89645, 69BER06-2 - Florida Administrative Rules, Law, Code, Register

Home

Florida Department of State and Division of Library and Information Services

Notice: 89645

Notice of Emergency Rule

Department:

DEPARTMENT OF FINANCIAL SERVICES

Division:

Division of Insurance Agent and Agency Services

Overview

RULE:

69BER06-2

Public Adjusting of Insurance Claims from Hurricane Wilma

SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE:

The Department of Financial Services hereby states that the following circumstances constitute an immediate danger to the public health, safety, and welfare: This emergency rule is necessitated by the property damage resulting in Florida from Hurricane Wilma, Florida’s eighth hurricane in 15 months, which came ashore in Florida at 6:30 a.m. ET on October 24, 2005, as a category 3 hurricane near Cape Romano, 22 miles south of Naples. Hurricane Wilma came ashore with sustained winds up to 125 miles per hour. It remained a category 2 hurricane as it traveled across the entire southern peninsula of the state with winds of up to 100 miles per hour. The Governor of Florida declared a state of emergency (Executive Order # 05-219). The President of the United States signed a disaster declaration to provide federal disaster assistance to the damaged areas.
According to information reported to the Office of Insurance Regulation by insurance companies, 836,408 insurance claims were filed by Florida residents as a result of Hurricane Wilma. Due to the huge number of claims, over half of these claims have not yet been settled by insurance companies and 345,297 claims have not even had damages assessed by the insurer’s claims adjuster. These figures show that the emergency created by Hurricane Wilma continues to impact a large number of Floridians.
Excessive public adjusting fees are a source of injury to the public health, safety, and welfare by substantially impairing the financial ability of insureds to effectuate repairs to damaged property in a timely fashion, to commence or complete repairs, or to make proper and adequate repairs meeting building code requirements. In order for complete rebuilding to occur, insurance proceeds cannot be eroded by unreasonable public adjuster fees. As a result, there is a need to limit the fees imposed by public adjusters to a reasonable level. This rule limits fees charged by public adjusters to 10 per cent of the amount of the insurance policy proceeds paid to the policyholder.
The rule also contains provisions relating to required contract terms and other ethical requirements. These provisions are reasonable and necessary based on the Department’s experience with public adjuster abuses after prior hurricanes. The Legislature recognized, in Section 626.8698, Florida Statutes, that the interest of the public demands that public adjusters be prohibited from “soliciting or otherwise taking advantage of a person who is vulnerable, emotional or otherwise upset as a result of trauma, accident or similar occurrence…” Hurricane Wilma has placed a great number of people in a state of vulnerability, including many Floridians who live and work in areas previously impacted by Hurricane Rita, Hurricane Katrina, and Hurricane Dennis in the three months prior to landfall of Hurricane Wilma, as well as the four hurricanes which struck the state in 2004. The emotional stress of claimants may lead them to make imprudent decisions in the context of contracting with public adjusters.
In consideration of the emergency conditions that continue to exist, and given the Department’s responsibility to protect the public interest, including insureds, and implement the Insurance Code, an emergency rule is necessary.

REASON FOR CONCLUDING THAT THE PROCEDURE IS FAIR UNDER THE CIRCUMSTANCES:

The Department of Financial Services believes that adopting an emergency rule is the fairest method to protect the public because the nature of the destruction caused by Hurricane Wilma requires an immediate response. The conditions from Hurricane Wilma will require the Department to exercise its authority to provide protection to consumers from unethical conduct of certain public adjusters. The provisions of this rule provide needed guidance to public adjusters. A Department bulletin addressed to all licensed public insurance adjusters would reach them, but would not be legally binding. In addition, the Department has initiated permanent rulemaking for some of the provisions of this and previous emergency rules for public adjusters in the aftermath of hurricanes. A Notice of Proposed Rule Development was published in the Florida Administrative Weekly on October 21, 2005. The Department plans to publish a Notice of Proposed Rulemaking in the February 9, 2006, issue of the Florida Administrative Weekly.

SUMMARY:

SUMMARY OF THE RULE: This emergency rule adopts emergency ethical standards to be applied to claims resulting from Hurricane Wilma. The rule limits public adjuster commissions to a maximum of 10% of insurance proceeds regardless of whether the risk is residential or commercial. The rule also prohibits public adjusters from requiring, demanding, or accepting payments prior to settlement of a claim. The rule requires certain standards for public adjuster contracts to reduce risk of deception. The rule establishes ethical standards to avoid incompetence, conflict of interest, or deception. The rule also establishes a 14-day rescission period for public adjuster contracts. Additionally the rule prohibits public adjusters from entering into a contract to adjust a residential property claim that has been declared a total loss, unless the public adjuster services can reasonably be expected to benefit the claimant.

THE PERSON TO BE CONTACTED REGARDING THE EMERGENCY RULE IS:

Barry Lanier, Chief, Bureau of Investigation, Division of Agent and Agency Services, Department of Financial Services, 200 East Gaines Street, Tallahassee, Florida 32399-0333, (850)413-5600

PRINT PUBLISH DATE:

2/10/2006 Vol. 32/06

OVERSIGHT COMMITTEE:

Joint Administrative Procedures Committee
Florida Administrative Law Central Online Network (F.A.L.C.O.N.)

RELATED COURT CASES:

Division of Administrative Hearings

FEDERAL eRULEMAKING
WEB PORTAL:

Regulations.gov

HOW TO LINK TO
THIS NOTICE:

http://flrules.org/gateway/ruleno.asp?id=69BER06-2&PDate=2/10/2006&Section=4

REFERENCE MATERIALS:

No reference(s).

Under Florida law, E-mail addresses are public records. If you do not want your E-mail address released in response to a public records request, do not send electronic mail to this entity. Instead, contact this office by phone or in writing.