OPPAGA Study:  Public Adjuster Involvement Nets Higher Payments;
Public Adjuster Fees Could Leave Policyholders With Insufficient Funds

Public adjuster involvement in the insurance claims-paying process leads to delays in settlements and the potential that a policyholder is left with insufficient funds to make the necessary repairs that would return his or her home to the pre-catastrophic event status.  Those are two of the important points insurers succeeded in getting the state’s Office of Program Policy Analysis & Government Accountability to include in its just-released report on the impact of public adjuster involvement in insurance claims.

While the report makes no legislative recommendations, it does point to data that shows that both new and re-opened claims filed by policyholders utilizing public adjusters “took considerably longer to close.”

Citing data from the 2004 and 2005 hurricane seasons, the report says when public adjusters were involved a claim “typically took between 32 and 296 days longer than claims without public adjuster representation.”

The report also compared claims filed between March 2008 and June 2009 and found that policyholders generally received larger insurance settlements when represented by a public adjuster. 

“The typical payment to a policyholder represented by a public adjuster was $22,266 for claims filed in 2008 and 2009 related to the 2004 hurricanes.  In contrast, policyholders who did not use a public adjuster received typical payments of $18,659.”

The report also notes that the difference in payments was even larger for claims related to the 2005 hurricanes, “with public adjuster claims resulting in payments that were 747% higher.”

However, the report points out, “Policyholders pay public adjuster fees as a percentage of their settlement,” resulting in a net settlement that is lower and could leave the policyholder with not enough money to make necessary repairs to their homes.

The report also contains an appendix (Appendix B) that gives insight into the opposing views of public adjusters and insurers regarding public adjuster involvement.

For example, public adjusters believe they are the only advocates for policyholders, while insurers note that public adjusters “insulate policyholders from insurance companies and create distrust between the insurance company and the policyholder.”

Public adjusters also believe that recent laws that prevent them from contacting policyholders until at least 48 hours after the occurrence of an event prevents policyholders from their right to be represented.  Insurers say the time limits are necessary to give insurers the opportunity to settle claims before a public adjuster gets involved.

Here is a link to the full OPPAGA report: OPPAGA Report.