Louisiana policyholders have suffered their share of destructive storms, hurricanes and floods over the past five years. Many of these policyholders need the services of quality restaurateurs and major public policyholders. Recently, Hurricane Ida has led a number of public adjusters to seek advice on work in Louisiana. I tell public adjusters “do not do business as usual and have no conditional agreement.
My first suggestion to any public adjuster doing or considering work in Louisiana is to read Holly Soffer's post, Public Adjusting in Louisiana . She says:
• The law does not allow you to negotiate the claim : The definition of public adjuster does not include & # 39; negotiate or enforce a claim & # 39; which are the words that allow you as a public adjuster to represent your clients in most states. Instead, the law defines general adjustment as: & # 39; (a) Examines, assesses or evaluates and reports to an insured in relation to a first party claim. & # 39; §22: 1692
Note that the law says "report to an insured", not an insurer. Negotiating settlements and contacting insurance companies directly to discuss and evaluate the benefits of damages has proven to be an unauthorized practice. Do these regulations always apply? No, not consistently. The coming storm will, however, provide increased scrutiny, so watch out and think carefully about each communication.
• You can not charge a percentage fee : The law stipulates that: & # 39; A public adjuster can charge the insured a reasonable fee. A public adjuster shall not request or enter into any contract or agreement between an insured and a public adjuster that provides for the payment of a fee to the public adjuster that is dependent on or calculated as a percentage of the amount of all claims or receivables paid to or on behalf of an insured by the insurer and any such agreement shall be contrary to public policy and is invalid. & # 39; §22: 1703
In your contract you can use an hourly price or a fixed fee for your services but remember that such a fee must be "reasonable", which is decided on a case by case basis.
I know that some will simply not accept this and will try to come up with some system to circumvent laws on getting paid on a conditional basis. I suggest that public adjusters read the Louisiana Attorney General's opinion regarding a public adjustment agreement, which states:
A contingency fee is an amount, percentage or otherwise, that is based on the successful outcome of the case for which the service is reproduced. This office considers that the proposed fee schedule is equal to a contingency fee as the fee offered as consideration is directly dependent on the outcome of the funds recovered. Looking at the chart, the public adjuster can earn a $ 10,000 fee if the adjuster restores up to $ 100,000, about 10%. Similarly, if the adjuster restores up to $ 500,000, the adjustment fee would amount to $ 50,000, again $ 10%. We see that the schedule has a percentage-based correlation to the positive outcome of the case, where the public adjuster's payment is 10% of the revenue recovered. to enter into a contract where the adjustment fee is dependent on funds being recovered or calculated as a percentage of the receivable amount. Thus, this quota-based fee scheme would be disgusting for La. R.S. 22: 1210.103, which states that such a contract is contrary to public policy and is invalid.
When the recovery amount affects the amount earned, the fee to be paid is "conditional" on the results. Soffer warns against this by saying that you can charge a reasonable fixed fee or hourly rate for services. The hourly fee can be limited to an amount, but the ceiling can not be linked to a recovery.
There is a case settled this year about a public adjuster that included an illegal 7.5% contingent charge arising from a Hurricane Isaac claim in 2012. 1 The Court noted that the fee had been changed to a fixed fee before the first installment:
It is prohibited for a public adjuster to enter into an agreement with an insured, which prescribes a fee that depends on the size of a claim paid on behalf of the insured by the insurer. La. R.S. 22: 1703 (A). However, the records reflect that the parties later changed the contract so that WorldClaim would receive a fixed fee of $ 150,000.00 instead of a 7.5% contingency fee. Mr Fusco testified that when he learned that the charge was illegal in Louisiana, the parties amended the contract to reflect a fixed charge. The first contract between Renola and WorldClaim was signed on September 4, 2012; at trial, however, Fusco testified that the contingency fee was changed to a fixed fee contract in 2013. Louisiana Citizens' final payment to Renola occurred in 2014. The contract was thus converted long before the final payments were made to Renola. La. R.S. 22: 1703 (A) prohibits a public adjuster from entering into a contract for contingency fees with a customer who is dependent on final recovery. We find that since the contract was converted, the contract between Renola and WorldClaim does not violate La. R.S. 22: 1703 (A). As such, the district court did not abuse its discretion when it denied Louisiana Citizens' motion in limine .
What exactly can public adjusters do and say in discussions with insurance adjusters is confusing after I read about Soffer's blog post again, then the insurance commissioner's bulletin was noted in my latest post, Louisiana policyholders deserve good faith treatment – insurance companies can not ignore insurance companies and should communicate with policyholders . Some might read Soffer's blog and the Insurance Commissioner's literal remarks that public adjusters should not talk to insurance companies, and insurance adjusters should only talk to policyholders and not their public adjusters. The only thing that is clear is that public adjusters cannot negotiate the amount owed with the insurance company and that the agreements cannot be conditional. Louisiana does not work as usual for public insurance practitioners who are used to practicing in states outside of Louisiana.
Thought For The Day
I had nothing to offer anyone but myself my own confusion.
1 PVCA Inc. v Pacific West TD Fund 313 So.3d 320 (La. App. 2021).