In most cases, Public Adjusters (PA) only get paid when their involvement in a claim results in a payment increase. It’s arguable that the main reason policyholders would need a PA is because of the mistakes and mishandling of claims made by the insurance company. It is also safe to say Public Adjusters are the first line of defense for policyholders who need and want a fair claim payout.
With such an important role in the insurance claim process, why are more and more states lobbying for laws and regulations that make it harder for PA’s to do their job?
The answer is easy: it all comes down to money.
Policyholders have two routes to take when their claim is wrongfully denied or underpaid by their insurance company: hire a Public Adjuster or hire a lawyer. Both options require the policyholder to pay additional fees out of pocket that may or may not be recoverable, even if the insurance company acted in bad faith. When the roles of policyholder advocates are limited by additional rules and regulations the insurance company benefits in big ways. One example of such a law is Act 129 in Wisconsin. A version of the initial bill was passed into law on March 3, 2020.
WI Act 129 Aimed At Public Adjusters
Originally, Act 129 was disguised as an additional measure to “protect policyholders” from out of town Public Adjusters – a problem Wisconsin residents had never complained about before. In fact, when Wisconsin Insurance Alliance (WIA) was asked whether there have been any consumer complaints registered with the Wisconsin Office of the Commissioner of Insurance (OCI) regarding public adjusters, and no examples could be provided.
WIA said the legislation was needed to control bad acting public adjusters who had a tendency of leaving consumers with un-finished repairs, and intercepting and absconding with homeowners’ insurance claim payments despite having any proof or prior documentation that this was actually going on.
In reality, the lobbying and fear-mongering done to get Act 129 passed was to keep Public Adjusters and policyholder advocates out of the claims process. According to a state watchdog organization known as the Badger Institute, “legislators are being lobbied by the insurance industry and the national associations that represent insurance adjusters, groups some believe are trying to fence out competition.”
In the end, Act 129 was passed with some major revisions. According to David Miller with Miller Public Adjusters, “the bill was so poorly written in the first place and slanted toward protecting the Insurance industry, the end legislation is far from what is needed to protect Wisconsin property owners.”
What Is Needed To Protect Policyholders?
As a Wisconsin resident, licensed Public Adjuster and victim of insurance claim bad faith, nobody knows more than David Miller about how detrimental Act 129 would have been for policyholders had it passed in its original form.
One of the many valid points he makes in a recent blog post is how the real “bad apples” in the claims process are the Independent and Staff adjusters employed by the carrier whose seemingly routine mistakes cause underpaid claims. Do policyholders need protection in Wisconsin? Yes.
Homeowners insurance complaints related to property damage rose 11% from 2018-2019 according to the report made by the Wisconsin Department of Insurance. 54.4% of all complaints were related to how insurance companies handle claims.
Solution Lies In Better Regulation (Not More Of It)
Fair and equitable claim payments would first require anyone who provides claim services to be properly licensed. This would include Independent Adjusters, Staff Adjusters, and anyone else who would make decisions regarding claim payment, coverage, and damage assessments. This could easily be achieved if states like Wisconsin implemented a universal license that would treat all adjusters as equals.
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