NU Online News Service, July 09, 1:29 p.m.EDT

The Florida Office of Insurance Regulation (OIR) says a recentruling by the state's highest court regarding public insuranceadjusters is not favorable for policyholders.

A three-year battle over when a public adjuster can contact ahomeowner after events such as a hurricane, tornado or sinkhole hasended with the Florida Supreme Court declaring current state law isunconstitutional.

Public adjusters were banned from soliciting homeowners for 48hours after an event.

The OIR says the decision “will have an adverse impact andconsequences forFlorida's homeowners.”

“This legislative provision was enacted to protect homeownersfrom additional cost drivers to their insurance rates, includinginstances of fraud and incentives to increase claim frequency andseverity,” says the OIR in an emailed statement. “Ultimately, allFlorida consumers pay the price in increased premiums when claimsare inflated for some policyholders.”

The ban on contact by public adjusters was approved in 2008 andchallenged by a lawsuit filed against the state Department ofFinancial Services (DFS) by public adjuster Frederick W. Kortum Jr.in October 2009 on the grounds the law violated his constitutionalright to free speech.

The DFS, which licenses public adjusters, implemented andenforced the law.

The Florida Association of Public Insurance Adjusters (FAPIA)countered the OIR's statement by calling the ruling a victory forconsumers and saying the law was an “unfair rule that putpolicyholders at a disadvantage.”

While FAPIA says public adjusters exist to make sure homeownersget fair compensation from their insurers, the insurance industrydoesn't necessarily see it that way.

“There is no need for a public adjuster—who must be paid by thepolicyholder,” says Samuel Miller, executive vice president of theFlorida Insurance Council, a trade group.

Fees for a public adjuster come from the insurance settlement,and that is a problem, says Miller, since many public adjustersinflate claims to cover their expenses.

“We know that goes on,” Miller adds. “And the fact is, insurersdo a good job fairly settling claims. If there is a problem, thestate has an arbitration process. If no agreement is still reached,policyholders can call an attorney.”

The OIR adds: “While most public adjusters provide an importantservice, there are some who will look for unscrupulous ways tosubvert the system and take advantage of homeowners when they aremost vulnerable following a storm or other event.”

The OIR recommends policyholders become familiar with “thecorrect procedure to follow when filing a claim with theirinsurer.”

Legislators have developed other laws targeting publicadjusters, who now face additional scrutiny and limits oncommissions after Senate Bill 408 was signed into law in 2011.

Furthermore, homeowners now have three years to file a claimafter a storm rather than the previous limit of five years.Insurers say public adjusters solicited homeowners and kept claimsfrom the 2004-2005 hurricane seasons flowing to insurers long afterthe storms were gone.

The number of public adjusters has skyrocketed since 2004 whenthere were about 680, according to a report by the stateLegislature's Office of Program Policy Analysis & GovernmentAccountability done in 2010.

There were nearly 3,000 public adjusters in Florida in 2009—morethan any other state the office examined.

According to the report, California restricts solicitation bypublic adjusters for seven days after a disaster and it—along withNew York and Texas—restrict solicitations during specific hours ofthe day.