Public Adjuster, Appraisal Umpire Bill Summaries and Updates

 

On March 11, 2008, the Senate Banking and Insurance Committee (“Committee”) passed two bills resulting from the efforts of the Task Force on Citizens Property Insurance Claims Handling and Resolution (“Task Force”):

• CS/SB 1089—Relating to Insurance Adjusters by Senator Mike Fasano
• CS/SB 1018—Relating to Property Insurance Appraisal Umpires by Senator Mike Fasano

Copies of the bills as amended by the Committee are attached for your review.

A summary of each bill is below.

Public Adjusters
CS/SB 1098 (Senator Fasano)

The Committee Substitute for Senate Bill 1098, which seeks to further regulate public adjusters, is the result of recommendations made by the Task Force on Citizens Property Insurance Claims Handling and Resolution.

Testimony heard by the Task Force resulted in the determination that public adjusters were not properly trained or qualified to represent insureds because they were not conversant with construction, building codes or other technical knowledge critical to adjusting claims. Also, the Task Force found that some public adjusters were charging exorbitant fees.

Originally introduced by Senator Mike Fasano, SB 1098 was revised and passed unanimously on March 11, 2008 by the Senate Banking and Insurance Committee. The Bill currently is awaiting hearing by the Senate Judiciary Committee.

SB 1098 prohibits public adjusters from charging a fee unless a written contract is executed, and further caps fees as follows:

Public adjusters may only charge up to:

• 15 percent on non-hurricane claims
• 10 percent on initial hurricane claims
• 15 percent on re-opened or supplemental hurricane claims

SB 1098 references additional prohibited practices, such as limiting solicitations or offering loans or advances to prospective clients. Also, consumers can terminate a contract with a public adjuster without penalty if done within certain time frames.

The Bill requires all applicants for public adjusters to pass the public adjuster exam, which will be created by the Department of Financial Services (“DFS”). The exam must be passed prior to reinstatement of a suspended license. Further, public adjusters would be required to take continuing education courses specifically designed for public adjusters. The Bill also includes a new type and class of license for public adjuster apprentices.

Under SB 1098, public adjusters are required to sign a statement under oath certifying that estimates in proofs of loss are reasonable and that each proof of loss does not contain any false, incomplete, or misleading information. Any person who, with the intent to defraud, prepares or presents a proof of loss in support of a claim that contains false, misleading or incomplete information is guilty of a felony.

 
Property Insurance Appraisal Umpires
CS/SB 1018 (Senator Fasano)

Committee Substitute for Senate Bill 1018 proposes a new type and class of license for a “property insurance appraisal umpire” under the authority of the DFS. Similar to the public adjuster Bill, SB 1018 also is the result of recommendations made by the Task Force.

After reviewing testimony, the Task Force found that it was necessary to license, regulate and discipline umpires due to the critical role they play in assisting the insured’s and insurer’s appraisers in reaching an agreement as to the cost of repair or replacement pertaining to a property insurance claim.

The Bill provides that after June 1, 2009, no person may act as an umpire for a residential or commercial residential property insurance claim unless licensed by DFS. SB 1018 creates several definitions related to property insurance loss appraisers and umpires, including the terms “appraisal,” “property insurance appraisal umpire,” and “property insurance loss appraiser.”

The Bill authorizes DFS to license, regulate and discipline appraisal umpires, approve classroom courses, collect fees, and adopt rules. The Bill further establishes certain criteria that both umpires and appraisers must meet to participate in the appraisal process, and states that the parties will share the costs for the umpire unless the final award is 50 percent more than the insurer’s pre-appraisal estimate.

The Committee amendments provided for certain exceptions to the license education requirement for retired judges or civil certified court mediators.

Should you have any questions or comments, please do not hesitate to contact Katie Scott Webb at kscott@cftlaw.com