Citizens Claims Handling and Resolution Task Force Recap

Two meetings of the Task Force on Citizens Property Insurance Corporation (“Citizens”) Claims Handling and Resolution were held on June 19, 2007 in Fort Lauderdale.  Both meetings adhered to the same format, but were scheduled at different times in order to allow all members of the public a chance to provide testimony to the Task Force.  Following is an account of the earlier meeting.

Task Force members in attendance were Tim Loftin (representing Citizens), Heather Carruthers, Senator Mike Fasano, General Bob Milligan, State Representative Julio Robaina, Mike Lancashire.

Task Force Chairman and Florida’s Insurance Consumer Advocate, General Bob Milligan opened the meeting by recounting that the conclusion gained by the Task Force at previous meetings was that claims adjusters and insurance agents should be the primary focus of concern regarding projected systemic change.

Citizens Outreach Coordinator Victoria Williams gave a recap of consumer and agent concerns voiced at Citizens’ recent quarterly policyholders meeting.  Those concerns were:  availability of policies, risk exposure estimates, available reserves, projections of assessments on other policies, volume of claims, lack of continuity, repair contractor issues, availability of commercial and church coverage, extension of coverage east of I-95, provision for quoting more than 30 days out, explanation of the 15% eligibility threshold statute, concern for the disparity of how Citizens policies were paid, calls from those who have been taken out of Citizens, and flood/wind claims paid by Citizens.

Public testimony was then given, which included policyholders who were represented in person at the meeting by legal counsel.  These policyholders all shared a common thread of difficulties with Citizens’ adjusters, as well as with arbitration/mediation hearings, actual replacement value estimates/payouts and cost of living reimbursements.  When claims went unpaid or ignored, the combination of multiple hurricanes that struck during 2004-2005 caused further damage to policyholder homes that were more extensive than the claims initially filed.  This led to a doubling and tripling of damage totals.  Most speakers shared current photographs of their homes with the Task Force.

This testimony prompted a discussion about the ongoing issues raised at previous Task Force meetings regarding untrained and an inadequate number of adjusters, as well as disparities in the claim amount paid varying by geographic area involved.  (Citizens now uses software called “Xactimate,” which was criticized later by an attending prosecutor as not being used correctly by Citizens).

A discussion ensued of whether the newly-contracted 6,300 Citizens adjusters have received adequate training, or any training at all, for the 2007 hurricane season.  It was revealed by Mr. Loftin that the adjusters have not received training for 2007.

Bob Besserman, 2007 President of the Florida Association of Public Insurance Adjusters (“FAPIA”) next gave testimony.  Mr. Besserman related that before Hurricane Charlie, there were only 330 public adjusters in Florida.  Today there are over 2,400, many of whom have been trained only three or four days in “adjuster mills,” which amount to on-line home testing.  FAPIA has asked the Florida Legislature to make adjuster qualifications more stringent by requiring a state exam, as opposed to an on-line test. 

Mr. Besserman discussed the need for utilization of localized engineers instead of remote assessors, because use of the same vendor under different circumstances typically leads to a pre-determined—and thus, unfair—outcome. 

General Milligan responded that the Task Force will put “considerable pressure” on Citizens to adequately train and deploy its 6,300 contracted adjusters this year, if needed.  General Milligan and Representative Robaina asked Mr. Loftin to report back at the next meeting on June 28th as to the training materials and procedures for adjusters and how that is to be effected, inasmuch as the 2007 hurricane season has already begun.  Mr. Loftin indicated that of the newly-contracted adjusters, approximately 25% are Florida-based, 25% are Texas-based and 50% are of mixed origin.  It was also generally agreed upon by the Task Force that insofar as replacement value, rebuilding to Florida Code (generally more expensive) is part of making a proper adjustment in Florida, and that adjusters should be familiar with the requirements of the Florida Building Code. 

Another public adjuster gave testimony as to his concern with Citizens adjusters and employees repeatedly losing multiple copies of vital documents related to claims.  (This concern was echoed by every speaker who testified).  He also inquired about Citizens’ mediation policy, saying that Citizens seems to reject appraisals, even those given by its own appraisers.  Also, adjusters seem to have no concern for whether a case is settled, leading to a possible conclusion that Citizens may have a policy not to settle under any circumstances and to repeatedly delay the outcome using any method possible.

Mr. Loftin related that in 2004, Citizens only had two employees in its catastrophe department.  In 2005, it had only four employees.  Now, it has a “Claims Resolutions Team” headed by Curtis Hutchins.  Mr. Loftin gave Citizens’ phone number and asked for anyone in attendance to call him personally if he or she notices any abnormalities in the mediation process.

Representative Robaina asked whether the Resolutions Team has been tested.  The answer was that the Team has not yet been tested.

An attorney currently handling multiple lawsuits, including class actions against Citizens, next testified.  He indicated that Citizens staff was not properly using the Xactimate estimating software, and that an estimate for the Florida Keys, for example, used Miami-Dade, as opposed to Monroe County zip codes, thereby resulting in a fractional value for the real replacement cost of a Keys-based structure.

He also accused Citizens of underpaying its policyholders by $50 million throughout the course of two hurricanes by not paying the cost of building permits.  He also said that Citizens is not paying full value on higher damage claims—those that receive “substantial damage” notices.  Calling for “transparency” in Citizens operations, the attorney also said that Citizens is not fairly notifying policyholders that they can deposit a Citizens claim check and still file a supplemental claim.  Also, he indicated that Citizens is not reimbursing fees for building code upgrades.  He then offered to allow Citizens free access to his on-line software program that stores images and replacement values of personal items.

The Task Force concluded the meeting with a discussion about what constituted the definition of an “unpaid claim.”  Based upon the testimony heard, the Task Force felt that there was substantial probability that the “unpaid claims” number previously given by Citizens could be misleading.   The Task Force asked Citizens to provide a complete listing of open claims for review by the next meeting, scheduled for June 28 from 9 a.m. to 4 p.m. in Tallahassee.

To read news coverage of the June 19 Task Force meeting, click on the headlines below:

Insurer takes heat at hearing

Citizens Insurance task force gets an earful about claims

Citizens officials say insurer better prepared this season

Claims brewing long after storms

 

Should you have any questions or comments on the above, please do not hesitate to contact this office.