Alternative Resolution Roundtable: Appraisal is the Hot Topic
I have been asked to participate in a roundtable discussion regarding alternative dispute resolution processes by Sean Shaw, the Florida Consumer Advocate.
Here is his letter to me:
The Roundtable will be televised live on The Florida Channel, and there will be an opportunity for people to call-in with questions.
I have commented about appraisal in previous posts.
I plan to have a post before and after the roundtable as I work through my thoughts on how we can efficiently and fairly resolve cases short of litigation.
The carrier's position that appraisal is being abused and is no longer a viable option for them is completely bogus.
Chip, I have been using appraisal as a tool to complete difficult claims for years. I have worked on both sides of the "fence" and have completed appraisals for both the carriers and as a public adjuster. I have seen a steady progression over the years and appraisal certainly has changed, but it is completely disingenuous to characterize these changes as something that renders the process as non-viable for the carriers.
When I began to invoke the appraisal clause on Hurricane Andrew claims, only rarely would a carrier deny the Insured's right to invoke appraisal. In addition, most of the appraisals were settled directly with the carrier's appraiser and the umpire was only involved in approximately 10% of the appraisals. At that time, the carrier's appraiser was generally independent, and was free to act on his/her own without repercussions.
When I worked as an appraiser for the carrier back in the 80's and early 90's, I was provided a copy of the original adjuster's estimate and the name of the other appraiser, period. When my appraisal was over, I would provide a final report which would detail the issues and when necessary, I would point out the error of the carrier's position. I was not worried about losing an account as the result of a perceived bad appraisal award.
As time has passed, I have noticed a disturbing trend towards more and more interference in the appraisal process by the carriers. This progression has become so blatant, that only rarely do I not involve the umpire in appraisals. Many times the carrier's appraiser will agree that the carrier's original adjuster was completely in error, but the carrier's appraiser will request that we involve the umpire in the final award to provide the carrier's appraiser with "cover".
In this scenario, the carrier's appraiser clearly does not feel free to act independently. They are clearly worried that future business is in jeopardy if for instance he agrees a roof should have been replaced when the carrier denied the roof replacement. I seriously doubt the carrier's appraiser will provide the carrier with an honest assessment and in fact, the carrier is probably told the process "broke down again".
Is it any wonder then why these carriers want to get out of a "broken system"?
Chip, the system isn't broken. In the event that these carriers continue to drop the appraisal clause from their policy, consumers will be left with no option but to file suit.
I realize this helps your profession, but it isn't necessary. Your position that anything that short circuits the policy holders right to due process is bad is also completely derogatory towards my chosen profession and extremely arrogant to boot. Who better to render an opinion as to damage, than someone who has done this for a living and is a professional at assessing damage???
Florida needs advocates who fight for the consumers NOW and we need to stay on the "side of the angels".
This consumer advocate is a mouthpiece for the insurance companies.
I have watched the previous two roundables, the only people at the table were representatives of the insurance companies and contractors. They are trying to find or create loopholes so that contractors that are in bed with the insurance companies can negotiate settlements favorable to them and the insurance companies, basically running public adjusters out of business and letting the policyholder get less than what the policy contemplates.
A real consumer advocate would be in favor of protecting the consumer and not the insurance company as Sean is doing. I fail to understand why FAPIA has invited him to the conference. He is a lost cause.
Mike,
I appreciate your comments and views. Sometimes, there will be disagreements among people that are normally aligned in interest.
I believe that one of the fundamental differences in our country versus many others is that we have a system of justice that provides for "due process." This is so important that it is in our constitution and most state constitutions.
Many "informal" appraisals can be "Kangaroo" courts because there are no rules. No right to confront witnesses nor examine evidence. I have heard of some appraisals being conducted in bars with drinks.
The Windstorm Network recognized some of these problems and has promulgated a Code of Ethics for its certified Umpires.
Maybe your appraisals go very well. When I am involved, most of mine go very well for my clients too. However, as an attorney that represents policyholders, I get brought the appraisals where the policyholder's outcome was not very good. Most of the time in those situations, the policyholder did not have a public adjuster or professional helping in the process. Possibly, your view would change if you saw those cases.
I have been of the view that appraisal with the arbitration rules as a procedure would be fair and practical. Indeed, this was the law in Florida for a number of years until the Florida Supreme Court said the procedure was "informal." Many would suggest "informal" means without rules.
Under the arbitration rules, parties can make the appraisal as formal or informal as they want. Or, if they cannot agree, arbitration rules apply so that everybody gets a "fair" binding process. The procedure is determined in advance. There is no binding procedure on either party or how appraisals are to occur in Florida, today.
Could you imagine playing a game of cards with no rules? How about a playing a game involving ten million dollars at stake with no rules?
If you win at that system, I guess you would want to perpetuate it. But, some may suggest that an element of fairness is to have some set criteria for how the game is played before it starts. Losers may may think it was rigged against them. Clever winners may not want the procedure to change fearing that their "edge" of winning will go away if they have to play by some set of rules which both sides have to abide.
It would seem to many Americans that any system of justice which is binding and with serious consequences would have some set rules. This notion of having set rules to play by for both sides has been my chief concern for a long time.
Hello Chip,
It is certainly encouraging to see that there are still people not ready to fold under the pressure of the insurance carriers to get rid of the appraisal process.
While the insurers claim that the appraisal process has been abused, I can state that they are the ones that have abused the mediation process, to the point that it is a joke to even try and use that avenue to resolve any claim, thus leaving the policyholders with no option but to
invoke appraisal.
Because appraisal has effectively made the insurers pay for what they really owe to the policyholders, and not what they wished to pay, that is the only reason why they are so against it and trying so hard to remove it from their policies.
If the appraisal process is abolished, as the insurers wish to do, then it will definitely be a standard practice for them to under-pay claims, knowing that the policyholders will either have to accept their low-ball offers, or file suit against them to get a fair settlement.
It is obvious that many homeowners will resign themselves, and only a few will pursue litigation.
Your involvement in this matter and representation of our views is a valuable aid to the future of fair handling and settlement of property claims.
Thank you,
Manny Garcia