A Matter of Great Importance to the Florida Claims Community

July 19, 2010

To All Florida-Licensed Adjusters and Their Employers:

Many of you may not be aware of attempts by the DFS to make significant changes to the Adjuster Code of Ethics by adding specific time frames for claims performance.

In February of this year, the Department modified the Code by adding the following to Rule 69B:220-201:

(f) The adjuster shall provide a complete written claim status update to the client no less than every thirty (30) calendar days beginning from the contract date and shall document the claim file accordingly. The claim status must include any communication received from the insurance company regarding the claim.

(g) The adjuster shall respond to the client's written request for a claim status in no less than ten (10) business days from the date of receipt and shall document the file accordingly.

Also note that 69B-220.201(2)(b) states:

(b) A breach of any provision of this rule constitutes an unfair claims settlement practice.

On behalf on the nearly 25,000 members and constituents of the Associations of WCCP and PCCP, we immediately brought this to the attention of numerous carriers, Third Party Administrators, and other interested parties.

On March 14, 2010, with the assistance of the Florida Insurance Council and others, the WCCP and PCCP Associations objected to such change. A copy of that objection included here.

On June 23^rd, 2010 the WCCP and PCCP Associations received notification of additional changes resulting from feedback provided in March, 2010.

Included here are both the Original Proposed Changes and the Revised Proposed Changes received on June 23^rd. Relevant changes are highlighted in yellow.

It appears that the DFS did remove one of the objectionable sections. They deleted the language previously cited under (f) and replaced and modified the language previously cited under (g), which now states:

(f) The adjuster shall respond with specific information to a written or electronic request for claims status from a party to the insurance policy or the party's designated representative, in no less than fifteen (15) days from the date of the request and shall document the file accordingly.

If you read the entire Notice of Proposed Rule Change, you'll get the clear impression that the bulk of the initiative is geared toward Public Adjusters, and may in fact be directed at the property line of business. However, such a rule change would affect all adjusters and all lines of business.

We are not convinced that there is a need for such a requirement, nor are we convinced that any particular adjuster group has been guilty of claims practices that would require creation of a "rule” to address such a problem. Yet this issue notwithstanding, placement of such a rule in the Adjuster Code of Ethics is totally inappropriate.

The Code of Ethics is meant to address behaviors...right and wrong...and they are subjective in nature. One mess up does not create an unethical practice. However, with such a rule, one mess up would automatically constitute a violation of unfair claims practice and (ignoring the issue of "damages”) a violation of law that establishes "negligence per se”.

Many adjusters, carriers and administrators have been involved in, or have been the subject of, lawsuits by insureds or parties to the insurance contract. Some of these parties are not the ones with whom your companies originally contracted (e.g. an insured's bad faith UM, PIP or Property claim assigned to a plaintiff's attorney, or the "3^rd party beneficiary” of the workers' compensation contract who may arguably be a party to the contract).

Many of us in Florida's property, casualty and workers' compensation industry have been fortunate to serve as expert witnesses for carriers, administrators, and policyholders. We see allegations spawned by rule violations that create terrible exposures when there was really no vice intended. I can assure you that this subsection (f) is not only inappropriate, but is dangerous.

However, notwithstanding the intent and potential relevancy of these proposed changes to claims practice in Florida, placement in the rule governing Ethical Requirements is inappropriate. These proposed changes are not guides for appropriate or inappropriate adjusting behavior(s); rather, they deal with matter of private contract (and may well infringe on the rights of contract between parties), performance measurement, and time requirements for such performance. If indeed there is a legitimate reason for such guidelines, perhaps they should be considered in another area, such as the Unfair Claims Practices Act.

I ask that as many of you as possible show your support for having this requirement pulled from the Code by either writing to Mr. Mathew Guy and Mr. Eric Purvis at the addresses below:

Eric Purvis
Florida Department of Financial Services
Division of Agent & Agency Services
Larson Building, Room 412
200 E. Gaines Street
Tallahassee, FL 32399-0320
Email: Eric.Purvis@MyFloridaCFO.com

Matthew Guy
Communications Coordinator
Florida Department of Financial Services
Division of Agent & Agency Services
Office of the Director
Phone: 850.413.5418 Fax:850.922.3905
Matthew.Guy@MyFloridaCFO.com

...or by sending a delegate to the Friday, July 30^th meeting in Tallahassee to be held at 10:00 a.m. in Room 116 of the J. Edwin Larson Building, 200 E. Gaines Street, Tallahassee, FL 32399

I would also ask that you forward this notice and request to any other influential members of the claims community, i.e. executives, managers, et al. who will be exposed to the dangers of such a rule.