Public Adjuster Moratorium Ruled Unconstitutional by Florida Supreme Court

A 2008 Florida law establishing a 48-hour moratorium on public adjusters was ruled unconstitutional Thursday by the Florida Supreme Court on grounds that it restricted commercial speech.

The decision was a blow to the insurance industry and Chief Financial Officer Jeff Atwater, who appealed a lower court ruling that was unanimously upheld by the state’s highest court. Public adjusters serve as advocates for policyholders while negotiating insurance claims. The overturned law had prevented them from getting involved in insurance cases for at least 48 hours after the occurrence of an event.

The association representing Florida public adjusters applauded the ruling.

“The ban on solicitation is a violation of public adjusters’ free speech rights – and more importantly, an unfair rule that put policyholders at a disadvantage,” said Harvey Wolfman, president of the Florida Association of Public Insurance Adjusters. “Thanks to this ruling, we can help more policyholders in those critical first hours when they need it most.”

Atwater’s office, however, did not quibble with the ruling.

“The office respects the Supreme Court’s authority and its ruling in this case,” said Atwater spokeswoman Alexis Lambert, who added that Atwater’s role in the case was one intended to support consumers.

The insurance industry, however, sided with Atwater’s challenge largely because many commercial insurers provide their own adjusters to assist in claims.

“CFO Atwater and the Office of Insurance Regulation provide safeguards for hurricane victims that they will be treated fairly by the adjuster dispatched by their insurance company,” said Sam Miller, vice president of the Florida Insurance Council, an industry group. “There is no need for a public adjuster who must be paid by the policyholder. Unlike legal fees in lawsuits against insurers, fees for a public adjuster come from the insurance settlement.”

Public adjusters have been held to increased scrutiny in recent years, largely as a result of thousands of claims that drifted in over a five-year period in the aftermath of Hurricane Wilma in the fall of 2005. The scrutiny also has resulted from sinkhole claims in the greater Tampa Bay area that have slammed commercial carriers and the state-backed Citizens Property Insurance Corp.

The Florida Legislature passed the law four years ago to create the waiting period before property owners would be able to receive any information from public adjusters about potential damages in the aftermath of a storm.

“The statute unconstitutionally restricts the commercial speech of public adjusters because it is not narrowly tailored to serve the state’s interests in ensuring ethical conduct by public adjusters and protecting homeowners,” the court said.

The lawsuit was originally brought by in October 2009 by public adjuster Frederick W. Kortum against Atwater’s predecessor, former CFO Alex Sink. A trial court ruled in favor of the state, but that decision was then overturned by the 1st DCA and affirmed by Thursday’s Supreme Court ruling.