior to receipt by the insured or claimant of a payment on the claim by the insurer.
• No public adjuster or public adjusting firm shall accept any form of payment or remuneration for adjusting services that the public adjuster or public adjusting firm have not yet performed.
• No public adjuster shall enter into any contract, agreement or other arrangement with any person, including an attorney, building contractor, architect, appraiser or repairman, by which the person would enter into an agreement to assist a claimant or insured on an insurance claim, utilize the services of the adjuster to carry out the agreement, and from the proceeds of the claim, allow the public adjuster to accept an amount that would exceed the limitation of the public adjuster’s compensation imposed by Section 626.854(11), F.S.
• No public adjuster, while so licensed in the Department’s records, shall represent or act as or be appointed as a company employee adjuster or independent adjuster. A public adjuster may hold a general lines agent license. However, no public adjuster, while so licensed in the Department’s records, shall represent or act as both a public adjuster and a general lines agent for the same insurance claim.
• No public adjuster shall re-open a claim and represent any person or entity on that re-opened claim if he or she previously adjusted that claim as an adjuster representing any insurer or adjusting firm.
• In the absence of a declared state of emergency by the Governor of the State of Florida, the public adjuster shall respond with specific information to a written or electronic request for claims status from a party to the public adjuster contract or the party’s designated representative, within fourteen (14) days from the date of the request and shall document the file accordingly.
• The public adjuster shall ensure that if a contractor, architect, engineer, or other professional is used to perform the repair work made under the claim, the professional, if so required, shall be licensed by the Florida Department of Business and Professional Regulation or other regulatory agency.
• Additionally, the provision of this rule addressing the requirement that a public adjuster act with dispatch and employ due diligence in achieving a proper disposition on a claim will be amended to include the following example: …”in the case of a public adjuster, the person under contract for their services or where the adjuster engages in a pattern of neglect which causes or could potentially cause injury to the insured or claimant.”

May 13, 2013