Friday, July 6, 2012

Supreme Court strikes public adjuster provision

TALLAHASSEE, Fla. – July 6, 2012 – A provision in a 2008 law restricted the ability of public insurance adjusters to contact homeowners immediately after a storm, but a unanimous Florida Supreme Court struck it down yesterday.

The Florida Legislature passed the insurance industry-backed waiting period for adjusters’ following claims that adjusters took advantage of distraught homeowners after the 2004-2005 hurricanes. The law barred contact between public adjusters and customers for 48-hours following a hurricane, tornado or other major storm.

Backers claimed that the public adjusters increased insurance costs by pressuring homeowners into signing contracts. Public adjusters and their supporters say they were just helping customers receive the full benefits to which they’re entitled.

The state’s high court upheld a 1st District Court of Appeal ruling that found the law, as written, barred commercial speech in violation of the First Amendment of the U.S. Constitution. The court rejected arguments put forth by the Department of Financial Services that contended adjustors’ activities fall outside freedom of speech protections.

“The department’s claim that the public adjuster-initiated contact and solicitation … are conduct – not protected free speech – is unpersuasive,” Chief Justice Charles Canady wrote for the court. “This argument is predicated on the strained reading of the statute advanced by the department. With the rejection of that strained statutory reading, the argument collapses.”

DFS spokeswoman Alexis Lambert said Chief Financial Officer Jeff Atwater’s office would have no statement on the ruling other than that Atwater respects the court and accepts the decision.

Following the 2004 and 2005 hurricane seasons, lawmakers looked at ways to reduce the cost of property insurance, and the state’s insurance industry said the public adjuster limitations would help. Insurers cited cases where they had to pay some dubious claims, blaming public adjusters for persuading homeowners to pursue them.

Based on the insurers’ argument, Florida lawmakers wrote a statute saying: “A public adjuster may not directly or indirectly through any other person or entity initiate contact or engage in face-to-face or telephonic solicitation or enter into a contract with any insured or claimant under an insurance policy until at least 48 hours after the occurrence of an event.”

An insurance industry representative on Thursday said the high court’s ruling was “unfortunate” and may end up costing consumers money as public adjuster fees are taken from the insurance settlement itself.

“CFO Atwater and the Office of Insurance Regulation provide safeguards for hurricane victims that they will be treated fairly by the adjuster dispatched by their insurance company,” said Sam Miller of the Florida Insurance Council. “There is no need for a public adjuster who must be paid by the policyholder.”

Attorneys for public adjuster Frederick Kortum, who challenged the law, said the law bans all types of communication during that time period. Regardless of whether lawmakers intended an all-out ban or not, the result doesn’t fall under the circumstances under which the government can limit speech, the plaintiffs argued.

“As long as the message is not misleading and is concerning a lawful transaction, you’re protected,” said Wilbur Brewton, a Tallahassee attorney who argued Kortum’s case before the high court. “It’s kind of like free speech anywhere, you may not like some of it but we have free speech in the United States.”

Other provisions of the 2008 law, including ethical standards and other regulatory powers granted to the department, remain in place. The Florida Association of Public Insurance Adjusters said there is adequate regulation to ensure consumers are protected.

“FAPIA and its nearly 400 member public adjusters are committed to helping policyholders receive full and fair compensation following damage to their property,” said FAPIA President Harvey Wolfman. “Thanks to this ruling, we can help more policyholders in those critical first hours when they need it most.”

Source: News Service of Florida, Michael Peltier


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