Consumer eViews
FLORIDA CHIEF FINANCIAL OFFICER TOM GALLAGHER'S WEEKLY NEWSLETTER

Volume 1, Number 35, August 30, 2004          

Twelve years ago this month, Hurricane Andrew hit Homestead and became the costliest natural disaster in U.S. history. I served as Florida's Insurance Commissioner when Hurricane Andrew made landfall.

Sadly, on this anniversary, thousands of Floridians again are suffering the aftermath of another catastrophic storm.

On August 13, Hurricane Charley mapped a destructive course from Sanibel Island through Fort Myers, Punta Gorda, Arcadia, Lakeland, Orlando and Daytona Beach.  The destruction is overwhelming, and so are the emotions and hardships those residents and business owners are facing.

But there is good news.  Because of what we learned from Hurricane Andrew, the victims of Hurricane Charley can look forward to rebuilding their lives and their businesses more quickly and with more coordinated assistance than before.

After Hurricane Andrew, it took weeks for relief supplies to be delivered and utilities to be restored. Fraud and price gouging were rampant.  And, it was months before any reliable estimates were available on damages, both insured and economic. 

This time, truckloads of water, food and other relief items were on the way before Hurricane Charley came ashore.  Utility companies were immediately working to restore power, and recovery crews were removing trees and debris within hours of the storm’s landfall.  Insurance specialists were dispatched the next day to expedite the filing of insurance claims, and teams of investigators were on-scene, creating a visible force against any would-be scam artists. 

Perhaps more importantly, the response and coordination among federal, state and local officials has been tremendous.

Another stark contrast between Hurricane Andrew and Hurricane Charley is that Florida’s insurance industry is better prepared financially.

In the years before Hurricane Andrew, residential and commercial development had popped up along our shorelines and in our cities and towns.  Every home and business was in search of property insurance protection and insurance companies were issuing policies hand over fist to keep up with the demand.  At the time, Florida’s property insurance market was one of the most active and competitive in the nation.

In Hurricane Andrew’s wake, companies that took in $11 billion in premium the previous 20 years paid out $16 billion in insured losses, leaving over one million homeowners nearly stranded without insurance coverage. 

Today, insurance companies are backed by a $15 billion Florida Hurricane Catastrophe Fund and are reserved to handle up to a $50-billion storm.  An insurer of last resort is also in place. Citizens Property Insurance Corporation provides insurance to those with nowhere to turn to for coverage.
Undoubtedly, we will learn new lessons from Hurricane Charley.  But because of what we learned from Hurricane Andrew -- that insurance companies, individual citizens, and government officials at all levels are responsible for preparing for the immense costs of a major natural disaster -- we can all look forward to a faster recovery from Hurricane Charley.  

                                      -- Tom Gallagher


Several weeks after category 4 storm Charley caused the deaths of 25 people, an estimated $7.4 billion in insured losses and nearly 150,000 people to ask FEMA for assistance, a community prayer service was held for residents in Port Charlotte. Muslim, Jewish and Christian religious leaders gave inspirational talks to the 600-plus residents, and Franklin Graham, evangelist son of Billy Graham, delivered the keynote  message.

My thoughts and prayers are with the victims, volunteers and professionals who are working to make this recovery as efficient and effective as possible.

 My best,     

                                                                              -- Tom Gallagher

 


GALLAGHER GIVES HURRICANE CHARLEY STATUS REPORT

Florida’s Chief Financial Officer Tom Gallagher today joined area legislators, including incoming House Majority Leader Andy Gardiner, in a tour of storm-affected areas in Orange County and provided an update on the Department of Financial Services’ response to victims of Hurricane Charley.

“Local, state and federal officials, in addition to the many volunteer organizations, should be applauded for their quick and effective response to Hurricane Charley,” said Gallagher, who served as Insurance Commissioner during Hurricane Andrew.  “Storm victims need all the help they can get to start rebuilding their homes and lives, and we’re here to help.” 

Gallagher’s update followed a tour of storm-damaged areas and a briefing with county officials, including Orange County Commission Chairman Richard Crotty. 

“For storm victims, the Department of Financial Services is focused on ensuring companies quickly pay claims, investigating allegations of fraud and assisting the more than 15,000 Floridians who have called for help since the storm struck,” Gallagher said.

“CFO Gallagher’s presence underscores the great partnership between state and local authorities to expedite the recovery process,” said Representative Gardiner.

Also Gallagher joined Florida Select Insurance Company President Mike Lefler, who announced a $50,000 donation to Volunteer Florida, a state-coordinated consortium of volunteer organizations.  The donation will go directly toward recovery efforts.

The Florida Cabinet approved a measure recommended by Gallagher to impose a 60-day grace period on premium payments and nonrenewals for homeowners insurance, in the aftermath of Hurricane Charley.  Gallagher asked Governor Jeb Bush and other members of the Florida Cabinet, which also serves as the state’s Financial Services Commission, to authorize the measure giving the hardest-hit storm victims time to recover and file insurance claims, without having to worry about losing coverage.

The Cabinet unanimously approved the measures, which extend to storm victims in Brevard, Charlotte, DeSoto, Hardee, Lake, Lee, Orange, Osceola, Polk, Sarasota, Seminole and Volusia counties, which have been declared as substantially affected counties.

For storm victims who will need extensive repairs to their homes, Gallagher also proposed an amendment to the emergency rules granting an additional 60-day moratorium on insurance cancellations following the completion of home repairs.

Gallagher also limited public adjuster fees to no more than 10 percent of the claim payment, noting in the case of a total loss that no fee should be charged.  He also banned adjusters from requiring any up-front payment.

Gallagher reminded victims of Hurricane Charley that the department is available to assist affected Floridians over the phone or in person.  Some 20 disaster recovery sites, manned by consumer specialists, are located in 10 counties. Consumers calling 1-800-22-STORM (227-8676) or visiting a mobile location can verify that an adjuster or agent is licensed, get help filing an insurance claim, verify a contractor has workers’ compensation coverage and more.

The department also has teams of investigators on the ground investigating reports of any unlicensed adjusters, inappropriate adjuster offers or contractors working without workers’ compensation insurance. 

In addition, Gallagher has asked banks and credit unions to consider increasing credit card limits and credit lines, reducing or eliminating late fees on loans, granting temporary loan payment extensions, allowing customers to skip a loan or credit card payment, expediting loan applications, and waiving ATM and check-cashing fees for storm victims, even if they are not accountholders.

Additional information is available at www.MyFloridaCFO.com .


CFO GALLAGHER ANNOUNCES ARREST OF UNLICENSED ADJUSTER, WARNS REPORTS HAVE LED TO SEVERAL INVESTIGATIONS

Florida’s Chief Financial Officer Tom Gallagher announced that an unlicensed adjuster seeking contracts with victims of Hurricane Charley was arrested on Sanibel Island.  He also warned that the Department of Financial Services is investigating reports of other unlicensed adjusters working in storm-devastated communities in central and southwest Florida.

“It is unfortunate, but disasters bring out the best and the worst in people,” Gallagher said. “Storm victims must be sure that they are dealing with a legitimate adjuster and verify that by calling the department’s storm helpline.”

Gallagher, who was Florida’s Insurance Commissioner when Hurricane Andrew struck in 1992, said he hopes that the quick and visible mobilization of department fraud investigators to storm-damaged communities will work as a deterrent to unlicensed activity.

Richard Viera, 36, of 7244 Swan Lake Dr., Ft Myers, was arrested  on one count of operating without being licensed as a public adjuster.  Viera was soliciting business for Public Insurance Adjusters, a Florida corporation with an address in Miami.  He had recently relocated to the Ft. Myers area from Miami.The department’s Bureau of Agent & Agency Investigations, working with the Division of Insurance Fraud and the Sanibel Police Department, initiated the investigation after receiving information from homeowners in the Iona Gardens area of Sanibel Island that they had received promotional fliers from Viera offering to help them file insurance claims.  Investigators learned that Viera had entered Sanibel Island daily since Monday, and Viera allegedly admitted that he had negotiated other contracts in the area.  Investigators are following up with those property owners. 

Gallagher last week issued an emergency rule allowing claimants 14 days to back out of any contract with a public adjuster.  He also capped public adjuster fees at 10 percent of any claim payment, and ordered that public adjusters cannot require any up-front payment.  Any policyholder who has a question about their insurance adjuster should call 1-800-22-STORM.


GALLAGHER AND BRONSON JOIN SEARS, UNITED WAY OF FLORIDA, K.I.D.S, INC., FOR HANDS-ON HURRICANE RELIEF

Florida’s Chief Financial Officer Tom Gallagher and the state’s Agriculture and Consumer Services Commissioner Charles Bronson joined Sears, Roebuck and Co., United Way of Florida, and Kids in Distressed Situations (K.I.D.S) in announcing that more than $1 million of merchandise and funding will be donated to individuals, families and communities who were devastated by Hurricane Charley.

“Storm victims need all the help they can get to start rebuilding their homes and lives,” Gallagher said.  “This incredible donation provides immediate, direct assistance to Florida families.”

Added Bronson: “For the countless victims of the hurricane who lost their homes and have been able to salvage few, if any, personal belongings, this contribution will be invaluable.”

 

The contribution, provided through the Sears American Dream Campaign, includes: 

  • Sears is providing $225,000 in children’s apparel, Lands’ End is providing $450,000 in men’s and women’s apparel and Sears stores located in Miami, Orlando and Tampa are providing $200,000 to go toward relief efforts.

  • Sears is providing United Way of Florida with $100,000 worth of gift cards so impacted families can purchase items needed to rebuild. Families will be identified by United Way of Florida as part of their disaster response and recovery efforts.

  • Sears and its vendor-partners are donating socks, sleepwear and undergarments for impacted residents along with rakes, shovels and supplies for relief workers valued at $100,000.

  • Sears associates and retirees are volunteering in the neighborhoods and assisting in the sorting and distribution of donated clothing.

The Sears American Dream Campaign is a $100 million community commitment to strengthen families, homes and communities. For more information visit the Web site at http://www.searsamericandream.com

Other campaign partners include the United Way of Florida and K.I.D.S., Inc., a national charity that distributes donated juvenile products, clothes, toys, shoes, beds, books, art supplies and other children’s products to non-profit agencies. 


GALLAGHER REMINDS HURRICANE VICTIMS HOW TO SEEK HELP FOR INSURANCE QUESTIONS AND PROBLEMS

Florida’s Chief Financial Officer Tom Gallagher reminded victims of Hurricane Charley that the Department of Financial Services is available to assist affected Floridians over the phone or in person.

“Our hurricane hotline remains available at 1-800-22-STORM,” Gallagher said.  “Whether you need help contacting your insurance company, filing a claim or resolving a complaint, DFS staff are on the ground in the impacted communities ready to help.”

Immediately following the storm, Gallagher deployed the department’s Mobile Response Unit to set up a base of operations at 24123 Peachland Blvd., Publix shopping center, in Port Charlotte.  The department now has consumer specialists at an additional 13 locations in 10 counties.  Consumers calling 1-800-22-STORM (227-8676) or visiting a mobile location can verify that an adjuster or agent is licensed, get help filing an insurance claim, verify a contractor has workers’ compensation coverage and more.

The Department of Financial Services also has teams of investigators on the ground investigating reports of any unlicensed adjusters, inappropriate adjuster offers or contractors working without workers’ compensation insurance. 

Gallagher also said he plans to ask Governor Jeb Bush and other members of the Florida Cabinet, which also serves as the state’s Financial Services Commission, to co-authorize a 60-day insurance premium grace period and moratorium on non-renewals at tomorrow’s Cabinet meeting.

Gallagher will ask to extend these measures through October 15 to storm victims in Brevard, Charlotte, DeSoto, Hardee, Lake, Lee, Orange, Osceola, Polk, Sarasota, Seminole, and Volusia counties, which have been declared as substantially affected counties.

In addition, Gallagher is asking banks and credit unions to consider increasing credit card limits and credit lines, reducing or eliminating late fees on loans, granting temporary loan payment extensions, allowing customers to skip a loan or credit card payment, expediting loan applications, and waiving ATM and check-cashing fees for storm victims, even if they are not accountholders.

A list of the sites manned by insurance consumer specialists follows. 

Disaster Recovery Centers As of 8/22/04

 

CHARLOTTE COUNTY              
Harold Recreation Center, 23400 Harold Ave.,Port Charlotte

Status:  Open

 

LEE COUNTY
Lee County Public Works, 1500 Monroe St.,   Fort Myers

Status:  Open

 

LEE COUNTY
Germain Arena, 11000 Everblades Pkwy, Estero

Status:  Open

 

LEE COUNTY
Fisher of Men Lutheran Church, 10360 Stringfellow Road, Pine Island           

Status:  Will open 8/24/04

HARDEE COUNTY
Hardee County School Board Parking Lot, 1001 North highway 17, Wauchula

Status:  Open

 

HARDEE COUNTY
Pioneer Park, 2800 US Highway 17 South, Zolfo Springs

Status:  Will open 8/23/04

HARDEE COUNTY
Migrant Workers Head Start, 5115 Mason-Dixon Ave., Bowling Green

Status:  Will open 8/23/04

DESOTO COUNTY
South Florida Community College, 2251 Northeast Turner Ave., Arcadia
Please Note:  The DRC at DeSoto Middle School has been closed.

Status:  Open

 

HIGHLANDS COUNTY
County Offices, 4505 George Blvd., Sebring

Status:  Open

 

OSCEOLA COUNTY
Osceola Square Mall, Suite 31-B, Kissimmee

Status:  Open

 

POLK COUNTY
Eagle Ridge Mall, Unit 308, 451 Eagle Ridge Drive, Lake Wales

Status:  Open

 

VOLUSIA COUNTY
Sunshine Park Mall, 2400 S. Ridgewood Ave., South Daytona

Status:  Open

 

SEMINOLE COUNTY
Strip Mall,1491 E. State Road 434, Winter Springs

Status:  Open

 

ORANGE COUNTY
Goldenrod Street Building, 1502 Goldenrod Dr., Orlando

Status:  Open

 

 


GOVERNOR, CABINET GIVE STORM VICTIMS 60-DAY GRACE PERIOD ON INSURANCE PREMIUM PAYMENTS, NONRENEWALS

The State Cabinet approved a measure recommended by Florida’s Chief Financial Officer Tom Gallagher to impose a 60-day grace period on premium payments and nonrenewals for homeowners insurance, in the aftermath of Hurricane Charley.
“In the aftermath of Hurricane Charley, storm victims are busy putting their lives back together,” Gallagher said.  “The last thing they should have to worry about is making premium payments or losing coverage.”

Gallagher, who served as Insurance Commissioner during Hurricane Andrew, asked Governor Jeb Bush and other members of the Florida Cabinet, which also serves as the state’s Financial Services Commission, to authorize the measure giving the hardest-hit storm victims time to recover from the storm and file insurance claims, without having to worry about losing coverage.

The Cabinet unanimously approved the measures, which extend to storm victims in Brevard, Charlotte, DeSoto, Hardee, Lake, Lee, Orange, Osceola, Polk, Sarasota, Seminole and Volusia counties, which have been declared as substantially affected counties.

Kevin McCarty, Commissioner of Insurance Regulation, was quick to point out that this action was not in response to any complaints about insurers but was “a proactive step on our part to protect the interests of policyholders.  So far the industry’s response to this disaster has been laudable, and I expect it will continue to be so,” McCarty said.   

For storm victims who will need extensive repairs to their homes, Gallagher also proposed an amendment to the emergency rules granting an additional 60-day moratorium on insurance cancellations following the completion of home repairs.

Last week, Gallagher also limited public adjuster fees to no more than 10 percent of the claim payment, noting in the case of a total loss that no fee should be charged.  He also banned adjusters from requiring any up-front payment.                                    


GALLAGHER URGES FIRE SAFETY IN COLLEGES AND UNIVERSITIES

Advice follows deadly fraternity house fire at University of Mississippi

After learning of an early morning fraternity house fire at the University of Mississippi which killed three students, Florida’s Chief Financial Officer Tom Gallagher, who also serves as State Fire Marshal, is urging public and private colleges and universities in the state to advise students in on-campus housing about the dangers of fire.

In the last two weeks, representatives from Gallagher’s office have been hand-delivering instructional materials to schools statewide, including a fire-safety video message aimed at students living in dorms, fraternity and sorority houses, and off-campus housing.  Gallagher also urged college officials to include fire-safety instruction in orientation classes.

“Thousands of students across the state are returning to college campuses this month, and fire-safety is probably the last thing they’ll think about,” Gallagher said.  “The unfortunate reality is that fire is a very real danger.  That’s why we’ve asked college and university presidents to make fire safety a priority to protect our students.”

Fire safety specialists from the State Fire Marshal's Office also will visit university campuses during Fire Prevention Week, Oct. 3-9, to provide information and answer student questions.

Gallagher offered the following fire-prevention and safety tips:

    If fire strikes, get out and stay out. Wherever you are, follow directions or plans and go to the nearest exit.

    Have a fire extinguisher handy in your kitchen, sleeping area, garage, car and boat.

    Make a fire escape plan. Draw a basic diagram of your home. Consider various fire scenarios and develop actions for a safe escape.

    Keep exits clear of debris and furniture.

    Crawl low under smoke to reduce smoke inhalation and go to the nearest exit.

    Use electricity safely. Replace worn cords and don’t overload cords or outlets.

    Take care with lighted candles and cigarettes. Never leave a candle unattended or near anything that could catch fire.

    Be careful cooking. Things can easily catch fire in the kitchen. Keep the handles of pots turned inward and keep paper and cloth away from the stove.

    Give portable heaters plenty of space and keep drapes, sheets and blankets away. Unplug the heater when you leave the room. 

          The State Fire Marshal’s instructional video message can be viewed online at www.MyFloridaCFO.com/SFM.  


NEW VOICE MAIL STOCK TIP SCAM IS WORTHLESS OFFER

You just checked your voice mail and it seems like the luckiest day of your life.  In an apparent case of mistaken identity, a caller has just given you an inside tip on a sure-fire stock deal.

But before you put your hard-earned savings into that little-known but soon-to-be booming investment, Florida’s Chief Financial Officer Tom Gallagher warns that you should take a second look. You could be about to fall for a new twist on an old con.

“The people behind the messages intend to profit by hyping the stock, driving up its price, then selling and leaving victims with losses,” Gallagher said, and reminded investors to be cautious about any investment.  “If it sounds too good to be true, it probably is.”

“Con artist are always discovering new ways to cheat investors out of their hard-earned money,” Gallagher said.  “I am issuing this warning with the hope of arming Floridians with information to protect themselves.”

Gallagher said the Department of Financial Services and the Office of Financial Regulation (OFR) have received numerous complaints regarding this scam, in which a voice mail message states that the stock price of certain small companies will soon shoot up. The message is intended to sound as if the caller is confiding inside information to a friend.  Voice mail messages are appearing  on home answering machines from coast to coast, according to the Securities Exchange Commission.

If you suspect that you may be the victim of investment fraud, log on to www.MyFloridaCFO.com  to file a complaint on-line or call the Florida Department of Financial Services’ Helpline at 1-800-342-2762.  Please have ready the date and time of the call, the phone number that received the call, the phone number provided for call-back, and the recommended stock.
 


FLORIDA TO RECEIVE OVER $1 MILLION SETTLEMENT WITH DEUTSCHE BANK SECURITIES AND THOMAS WEISEL PARTNERS

Under the terms of settlements announced between securities regulators and Deutsche Bank Securities Inc. and Thomas Weisel Partners LLC, Florida stands to receive over $1 million upon final acceptance of the terms of the agreement, according to Florida's Chief Financial Officer Tom Gallagher and Don Saxon, Commissioner for the state's Office of Financial Regulation. The settlements result from allegations of conflicts of interest at brokerage houses where analysts recommended stocks due to improper influence from their investment banking colleagues.

The announcement follows an investigation of the two firms by a state securities working group, the U.S. Securities and Exchange Commission, NASD, Inc., and the New York Stock Exchange. The settlements are related to the April 2003 Global Settlement that ten other investment banks reached with the state, federal and industry regulators.

Deutsche Bank will pay a total of $87.5 million:  $25 million in disgorgement, $25 million as a penalty for various conflicts of interest, $25 million to fund independent research, $5 million to fund and promote investor education, and $7.5 million for failing to promptly produce e-mail and thereby delaying by over a year the investigation of Deutsche Bank.

Thomas Weisel Partners will pay a total of $12.5 million:  $5 million in disgorgement, $5 million as a penalty for various conflicts of interest, and $2.5 million to fund independent research.

Gallagher said the investigations of Deutsche Bank and Thomas Weisel Partners, together with the 2003 Global Settlement, are part of a comprehensive regulatory effort to reform the relationship between investment banking and research and to manage appropriately conflicts of interest. "Today's settlements represent a significant step in our continuing efforts to ensure that investors are treated fairly and provided with objective research."

Under the terms of the settlement, Deutsche Bank is also required to distribute $2.5 million to the Investor Protection Trust (IPT), which will use the money to fund investor education initiatives on the state and national levels. The IPT is an established charitable organization with experience handling settlement funds and a history of investor education successes.

"These enforcement actions, coupled with pending reforms in the mutual fund industry, should help to restore investor confidence," Saxon said. 


Florida Department of Financial Services
Consumer Services HelpLine
(800)342-2762.