As businesses continue to struggle with the myriad of obstacles imposed by BP when getting their claims paid, CFO Alex Sink said it's time for Florida legislators to come into special session to write some rules for how BP handles its claims process in Florida.
In a letter today to Kenneth Feinberg, who has been assigned by President Obama to manage the $20 billion escrow account and pay claims, Sink advised that the feds should learn from Florida's experience dealing with insurance claims and have a transparent, easy-to-understand process, with firm time limits that's fair to both sides.
"Under a hurricane situation businesses know they have a certain number of days to respond,'' Sink told reporters today. "If you don’t agree with the claims payments there are ways to appeal. Right now we're in a situation with where there are no rules and there are no expectations and I believe in the legislators would be able to clarify what the expectations -- the protections -- are for a small businesses and local governments trying to file claims."
Here's the text of the letter:
Mr. Kenneth Feinberg
Willard Office Building
1455 Pennsylvania Avenue, NW
Washington, DC 20004-1008
Dear Mr. Feinberg:
I am very encouraged by your appointment as the independent claims administrator for the new escrow account for Gulf oil spill claims from BP. Your reputation and experience in handling claims in difficult situations like this fairly and efficiently is just what we need throughout the Gulf Region to remedy many of the problems facing our small business owners and citizens. I look forward to meeting you and working with you on behalf of the people of Florida.
As a statewide elected member of the Florida Cabinet and Florida’s CFO, I oversee the Department of Financial Services (DFS). One of my key roles is to aid consumers through a transparent and accountable process with financial and insurance issues, including insurance claims. My Consumer Services call center receives more than 25,000 calls a year relating to insurance claims issues.
As Floridians began to work with the BP claims process, they turned to my department and our Insurance Consumer Advocate with their questions and frustrations. After having worked with frustrated small business owners for weeks and utilizing my department’s insurance claims background, I offer the following recommendations on how you can improve, simplify, and expedite the new claims process.
· Prompt timelines must be established for every step in the claims process (reporting, acknowledging, evaluating, denying, deficiency and paying claim, etc…).
· The documentation that is required of individuals and businesses must be consistent and necessary. In speaking with impacted businesses in Florida, the biggest complaint about the BP claims process is the excessive documentation that is required.
· The appeals process must be simple, fast and impartial. Claimants deserve an appeals system that is straight-forward and will not linger on for months. For the appeals process to work smoothly, claimants must be provided specific reasons for any denial. In addition, the claims facility should provide claimants with information as to all their rights once a claim is denied.
· Adjusters must be educated as to the type of businesses that will likely make claims and the various claim types that each business may present. For example, here in Florida, it is apparent that the BP claims adjusters are unfamiliar with the accounting practices of the various affected businesses. Fishermen, bait shop owners, restaurateurs and hoteliers have needs that are specific to their industries. An adjuster can not apply the same standards to a restaurant owner that apply to a commercial fisherman.
· A system for dealing with recurring claims must be established. For example, how will the facility treat a claim by a restaurant owner or charter fishing business whose losses continue to mount each month? Will they have to make a claim with the facility each month? Will the facility cut a check each month based on its own investigation? Will the facility be empowered to give a lump sum payment to the restaurant owner or charter fishing business that will cover all losses up to a prescribed period of time?
· A claims representative must retain all documents related to a claim in a file that is organized so that the information is readable and easy to follow. Moreover, there must be a transparent method for claimants and interested parties to track claims. It would be ideal if a claimant could use an internet-based program to track claims. Claimants should be able to submit their initial and supplemental claims online as well.
Based on my experience, these six items provide a framework for a claims system that will quickly get money into the hands of people who have been affected by the Deepwater Horizon incident. We stand ready and willing to provide any further assistance as you develop claims standards.
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As a statewide elected officer of the Florida Cabinet, CFO Alex Sink oversees the Department of Financial Services. A successful business leader with nearly three decades of experience in the private sector, Sink is serving her first term as Florida's CFO. CFO Sink's priorities include using her business experience to cut wasteful spending, holding government accountable to Florida’s taxpayers, and cracking down on financial and insurance fraud.