Every year, the insurance lobby, in an effort to remain relevant, choose a topic which they feel will benefit their clients.  It’s their job, after all, to look out for the best interests of the insurance companies.  They get paid an awful lot of money to do so and the insurance industry makes a tremendous amount of money available to them for political donations which also makes the lobbyist more relevant to legislators.  Last year, the Sun Sentinal reported that the insurance industry distributed close to $700,000 in political contributions.  Over 11 million has been contributed to Florida’s political campaigns over the last decade alone - just by the insurance companies.

It’s a sad state of affairs, but its the truth .

So what is this year’s scapegoat topic of why insurance companies after no hurricanes in 5 years MUST raise our premiums?  Sinkholes and those pesky public adjusters who, according to the insurance industry are “bleeding” the industry dry. 

Really?

There are less than 1500 active public adjuster licensees in the great state of Florida which has a population of close to 20 million.  The large majority of people don’t even know what a public adjuster is. 

So the argument being put forth until about two weeks ago, was that sinkhole claims were in large part fraudulent and being fueled by public adjusters.  As an aside - a very small number of PA’s actually handle the specialized sinkhole claims.  They are typically very complicated and require a great deal of experience.  Another reason a homeowner would turn to an expert.  The majority of public adjusters have never filed a sinkhole claim.  A survey recently performed by the Florida Association of Public Insurance Adjusters (FAPIA) revealed that only 6% of the respondent public adjusters have ever handled a sinkhole claim.

The insurance industry asked the Office of Insurance Regulation (OIR) to put out a “data call” sometime in September 2010 to get to the bottom of the alleged problem with sinkholes.  The allegation  made to dozens of media outlets during an editorial board tour by OIR Chairperson, Kevin McCarty was that fraud was rampant and the increase in sinkhole claims could be attributed to the consumer advocates who are licensed by the State to work as public adjusters.  McCarty and others consistently referred to public adjusters as “cost drivers”. 

Well, the study was done on the taxpayers dime.  The result? 

They released their report two weeks ago which found that “From 2006 through 2010, only 203 claims were reported to the Department of Financial Services Division of Insurance Fraud—less than 1% of the total claims reported. The number of alleged fraudulent claims peaked at just over 2% of the total claims reported in 2007. ”

Hey, wait a minute.  What about those evil public adjusters?    Weren’t they responsible for all these allegedly fraudulent sinkhole claims?  Well, apparently not.  Funny how the media didn’t pick up on that fact, though.  Maybe because they put themselves out on a limb repeating the insurance industry mantra “bad public adjusters, bbaaaddddd”.

Is it possible, that insurers will continue to find ways to use public adjusters as scapegoats in Florida’s upcoming legislative session?

The answer, of course, is yes.  Unfortunately, for them, each time they try to smear the honorable profession of public insurance adjusting by spending taxpayer dollars on government funded research and reports - they come up empty.   The same thing happened earlier this year when former representative, Janet Long, commissioned the Office of Public Policy and Government Accountability (OPPAGA) report on public adjusters. 

Why?  Because the problem is not with public adjusters.  If our legislators and law makers would stop listening to the special interests and deal only in the facts - they would realize that there is, indeed, a problem with the insurance industry and also an increase in sinkhole claims.  But the cause is not public adjusters.  The cause, which is very well documented, appears to be related to a number of other issues such as droughts, cold spells, increased building in areas prone to sinkholes and increased water usage and strawberries.  Strawberries?  Yes, but that’s another article.

Floridians live on a bedrock that is supported in large part by the hydrostatic pressure from our underground aquifer.   When that water is drained for use by farmers during cold spells, as it was in January of this year - a large number of sinkholes develop.  Some immediately and some appear more slowly.  You can find this basic information by googling the US Geological Survey and Sinkholes.  It’s scientific fact.

Our lawmakers must look to science, not the insurance lobby, to find an answer to Florida’s  growing sinkhole problem.

Meanwhile, if your home begins to show the signs of sinkhole damage, the insurance lobby would prefer it if you would wait until it is completely swallowed by the earth before making an insurance claim.  And please don’t dispute the insurance company’s decision by hiring a “cost driving” insurance professional to represent you.    According to OPPAGA, if you do, the insurance company will end up paying you over 500% more than what you were originally offered.

But if you don’t call the insurance carrier when the first signs of damage appear, the insurer could potentially accuse you of failure to mitigate damages (a policy exclusion).

It’s the ultimate catch 22 and Floridians are caught in the middle.  Meanwhile, make sure you pay those premiums on time or risk cancellation of the policy you must turn to if the ground beneath your home begins to open up.