A 2008 Florida law establishing a 48-hour moratorium on public adjusters was ruled unconstitutional July 5 by the Florida Supreme Court on grounds that it restricted commercial speech.
The Florida Supreme Court has declared unconstitutional a state law banning public insurance adjusters from soliciting policyholders during the first 48 hours after a damaging event.
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.”
At issue in the case was a 2008 Florida law, created in the wake of Hurricane Katrina, that prohibited insurance adjusters from soliciting business for 48 hours after an event leading to an insurance claim. The new law was created with the support of insurance companies who alleged that unscrupulous public adjusters were causing them to pay unnecessary or inflated insurance claims.
The ruling marks the end of a court battle that began in 2009 when an Oviedo, Florida-based public adjuster sued the state Department of Financial Services over the new law. Plaintiff Frederick Kortum maintained that the first 48 hours after a damaging event are the most critical for a policyholder because it is the window when photos, paperwork and other important actions must be taken to protect evidence, and public adjusters serve as advocates for policyholders while negotiating insurance claims.
Insurance associations were in support of the ban, however, the court ruled that public insurance adjusters’ commercial free speech rights are violated if they are prohibited from soliciting people until 48 hours after an insured event.
Interestingly, the court’s opinion relied in large part on the standards of law set by Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), the same case used by insurers to defend their free speech rights in two important collision industry cases.
In those earlier cases, Allstate successfully used Central Hudson to argue the violation of commercial free speech in the Texas case of Allstate Insurance and Sterling Collision, v. Greg Abbott when the ban on insurer owned shops was challenged in court by Allstate.
Central Hudson was also used by insurers in a New York case, Allstate v. Serio, that found that certain restrictions on insurer steering were violations of the insurance companies’ right of commercial free speech.
A similar ban on body shops
A few years ago, the major insurance associations had also initiated support for a similar ban on body shops.
The ban was introduced in the Model Act Regarding Insurer Auto-Body Steering that had been under consideration by the National Conference of Insurance Legislators (NCOIL) Property and Casualty Insurance Committee.
The American Insurance Association (AIA), National Association of Mutual Insurance Companies (NAMIC), and the Property Casualty Insurers Association of America (PCI), had supported the introduction of several new restrictions on collision repair facilities in the model. The insurance industry proposal would require repair facilities to wait three days after an accident before they were allowed to solicit a vehicle owner for their business. The proposal also would ban a shop from seeking a power of attorney from a vehicle owner for the repair of the vehicle.
Though the NCOIL Steering Model was “indefinitely tabled” by the committee in 2010, then-Committee Chair Sen. Ruth Teichman (KS), speaking for the group, said they were committed to revisiting the issue of steering in the future.
This new decision in Florida adds further support from the courts that this type of ban on communication with consumers is a violation of commercial free speech rights, whether the ban is on adjusters, body shops, or insurers.