CFO Florida prohibits insurers from altering adjusters’ reports without explanation

Nearly two years after a group of independent claims adjusters alleged that insurers fraudulently altered their claim estimates and misrepresented their policyholders, Florida’s chief financial officer issued an emergency rule prohibiting similar actions in Hurricane Milton claims.

“Any move in a positive direction is a good thing,” said Mark Vinson, one of the independent adjusters who denounced the allegations at a Florida legislative hearing in late 2022.

The rule, issued late Wednesday as Hurricane Milton’s eyewall made landfall near Tampa, prohibits office adjusters from changing initial damage estimates made by field adjusters — unless the revised report shows all the changes, provides a detailed explanation of why the changes were made and include the identity of the office adjuster responsible for the revisions.

Another Florida adjuster who spoke out about the insurers’ alleged practices said the new rule is a partial victory, but more needs to be done.

“I thank (CFO) Jimmy Patronis for responding to the situation to ensure that companies are not changing estimates or reducing prices that they are not entitled to,” said independent adjuster Ben Mandell. “But we still wish they would move just as quickly to arrest the people who were responsible.”

The adjusters, all hired by insurance companies after Hurricane Ian hits Florida in 2022, complained that after turning over their inspection reports to claims management firms, insurers made wholesale changes, lowering repair cost estimates up to 98% without a second. inspection and without consulting the field regulators. All the while, revised estimates that were sent to policyholders kept the field adjusters’ names and license numbers in there in a way that made it appear they claimed the lower total cost, the adjusters said.

This led several angry homeowners to blame the land adjusters.

Patronis’ office could not be reached for comment Wednesday night, but a spokesman said earlier this month that an investigation into the adjusters’ claims was ongoing.

The emergency rule came less than two weeks after CBS News’ “60 Minutes” aired a segment about the adjusters’ allegations. That report gained thousands of views and hundreds of comments online, suggesting it had an impact.

The head of a Florida insurer, Heritage Property & Casualty Insurance, blamed altered reports on software that did not show the names of office adjusters. CEO Ernie Garateix also said that while some adjusters’ reports were revised down, many other estimates were raised, benefiting policyholders.

Patronis’ emergency rule should make up the difference, adjusters said. But it also contains a curious requirement that Vinson and Mandell warned could limit their ability to provide accurate price estimates in some cases.

The rule notes that adjusters must use an electronic estimating program that is updated at least monthly. Only Xactimate, already the most widely used tuning software, offers updates at least monthly, Mandell said.

But Xactimate, owned by Verisk Analytics, doesn’t allow field adjusters to manually adjust the estimated price of some construction services, he said. For example, Xactimate calculates roof replacement at a lower rate because it is based on a low hourly wage for demolishing the roof or removing old shingles. But in reality, most roof demolition work is done by a regular roofing crew, who are typically paid a higher hourly wage than general/demolition workers, Mandell argued.

On the other hand, other estimating software brands can produce lower overall cost estimates than Xactimate does, he noted.

The Order of Patronis can be seen here.

Top photo: Photo illustration generated by artificial intelligence software. (Adobe Stock)

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Florida carriers