Florida Insurance Consumer Advocate Sean Shaw will hold a forum today to discuss a move by some insurers recently to essentially strip policyholders of the option to go to appraisal to fight claims disputes.

That means policyholders would have two options left when they disagree with their insurers about the cost of making repairs: using the state's free mediation program, which is not binding, or filing a lawsuit.

In the appraisal process, appraisers for insurers and policyholders each come up with estimates of the damage and jointly choose an independent umpire to make a binding decision.

State-backed Citizens Property Insurance quietly changed its appraisal language last year to allow it to opt out of appraisal. Liberty Mutual Group subsidiaries and United Property & Casualty Insurance received state approval to remove the option altogether for some lines, reported the Florida Association Florida Association of Public Insurance Adjusters, which represents adjusters that are hired by policyholders to represent them in claims disputes.

Most people seem to agree that the appraisal process is flawed. Both insurance company executives and public adjusters have told me that appraisal umpires typically award claim amounts that are halfway between what they policyholders and insurers want instead of actually assessing the scope of damage for themselves.

Shaw's office said appraisal is a "cost-effective process for resolving claim disputes" but "due to the lack of standards...many insurers believe that the process has been abused and that it may no longer be a viable option."
Chip Merlin, an attorney in Tampa who represents policyholders, is among about a dozen people -- including public adjusters and insurance company representatives -- who will participate in the forum today. He floated some ideas recently on how to change the appraisal process without eliminating it.

http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2010/01/forum_today_on_insurers_removi.html