The Ongoing Issue of Field Adjuster Independence: Why Xactimate and Florida’s Emergency Rule are at Odds with Policyholders’ Interests

In my recent articles, The Façade of Consumer Protection: How Florida’s Political Leadership Continues to Favor Insurance Companies Over Policyholders — Are Florida’s Politicians in Bed with the Insurance Industry and Florida’s Emergency Ethical Rule Conflicts with Xactimate’s License Agreement – Another Example of Insurance Industry Control in Florida, I’ve discussed the conflict between Xactimate’s license agreement, how adjusters are expected to often and routinely change software pricing and Florida’s new emergency ethical rule. The new ethical rule will allow wrongful-acting insurers to leverage and underpay hurricane victims as they refuse to change wrongful pricing based on the rule.

Today, I want to highlight that Xactimate and the insurance industry have argued about the importance of property adjuster independence regarding pricing to ensure fair claims handling. A close look at the aftermath of Hurricane Katrina reveals how other states, like Louisiana, handled similar challenges by balancing the use of software pricing tools with adjuster judgment. This contrasts with Florida’s current approach, showing how essential it is to empower property field adjusters to serve policyholders effectively.

Xactimate as a Starting Point, Not a Final Say

Following four Florida hurricanes in 2004 and three major hurricanes in 2005, construction prices in hurricane-devasted areas rose, far outpacing any pricing software’s ability to keep up. Schafer v. State Farm Fire & Casualty Company 1 is one of several class action cases that illustrate that Xactimate is meant to serve as a guide—not a rigid framework. Policyholders claimed that Xactimate was in a conspiracy to underpay claims because the software pricing was far too low on a repetitive basis. Testimony in the case confirmed that property insurance adjusters often, and were expected, to deviate from Xactimate’s pricing and estimates to account for real-world variables such as material availability, actual pricing by contractors, pricing found in hardware stores and unique property conditions. These necessary deviations reflect the professional expertise required to assess the true cost of repairs, which property insurance field adjusters accomplish all the time.

However, Florida’s new emergency rule undermines this discretion by forcing adjusters to adhere more closely to insurer-driven pricing models. Such restrictions risk reducing claims payouts, leaving policyholders with insufficient funds to repair their homes. This shift favors insurers while tying the hands of property insurance adjusters, making it more difficult to ensure fair claim outcomes. Who wants to be accused of unethically changing the wrong software line item and losing an adjuster license when it is far easier to let company management underpay the damage and deal with the disgruntled policyholder?

Lessons from Louisiana: Balancing Guidelines with Reality

In the wake of Hurricane Katrina, Louisiana’s insurance commissioner implemented mediation rules that acknowledged the limitations of software-based pricing models. These rules, outlined in Louisiana’s Rule 22, recognized that Xactimate and similar tools could provide a starting point for negotiations. However, the rules also made it clear that insurers were required to meet their contractual obligations—even if that meant deviating from software estimates.

The guidelines emphasized:

The guidelines referred to herein do not apply to any portion of repairs necessary to fulfill the insurer’s contractual obligation to restore the insured residence to pre-hurricane condition where… there is an executed repair contract to effectuate such repairs for an agreed price and the insurer has tendered full payment for the repair contract amount. 2

This approach ensured that policyholders could receive the full amount required to restore their homes, even when software-generated estimates fell short. It also underscored the importance of adjuster independence in assessing actual repair costs accurately.

Florida’s Emergency Rule: A Step in the Wrong Direction

Unfortunately, Florida’s current emergency rule reflects the opposite approach. Rather than empowering property insurance field adjusters to freely challenge software estimates and advocate for fair claim payments, it restricts their ability to deviate from insurer-preferred processes. This shift compromises the integrity of the claims process and leaves Florida’s policyholders vulnerable to underpayment.

Louisiana’s approach and legal case findings highlight the importance of balancing pricing tools with property adjuster expertise. By setting guidelines that respect actual construction pricing realities and obligations over software limitations, which are inherently and notoriously behind the increased demand and higher pricing, Louisiana ensured that policyholders could recover fully from catastrophic losses. Florida, however, appears to be moving in the wrong direction—prioritizing insurer interests over consumer protection.

A Call for Field Adjuster Independence and Fairness

If Florida’s leadership is serious about protecting consumers and stopping the insurers’ home office’s secret alteration of field adjuster estimates noted in CBS 60 Minutes Exposes Alleged Insurance Company Fraud: Adjusters Reveal Altered Hurricane Damage Estimates by Claims Management, it must reexamine its emergency rule and align it with practices that prioritize fairness. Adjusters need the freedom to apply their professional judgment and go beyond software-generated estimates when necessary. Without this flexibility, policyholders will continue to bear the brunt of an unfair system that favors insurers.

The lesson from Louisiana is clear: Pricing software should inform—not dictate—claims decisions. Adjusters must freely be allowed and encouraged to advocate for the true and full costs of repairs, ensuring that homeowners and business owners receive the full policy benefits they are owed as soon as possible. If Florida’s insurance regulators fail to restore property field adjuster independence, it will further erode the balance of power between insurers and policyholders, leaving hurricane victims to shoulder the financial burden of inadequate and delayed claims payments.

The Schafer case and Louisiana’s mediation rules highlight a fundamental truth: software is a tool, not a substitute for human expertise. Property filed adjusters should have the independence to prepare full estimates of all covered damage as an ethical benchmark. This is not a luxury—it’s a necessity for fair claims handling. Policyholders are harmed when independent claims managers do not allow these licensed field adjusters to do their jobs or change the field adjuster’s work product without a good faith and transparent basis. Florida’s emergency rule risks tipping the scales too far in favor of insurers, undermining the very protections policyholders rely on.

Thought For The Day

Trust happens when leaders are transparent. Leaders establish trust with candor, transparency, and credit.
—Jack Welch

1 Schafer v. State Farm Fire and Cas. Co., 507 F. Supp. 2d 587 (E.D. La. 2007).
2 Rule 22, 32:9 La.Reg. 1583 (September 20, 2006).