Last week, Chip Merlin posted “Insurance Company Declares War on Public Adjusters.” In this post, you can see a letter sent to one policyholder of Sawgrass Mutual, a mutual insurance company owned by its members. The letter invited insureds to a special meeting where a vote would be held to determine whether policyholders would be precluded from hiring public insurance adjusters.
The special meeting went forward last Tuesday, with a mere 9% of the shareholders voting. The majority (74%) of that 9% voted in favor of eliminating their option to hire a public insurance adjuster in the event of a loss.
Julie Patel, of the SunSentiel, reported the results in her article, “Sawgrass Policyholders Won’t Hire their Own Claim Reps.”
Davie-based Sawgrass, which has about 12,000 policies, is a mutual company so policyholders own the company. The plan – aimed at saving money on claims costs – was approved.
As explained Chip’s post, the agreement violates Florida regulations which prevent insurers from suggesting, as a consideration for obtaining an insurance policy, that policyholders not obtain the help and assistance of a public insurance adjuster after a loss. Chip also gave valuable insight regarding the reasoning behind Sawgrass’ proposition and the benefits that of using public adjuster:
[M]anagement of insurance companies want to gain additional profits and other competitive advantages; by prohibiting policyholders from valuable assistance in the adjustment of a claim, insurance companies increase the likelihood that a policyholder will accept less than the full value of a claim. While there is no guarantee that public adjusters will find coverages and scopes of damage missed by insurance company adjusters, the statistics obtained by the Florida Office of Insurance Regulation suggest otherwise. My own experience is that insurance companies routinely underestimate damage amounts and fail to pay for or disclose coverages available under the policy.
Patel’s article explained that public adjusters also feel that Sawgrass policyholders were not informed about the value of hiring a public adjuster.
[T]he letter did not provide Sawgrass policyholders with the benefits of hiring a public adjuster: to help level the playing field between consumers who may not understand the nuances of insurance policies and insurers with vast resources to fight claims.
The amended bylaws will be provided to the Florida Department of Insurance and the Insurance Consumer Advocate, who is charged with the duty “to represent consumer interests in regulatory proceedings regarding all insurance activities conducted under jurisdiction of the Department of Financial Services and the Office of Insurance Regulation.” It will be interesting to see their reactions.