Thursday, December 09, 2004

Insurance Foxes to 'Improve Service' for Us Chickens

The Insurance Journal reported Thursday, December 9, that, "The first meeting of the Task Force on Policyholder Services and Relations to Citizens Property Insurance Corp. took place yesterday in Tallahassee."

The 13-member 'Policyholder Services' task force was created the first of December, according to a department press release:
Florida’s Chief Financial Officer Tom Gallagher today announced the creation of a joint task force of stakeholders with the goal of making recommendations to Citizens Property Insurance Corporation for improving customer service and returning policies to the private insurance market.

"Thousands of consumers have contacted the Department of Financial Services upset over delays in processing their insurance claims," Gallagher said. "Though Citizens has made tremendous efforts during the storm recovery process, more is needed to eliminate delays and ensure claims are processed fairly and efficiently."

Gallagher said he anticipates the task force will recommend ways to improve adjuster response times and reduce backlogs in damage assessments.
Here's the catch: although ostensibly composed of "stakeholders" and intended to improve "customer service" of the state-owned Citizens Property Insurance company, none of the thirteen task force members is an independent voice for the consumer side of the insurance business.

On a task force created to improve claims service for insureds, how could Mr. Gallagher leave off every single one of them? Don't customers have a "stake" in the premiums they've paid for property insurance? Aren't customers by the tens of thousands directly experiencing the kind of "services" that need improvement? Isn't it likely that the most useful source for recommending how Citizens Insurance could improve its claim handling would be those who have gone through the experience?

To be generous, you might say there is one voice for the general consumer on the 13-member panel of "stakeholders." Steve Burgess, who was appointed "state insurance consumer advocate" last July, is a member of the panel. Whether he is a truly independent voice, however, is debatable. Burgess also holds a salaried job inside the Department of Financial Services itself. Even granting that he might fairly be called a representative of insurance consumer-stakeholders, he also is a subordinate employee directly answerable to the same Director of Financial Services who is supposed to receive the task force report.

If you think that arrangement might be just a wee bit too cozy, you're not alone. Burgess himself has been quoted in the past as saying he thinks the position should be made more independent by moving it entirely out of the department. And who better to know? Burgess held the position once before. On that occasion he was more or less fired by former insurance commissioner Bill Nelson over a policy dispute, as the St. Petersburg Times remembered last July:
By legislative decree, the job was created to ensure an independent voice representing wronged consumers. Yet the advocate reports to the state's top insurance regulator, now Chief Financial Officer Tom Gallagher, who has to balance industry concerns in his decisions.

That has led to tense times in the past, such as a high-profile showdown in 1997 between then-Insurance Commissioner Bill Nelson and then-consumer advocate Steve Burgess over some proposed legislation. Burgess wound up out of a job. With the retirement this spring of Burgess' successor, Elsie Crowell, the tightrope is open again.
I want to emphasize that Steve Burgess himself isn't the issue. He has a pretty good record, as near as I can tell, and he seemed like a nice guy when I called him to ask why there were no real consumers on the task force. (His answer: "I really don't know... .")

Nor do I hold out any hope that the legislature will fix the structural problem it created when it put a lone chicken (the consumer advocate) into a den of foxes like the Department of Financial Services. The legislature knew what it was doing. It wanted to keep the consumer advocate on a short leash. That isn't likely to change until voters force their legislators to re-write the law.

What concerns me are two other issues which could be easily remedied. First, Financial Services Director Gallagher top-loaded the entire task force with "stakeholders" who come from the fox side of the fence surrounding this chicken coop. According to the St. Petersburg Times, they include:
* Pete Dunbar, chairman, Florida Department of Financial Services;

* Daniel Baptista, Latin American Association of Insurance Agencies;

* Skip Boylan, Florida Association of Insurance and Financial Advisors;

* Steve Burgess, Insurance Consumer Advocate;

*Karen Chandler, Florida Department of Financial Services;

* Carol Everhart, Professional Insurance Agents of Florida;

* John Fleming, Florida Association of Insurance Agents;

* Scott Johnson, Florida Association of Insurance Agents;

* Frank Kowalski, Florida Realtors Association;

* Ed London, Citizens Property Insurance Corporation;

* Susanne Murphy, Citizens Property Insurance Corporation;

* Ken Ritzenthaler, Florida Office of Insurance Regulation; and

* Hal Roberts, Florida Bankers Association.

Four of thirteen are state employees subordinate to Gallagher. Of the remaining "stakeholders" every single one is well entrenched in the insurance, banking, or real estate industry. Two of them come from Citizens Property Insurance itself, which prompts the question, if they know so much why haven't they already "improved" Citizens' customer service performance?

I do not doubt that this panel consists of articulate advocates for the insurance companies, mortgage holders, and real estate salesmen. But who among them will advocate for the average property owner or small businessman threatened with insolvency by unresponsive claims adjusting practices at Citizens?

My second concern is that Northwest Florida appears to be totally unrepresented. Escambia and Santa Rosa counties still are in the state of Florida, last time I looked. There is no doubt as you tour the area that we were -- and still are -- devastated by Hurricane Ivan. There are plenty of representatives on Gallagher's panel from Miami and other parts of Florida which were barely grazed by any of the four hurricanes that struck the state this year. They've been doing pretty well with FEMA after surviving a stiff breeze. But none of the appointed "stakeholders" on the panel lives here that I can determine. (If you know of any task force members who actually do own property here along the "Blue Roof Coast" please let me know.)

So, there you have it: a 13-member task force to study how to improve Citizens Property Insurance services to customers. Yet, not one honest-to-goodness premium-paying customer from the general public among them. And not one Northwest Florida "stakeholder" out of what may be tens of thousands of Citizens Property Insurance claimants.

Mr. Gallagher, get real. If you really want to find out how shabbily Citizens Property Insurance is treating its customers and what can be done to improve things, put four or five regular citizens on your task force -- and make sure some of them are from the Pensacola area. Or, ask local attorneys like Charles F. Bealle Jr., Bob Kerrigan, or any of the other many lawyers who have been volunteering their time pro bono to help hurricane victims deal with the wreckage that has become Citizens' claims service.

As it is right now, your task force resembles nothing more than a convention of foxes discussing how to "better serve" us chickens -- baked, fried, or fricasseed.

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