By Julie Patel, Sun Sentinel
February 10, 2010
Many homeowners don't fully understand their property insurance policies and are at a disadvantage when negotiating with their insurers about repairs needed after a fire, theft, hurricane or other disaster.
That's the premise behind the public insurance adjusting industry, which has been growing substantially in Florida the past few years – fueled in part by the 2004 and 2005 hurricanes that left policyholders looking for help fighting their insurers.
Public insurance adjusters assess damages, determine what the policy covers, document evidence to support claims and assess what repairs will cost. In Florida, they can charge up to 10 percent of the undisputed portion of hurricane claims and up to 20 percent of the undisputed part of all other claims.
Alex Kokkoris, a public adjuster with Mordecai Claim Service in Lake Worth, said his profession wouldn't be needed if insurers didn't delay, lowball or deny claims.
"Homeowners hire public adjusters because they don't really know what they're entitled to or what the laws are so you hire someone you knows how to debate with the insurance company…They're going to give you as little as possible because their business model is to make as much money as possible," he said "You're paying the insurance company to pay you when you have a claim. Insurance is for protection. It's not to explain your case and beg and plead for a service you're already paying for."
Fort Lauderdale resident Elmando Simms had never used a public adjuster before hiring Mordecai this year. Simms' insurer repaired his porch and garage door after Hurricane Wilma damaged his home in 2005. But water continued leaking in through the roof and Simms' temporary fixes – roof patches and painting the walls – didn't last long.
He hired Mordecai after a friend recommended the company.
"He came around and was very helpful in pointing out stuff," Simms said. "As a layman, you wouldn't really see it yourself."
While they have drawn some praise, public adjusters have also garnered considerable scrunity from regulators and some criticism from insurers for driving up claims costs that can lead insurers to raise rates or drop policies – key problems in Florida's stormy property insurance industry.
State lawmakers imposed restrictions on the fees and advertising practices of public adjusters in recent years and are considering additional restrictions this year.
A study on public adjusters released this month by the Legislature's Office of Program Policy Analysis and Government Accountability found their numbers have grown four-fold in Florida since 2004 -- from 678 to 2,914 last year. The study found that complaints and regulatory actions against public adjusters are "generally low." Complaints – made about on issues such as advertising inappropriately, working without a license and working in a fraudulent way -- fluctuated from a low of 80 in 2004 to a high of 169 in 2008, dipping slightly to 135 last year.
The study also found claims handled by public adjusters take longer in part because they often handle claims insurers and policyholders disagree on. And certain Citizens Property Insurance Corp. policyholders who hired public adjusters received more than eight times more in claims payouts than those who didn't.
Increased payouts are good for policyholders but insurers have another take.
"That tells me not all, but many public adjusters, are causing undue delays. They're coming in and they're inflating their estimates," said Stacey Giulianti, an executive with Boca Raton-based Florida Peninsula Insurance Co. and a member of the Florida Property & Casualty Association, which represents 25 Florida-based insurers. "Insurance companies can miss minor items. You can't be wrong 750 percent of the time."
Insurers say they handle most claims quickly and fairly without the involvement of a public adjuster..
Lawmakers are drafting legislation this year that would bar policyholders from receiving the full replacement costs of their claims until they actually repair the damage.
Some of Florida's restrictions on public adjusters are already more stringent than those in other states, according to the state study. For instance, public adjusters must serve as an apprentice for one year before they can be licensed – something the public adjusters group proposed.
"We wanted higher standards for ourselves," said Paul Handerhan, a board member of the public adjusters group who works for Mordecai. "Every industry has some characters who aren't doing what they're supposed to be doing. Our complaint ratio is very low and overall, we're very effective in getting the insured the claim payment that is due."
Next week, Insurance Consumer Advocate Sean Shaw plans to make legislative recommendations on how to speed up claims – based on several forums he held recently to address complaints from consumers about the process.
Shaw recommends consumers find reputable, licensed public adjusters when needed with complicated claims they need help with. But he said consumers should be clear on what the fee is and what it includes. "There are bad insurance companies out there just like there are bad public adjusters. Most of the time, I'd argue they do the right thing but for those times they don't, you'd sure like to have a public adjuster there fighting for you," he said.
Chief Financial Officer Alex Sink said at a Florida Association of Public Insurance Adjusters meeting in September that more work is needed to regulate public adjusters who go "off the track." Sink's office conducted 540 investigations of public adjusters last year, up from 44 in 2004, according to the state study.
But Sink said the industry plays an important role: "What would we do without public adjusters? Where would people go when they had no other place to turn?"
Julie Patel can be reached at jpatel@sunsentinel.com and 954-356-4667.