Our 2014 Public Adjuster Wish List for the Property Insurance Market
It’s been an eventful year for public adjusters and the insurance claims industry. So I want to share my 2014 News Year’s Wish List for the property insurance industry.
- I wish Congress would fix the Biggert-Waters 2012 National Flood Insurance Reform Act. This extremely ill-conceived act of Congress is causing great harm to homeowners all across this country. Remember, an affordability study was supposed to have been commissioned with this legislation but is now two years away according to some accounts in the media. Meanwhile, policyholders who have been in their homes for years (and I am not just talking about high priced homeowners) are hurting because of premium increases and no buyers for their property. Shame on Congress for this!
- I wish for a complete overhaul to the National Flood Insurance Program’s policies and claim procedures. This is another example of Congress and the bureaucrats meddling in the lives of Americans who thought they really had flood coverage. Do you know if you have a flood loss, you must file a proof of loss within sixty days or lose your policy benefits? In other words, you have sixty days to figure out your damages and price the loss out. Yes, I am aware that in some cases they may extend the filing requirement. But Florida recently passed legislation that gives property owners 3 years, which previously was 5 years to determine their damages and file a claim. So why sixty days with the federal flood program? As we have seen with Superstorm Sandy and much lesser flood events, figuring out damages from a CAT loss is no easy task! The list of other things NFIP “DOES NOT” cover or restricts is too long to list here. But believe me, if you have a flood loss, you will payout of your pocket to put yourself back into the position you were in before the loss, not withstanding your flood policy. Having said that, I personally know a lot of carding and dedicated professionals who work for FEMA and the NFIP program. People I consider friends who strive to do their very best to help suffering property owners given the rules and regulations imposed on them.
- I wish this country would start serious discussions on a National Emergency Catastrophic Insurance program with a fund that kicks in when the President declares an area a National Cat Loss environment and gets badly damaged policyholders back on their feet without relying on the fine print of insurance policies and lawyers tying up our civil court system for years arguing about who pays for certain damages or tries to justify excessive payment on behalf of the stakeholders. Interestingly, at a holiday party this past week I was surprised to hear a commercial insurance broker I know suggest this same plan. How could we collectively fund it? He suggested that each property owner would be charged an annual fee as low as $1 per policy.
- Failing a united grass roots consensus on #2 & 3 above, I wish Florida would consider pulling out of the National Flood Insurance Program and establish a State Emergency Cat Flood Program. Have the program pay for actual proven flood damages with real incentives built in to motivate policyholders to improve mitigation or be subjected to a reduced benefit when the next flood happens to the same property. People need help not a flood insurance plan full of loopholes and exclusions, all of which can be changed based on the changing direction of the political winds in Congress.
- Failing to establish #4 above, I wish the financial firms who hold the mortgage on the properties affected provide some relief to property owners given the fast approaching financial storm called Biggert–Waters. So far, the banks and credit unions have been silent. Surely they must realize they cannot bury their heads in the sand and just adjust the escrow accounts in order to collect the increased flood premiums. These folks will reap the benefits of foreclosed properties and no new business for property mortgages if this B-W 2012 is not repealed or modified. If lenders don’t lend and foreclosures rise yet again, our national financial recovery may well be muted.
- I wish the citizens of Florida would think long and hard about the people they elect to govern them. Today’s elections are won or lost on the money raised by special interest groups and negative advertising that is bought with this money. One only has to study the legislation that has come out of Tallahassee in the last five or so years on property insurance to understand this problem. The positions the legislature has taken, which we have witnessed with property insurance, are simply unbelievable. I do however get it; it’s called the last person to speak with the most money wins. The problem with Florida is that the basic risks stay the same while the legislative game (with little concern for enforcement) keeps changing as if it will make a difference. If you disagree, please tell me how things have gotten better for struggling homeowners in this state.
- I wish insurance companies would do the right thing when claims are called in from their policyholders. Why do families have to resort to the media to get the attention of the claim department to release much needed and remember, contractually promised policy benefits. And oh by the way, what happened to the much publicized “POLICYHOLDER BILL OF RIGHTS” that was supposed to consider the Florida insured at their time of need? Maybe the better question is why all these folks had to spend time and money on a multi-day meeting to highlight why a policyholder bill of rights was needed. What happened to helping your insured? After all, they paid a premium for coverage and one would assume some reasonable expectations of some rights following a loss.
- I wish we could have a discussion about fees paid to agents and brokers. It seems the only Florida licensed insurance professionals who consistently are in the cross hairs of the legislature are public adjusters. Now you know how powerful public adjusters are, so Dads and Moms should add this profession to the list of doctors and lawyers their kids should grow up to be! But seriously, I am now told agents can charge up to 22% on flood policies! Boy that should make you feel cheerful and merry along with a good slug of Biggert-Waters this holiday season. I am also told some big name insurance brokers are selling pre-loss services in addition to the fee they charge for getting you coverage for that loss you might have. This is outright conflict of interest and double dipping. Hello! Does Tallahassee see any problems with this or do you even care? After all an election is coming up and no need to upset the campaign funding.
- I wish we had some real honest debate on the risks Florida faces and the fact that certain risks cannot and will not change. The homes and properties are already built in harm’s way all along our coast. Whether a Citizens state run insurance company or a bunch of new start-up insurance carriers cover the risks is not going to change anything. A great deal of rhetoric is out there about the fact that if the big one hits, everyone will have to pay for any Citizens Insurance Company shortfall through assessments. Well my friends, who do you think will pay for shortfalls with all these take-out companies if they fail and are admitted carriers? Yep, every policyholder will pay through the Florida Insurance Guarantee Fund (FIGA) assessment powers that are already in place! If on the other hand your take-out company is not an admitted carrier, then you are in the surplus lines market where there is no safety net, no rules and regulations. So it may be awhile before you see any of your money. How many people in Florida do you think understand the surplus lines scheme?
- I wish to acknowledge the Tampa Bay Times for being all over the flood insurance debacle. Kudos for awarding the “Sour Orange Award” for Florida’s biggest financial folly of the year. I wish they had included the political folks (all of them), the real estate industry, the insurance brokers and agents, the League of Cities, and all of their lobbyists for inclusion in this prestigious award. After all they completely dropped the ball on the flood insurance mess and in my view are the most culpable as they had a duty to watch out for the taxpaying citizens they represent. Remember the old saying--FIRST DO NO HARM.
- I wish all the folks in harm’s way all across this great country and especially in the hurricane zone to not let their guard down but instead make disaster preparedness and recovery a part of their business plan and family discussion. The folks devastated by Super Storm Sandy no doubt have a new height of awareness and respect for emergency managers and their unbiased warnings to prepare and evacuate if necessary. I hope the other residents along the east coast have paid attention and do not let hurricane amnesia set in.
- I wish all of you a safe holiday period, a Merry Christmas, Happy Holidays and a Happy New Year.
Let us know about your New Years insurance related wish by contacting us. We’ll add it to our list and report on any progress as 2014 progresses. Happy New Year all!