The Florida Association of Public Insurance Adjusters joined the National Association of Public Insurance Adjusters on March 11 in filing a lawsuit for a declaratory judgment against the Florida Office of Insurance Regulation (OIR). The complaint, filed in the Circuit Court of Leon County, alleges that the OIR does not have the authority to permit insurance companies to include a policy provision that prevents an insured from using a Florida licensed public insurance adjuster.
According to the associations' lawsuit, the OIR has taken the position that insurers can legally prohibit policyholders from hiring licensed public insurance adjusters as a condition of insurance coverage. The OIR, the associations allege, has "concluded" that such prohibitions do not violate the Florida Insurance Code, inasmuch as the code does not expressly "require" policyholders to retain a public adjuster.
Specifically, the associations allege that the OIR's conclusion is in violation of Section 624.11, Florida Statutes because it removes an integral component of the Code with which insurance companies must comply.
The Florida Insurance Code regulates public adjusters and expressly provides for the services of licensed public adjusters, the associations explain in their complaint. With the exception of attorneys, licensed public insurance adjusters are the only group of people who work on behalf of insured policyholders, and assist in negotiating claims for damage covered by an insurance policy. The associations therefore allege that by allowing an insurance company to include a contractual prohibition against utilizing a public adjuster by an insured, a statutorily recognized and defined consumer protection service is completely eliminated. The associations conclude that this is contrary to Florida law and unenforceable.
The associations claim that they are in genuine doubt as to the rights and as to whether this policy prohibition is lawful and enforceable. The associations assert they need a judicial determination as to their rights and clarity as to whether the OIR has authority to approve this policy prohibition.
The associations are requesting that the Court declare that a policy provision barring a policyholder from utilizing the services of a licensed public adjuster is unlawful and unenforceable.
The OIR has not been served by the associations with the complaint. However, the OIR has indicated that there is a pending administrative proceeding that appears to be related to the allegations in this complaint pertaining to a mutual insurance company's amendment of its organizational documents associated with limitations in the use of public adjusters by members of the mutual insurer. If so, the OIR may very likely argue that this lawsuit is premature and file a motion to dismiss for failure of the associations to exhaust all administrative remedies.
In addition, the OIR is likely to have other substantive defenses to the allegations related to its authority and the scope under which any insurance company can preclude an insured from utilizing a public adjuster.
Accordingly, insurance companies seeking to include contractual prohibitions on a policyholder's ability to retain a licensed public adjuster should continue to track the status of this case.
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