Freshman State Representative Frank Artiles, a Public Adjuster, Meets With Florida Insurance Industry Representatives On Concerns, Commonalities

 

Above:  State Representative Frank Artiles

 

Newly-elected State Representative Frank Artiles, a public adjuster, appraiser and umpire by trade, held a teleconference on November 22, 2010, with the goal of introducing himself to Florida insurance industry representatives and other interested parties and discussing their concerns, such as fraud and other issues impacting the property and casualty market. 

A resident of Miami-Dade County, Representative Artiles serves District 119, which includes communities ranging from Sweetwater at its northern tip, to areas of Kendall, Calusa, Three Lakes, Country Walk, Redlands, Homestead and Florida City.

Joined by Paul Handerhan, president of a new insurance advocacy group called “Florida Association for Insurance Reform,” Representative Artiles explained that, through various working groups he has facilitated, he has learned there are ways to compromise on the issues, while advocating for consumers.

“I didn’t come to Tallahassee to represent public adjusters,” he emphasized several times, “I came to represent my district.”

After discussing his background at length, Representative Artiles touched on general Florida insurance issues, such as Citizens Property Insurance Corporation (“Citizens”), which he said puts private insurance companies at a competitive disadvantage, principally because it is immune from bad faith claims.

“I want to protect insurance companies to make sure they do make a profit, because at the end of the day, I am a Republican,” he added.

Representative Artiles also said he wants to “stamp out fraud,” because of its negative impact on the State, as well as on insurance policyholders.

The meeting participants quickly prompted a discussion on claims-related issues and public adjuster fraud.  The subject of insurance-related Special Investigative Unit (“SIU”) personnel also was touched upon.

“There are good public adjusters and bad SIU people,” Representative Artiles said.

In regard to ongoing Hurricane Wilma fraud, Ernie King said that there is no reason insurance carriers should be getting newly reported losses from several years ago, when claimaints have had ample time and opportunity to do so earlier.   

Arson, Mr. King said, is also an issue in certain parts of Florida because of the economic situation.  “When someone buys a house in the foreclosure process for $40,000 and insures it for $250,000, the policy alone motivates them to burn down the house,” he explained.  “We are also limited by the Valued Policy Law.”

Further, because of the way Florida’s laws are written, Mr. King continued, many claims are not technically classified as fraud.

An SIU investigator participating in the meeting said that less than one percent of the claims in his department have been related to sinkholes.

Mr. King warned that the State is in danger of losing more insurance fraud investigators because of budget cuts, which will further compound the fraud issues.

On the subject of public adjusters, he said that it would be good public policy for Florida to instate a requirement that public adjusters must carry errors and omissions insurance.

Together with Mr. Handerhan, Representative Artiles discussed the licensing of appraisers and umpires.  Apparently, many of those who currently hold appraisal and umpire licenses, or “consider themselves appraisers” have been convicted of Medicare fraud and “been literally unlicensed in every aspect.”

Mr. King alluded that SIU investigators should be licensed as stringently as public adjusters and appraisers.  It was pointed out that many of these independent people are not even trained as thoroughly as their counterparts at private corporations.

Mr. King added that, in the context of a claim, the SIU representative doesn’t make an ultimate decision, but has a significant impact on the process.

One meeting participant said that public adjusters canvassing neighborhoods present a danger to policyholders, who have no screening process to determine their qualifications. 

Another meeting participant said he would like to see licensing standards for SIU personnel that are comparable to those applicable to public adjusters and appraisers.  The large disparity in requirements sends mixed signals, he explained.

A spokesperson for the Florida Association of Insurance Agents (“FAIA”) said that his membership would welcome the entry of more private carriers into the Florida market.  Citizens allegedly has been receiving nearly 45,000 applications every 30 days (which is expected to double by the end of next year, it was said) and has been enabled by the government to be substantially competitive by offering rates as much as 60 percent lower than those of private carriers.  The FAIA representative said that his organization will be “addressing the competitive nature of Citizens.”  It also will advocate for ways to prevent policies from going there, as well as methods to provide more takeout opportunities, while “respecting policyholders’ right to maintain their own agent.”

“Citizens is literally eating its cake and hurting the entire industry,” Representative Artiles said. 

Another meeting participant brought up claims-related legislation contained within SB 2044, the comprehensive 2010 property insurance package that was ultimately vetoed by Florida Governor Charlie Crist.  Although the issues of primary importance to the claims industry were addressed in the bill, what ultimately passed was “watered down quite a bit,” the participant explained.

Bob Gorelle remarked that many cases of fraud don’t involve public adjusters, adding that a change in Florida’s replacement cost value (“RCV”) statute has “turned the claims industry on its ear.”  He explained that, because Florida is the only state that requires insurers to pay RCV up front, the law is anti-consumer, since the costs of these payments are passed along in higher premiums.

Representative Artiles went on to say that Florida should adopt an “Arizona-style” law that would mandate a comprehensive inspection prior to selling a home.  The information would be kept in a database and, according to Representative Artiles, would provide a long-term savings for insurers that have access to this type of information.  It also would help takeout companies, he said, which he described as “flying blind” from the outset of assuming a policy.

In regard to whether he intends to personally sponsor an insurance-related bill, Representative Artiles said that he would look toward a legislator with more seniority, but would offer himself as a subject matter expert.

He also remarked that many general contractors are out of work and would welcome the opportunity to be employed as appraisers.

Although no definitive date was set for a future follow-up meeting, Representative Artiles indicated that he would like to schedule these types of calls on an occasional basis to provide a forum to improve the marketplace.

 

Colodny Fass will continue to monitor these activities and provide reports.