Florida lawmakers are being asked to license property insurance umpire and appraisers. While it is uncertain whether House Bill 79 will pass and become the law of the State of Florida, the insurance and banking committee voted 10 to 3 to let the bill continue on to the next committee stop.
Appraisal is an alternative dispute resolution sometimes used to determine the outcome of a claim where there is a disagreement over the amount of loss. Other posts on this topic are numerous, including:
- Insurance Appraisal Called "Almost Perfect Method" of Alternative Dispute Resolution
- Can Appraisal be Rejected if There is a Dispute Over the Scope of Loss?
- Appellate Court Affirms Trial Court Order Compelling Appraisal for Supplemental Hurricane Claim
The appraisal process requires the policyholder to have a representative appraiser and the insurance company to assign an appraiser. Both must be disinterested. The third member of the panel is the neutral umpire. When two members of the panel agree, the decision is a binding appraisal award on the claim and sets the amount of the loss subject to the policy.
The Windstorm Insurance Network already has in place a well-respected certification program for both umpires and appraisers, and while the certifications are not mandatory, the courses are extremely popular.
This bill proposes to require that only certain persons with specific qualifications could act as an appraiser or umpire.
As drafted, the bill requires licensure of appraisers and umpires and adds many more regulations that are currently not part of the law or any insurance policies. You can read the bill here.
Introduced by Republican house member Frank Artiles, you can watch his introduction of the bill to the Insurance and Banking Committee by clicking here.
Advocating to be pro-consumer, Artiles brings this, bill but with all of the property insurance issues in the State of Florida, the question is why the push to change the law on appraisal at this juncture?
I can think of many other laws that need changing!
Is this appraisal certification a request coming from insurance companies? Considering appraisal is not the way most claims are resolved, what protections will this bill offer? Can’t a Florida insurance form be used instead?
Appraisal was more commonly used in the past and was a frequent way claims from the 2004 and 2005 hurricane losses were resolved, but many carriers have either removed this policy provision or they have changed it so the insurance company never really has to agree to the process. Yes, that is right, many insurance companies no longer even offer appraisal in the property insurance policy.
So what happened to all these companies that removed the appraisal provision? The companies still have many disputes but the policyholders have very limited recourse. Take away the alternative dispute resolution process and more lawsuits are brought. This is no surprise and the insurance companies knew this would be the case, but they didn’t care then. In Florida, suing your own property insurance company and prevailing also means an award of reasonable attorney fees. Therefore, the educated guess is that insurance companies want a way out of litigation again. There are two ways to avoid being brought to court. 1. Go to appraisal or 2. Properly pay the claim.
My guess is that some carriers want to try option number 1 again but they want to stack the deck or have a way out if things don’t go as they anticipate. Adding more statutory regulations will give everyone something to argue about and will be another road block to a prompt payment of a claim.
The final form of the bill may be a great law for Floridians or it may be a confusing mess. Only time will tell but this is a bill we will be watching. It was made clear at this committee stop that the bill would be getting some amendments and significant changes before it is up for a vote on the floor. Stay tuned.
