In Florida, at least six property insurers are taking their fight with public adjusters to a new level — adding policy endorsements that all but tell homeowners: don’t hire them.
The National Association of Public Insurance Adjusters and the Florida Association of Public Insurance Adjusters have fired back with a lawsuit, arguing that several of the new endorsements violate Florida law.
“They’re unfair to the people who are working for the insureds, and they’re illegal,” Jonathan Zachem, general counsel for FAPIA, said at the group’s conference this week in Orlando. “It’s a clear case of anti-trust and unfair trade practices.”
Zachem was referring to endorsements now appearing in certain excess and surplus policies issued through Velocity Risk Underwriters — a managing general agent for Interstate Fire and Casualty, Lloyd’s of London, and other carriers.
Surplus lines insurers, which face only limited oversight under Florida law, can include endorsements that all but shut public adjusters out of the claims process. But now, four admitted Florida carriers are following suit. American Integrity Insurance, Orange Insurance Exchange, Safe Harbor Insurance, and US Coastal Property and Casualty Insurance Co. have all asked state regulators to approve optional endorsements offering premium discounts to policyholders who agree not to use public adjusters, according to the Florida Office of Insurance Regulation.
“These endorsements allow policyholders to choose whether or not they would like to use a public adjuster in the event of a claim, for a discount on their premium,” OIR Press Secretary Shiloh Elliott said in an email.
Adjusters and FAPIA leaders warn it’s only a matter of time before other Florida property insurers roll out the same kind of restrictions.
This marks the latest push by insurers to force public adjusters out of the claims process. For years, carriers and their allies have claimed that adjusters — who take a cut of the insurance payout — often overstate repair costs. Then in June, Florida’s largest insurer, Citizens Property Insurance Corp., turned up the pressure by removing public adjusters’ names from settlement checks altogether.
Insurers are also finding creative new ways to cut costs — and it’s homeowners who pay the price, outgoing FAPIA President Juan Moya told the conference. He cited endorsements from at least four carriers that slash payments for water-leak claims and limit coverage for matching materials, such as floor tiles, to just 1% of the total area.
Last week, a Florida appeals court threw up yet another roadblock for policyholders and public adjusters — requiring homeowners to submit actual cash value estimates before they can sue their insurers for breach of contract, plaintiffs’ attorneys said.
Public adjusters aren’t standing down. FAPIA recently fired off a letter to Citizens’ executives, demanding they scrap the “dangerous new policy” that keeps public adjusters’ names off settlement checks.
FAPIA and NAPIA have taken their fight to court, filing a lawsuit in Miami-Dade Circuit Court that claims anti-public-adjuster endorsements outright violate the legal rights of adjusters and insureds.
More dynamic and attention-grabbing:
“It is understood and agreed that a condition of this policy is that the named insured shall not hire, engage, retain, contract with, or otherwise utilize the services of a public adjuster, whether or not licensed in the state where the property is located or any other jurisdiction to inspect, evaluate, or adjust any loss covered by this policy,” reads the endorsement in a policy provided by Velocity Risk Underwriters, according to the lawsuit complaint.
“Velocity also threatens that it will not take any steps to investigate, and it does not investigate, the insured’s loss until the insured provides evidence that it has withdrawn from any representation by a Public Adjuster,” the complaint reads. “This requirement is plainly coercive for the insured after a loss, when time and attention to the loss is required right away.”
Speaking at the FAPIA conference this week, plaintiffs’ attorney Chip Merlin warned that the endorsements highlight new questions about how unregulated surplus lines insurers can freely restrict coverage.
“It doesn’t have to be that way,” Merlin said. “State regulators need to look at more financial regulations for surplus lines.”
Velocity Risk Underwriters, owned by Ryan Specialty brokerage since February, did not respond to requests for comment on the FAPIA lawsuit.
