The recently filed and soon to be heard proposed Florida insurance laws noted in yesterday’s post, Breaking News—Florida Senate Proposes New Insurance Legislationbelieves that Steve Badger generally agrees with this proposed wrongful-claims practice:
Altering or altering an insurance adjuster’s report without including in the report or as an addendum to the report a detailed listing of all changes made to the report and the identity of the person who ordered each change. Any change that has the effect of reducing the estimate of loss must include a detailed explanation of why such a change was made;
These proposed laws can be traced to the work of Washington Post journalist Brianna Sacks whose article I noted in Insurance company̵7;s corrupt claims culture exposed by Washington Post. My impression is that parts of the proposed legislation are aimed at Florida insurance company executives who are skimming money from Florida insurance companies, as reported by Tampa Bay Times journalist Lawrence Mower in Florida Insurance Company Execs Saw Big Payouts in No-Hurricane Years.
I was on a Zoom conference for the American Policyholder Association Board of Advisors when Mathew Mulholland sent me a link to Steve Badger’s previous answer to Washington Post article:
My response to the 7 public adjusters, 5 policyholder attorneys and 2 roofing contractors who all sent me a link to yesterday’s Washington Post article….
‘Yes, I saw that.’
I will say the same thing I wrote several weeks ago when this problem was first reported….
If these Florida insurance companies changed the independent adjusters factual observations of what they found to be damaged and then used those factual changes as the basis for the claim sent to the insured, then that is wrong. I can understand the claim that such behavior could be fraudulent.
However, if those insurance companies only applied their insurance coverage to the actual findings of the independent adjusters, I have no problem with an insurance company changing an IA’s estimate to match the coverage provided by the applicable insurance. Of course, an insurance company is only liable for damages covered by its policy.
That said, making these changes and leaving the estimate on the independent adjuster’s letterhead is not a preferred practice. But I wouldn’t call it a scam.
The best practice would be to revise the independent adjuster’s estimate to match the available coverage and put the revised estimate on the insurance company’s letterhead. Then send both estimates to the insured, one showing everything found to be damaged and one showing what damage is actually covered by the policy.
I keep telling people that some insurance defense attorneys have the heart and enough guts to speak their mind about the importance of “good faith” claims practices. We should listen carefully to and understand those who work for the insurance claims industry, even if we disagree. Many are ethical and care deeply about making the insurance product work for society.
A bill analysis and tax impact statement was published yesterday, and it may be easier for many to read to gain an understanding of what the proposed law does. It notes that the proposed law:
Prohibits authorized insurers and excess insurers from canceling property insurance during pending claims until repairs are completed;
Requires citizens to cover property with open claims handled by FIGA (Florida Insurance Guaranty Association);
Prohibits the Office of Insurance Regulation (OIR) from waiving its review of insurance forms for three years for any insurer that has violated the Insurance Code;
Provides that the prohibition against applying any other deductible under the policy if a ceiling deductible is applied includes all other losses to the property caused by the same covered peril.
Fees for the time period for filing a property insurance claim during an insured’s active duty military service; and
Clarifies legislative intent Chapter 2022-271, Laws of Florida, enacted during Special Session A in December 2023, (SB 2-A)  on property insurance) shall not be interpreted as impairing any right under an insurance contract that entered into force on or before the entry into force of this chapter law (December 16, 2022).
In terms of claims handling practices, the proposed law applies:
Requires OIR to ensure that liability insurers follow proper claims management practices by following specified best practices
Creates a 60-day prompt payment law for non-PIP motor vehicle insurance claims similar to the prompt payment law for residential property insurance claims;
Requires insurers to annually submit their claims manuals to OIR and certify that the manual conforms to common and customary industry practices for claims management; and
Strengthens the Insurance Unfair Trading Practices Act by:
o To prohibit changing or altering an adjuster’s report without including a list of changes, who made the change, and an explanation of a change that reduces coverage; and
o To prohibit the payment of bonuses to officers and directors while an insurer is impaired or insolvent.
The first hearing on this bill is tomorrow morning in Tallahassee.
Courage is resistance to fear, mastery of fear, not absence of fear.
– Mark Twain