Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Evidenced by the depositions yesterday, insurance agents will likely try to separate themselves from the promises they made to their clients. Advertisements, though, show exactly how an agent or agency held themselves out to clients. Yesterday, Chip asked whether or not the agent gave advice to clients or otherwise aided them in deciding what insurance coverages to purchase. Not wanting to admit to an extra duty, the agent stated that he gives out information, not necessarily advice. Unfortunately for the agent, Chip confronted him with brochures produced by his company that said, “Advice and Answers – Always” and that the agency “earns straight A’s for analyzing, advising, arranging, and administering insurance solutions that cover all bases.”

The agent went on to say that he would only purchase the insurance specifically requested by his client, but another advertisement made the following claim:

It’s our business to know your business so we can customize solutions based on your specific needs.

One of the more surprising developments was how the agent tried to claim the dozens of testimonials distributed by the agency over the years were merely the words of others and not indicative of agency promises. The testimonials had quotes like,

[This agency] provides an important part of the expert advice we rely on.

Or

[They] learned my business so I didn’t have to learn insurance.

Or

They showed me every reasonable option in the marketplace, then made a recommendation.

Over the course of the deposition, it became very clear that this agency promised expert know-how, exceptional service, and integrity. The advertisements showed exactly what the agent was trying to avoid – accountability.

In Slabbers Finally Learn How They All Have Exactly 11.2% Damage, I discussed how Dr. Spelman explained in another case his statistical methodology for determining how much damage occurred to structures that were obliterated by Hurricane Ike.

The “Reader’s Digest” version of what he did to calculate how each of the Bolivar Slabbers would be entitled to 11.2% was to perform a statistical regression analysis where three main variables were considered to provide a statistical expectancy that 95% of all residential Slabbers would fully be indemnified for wind only damage if TWIA paid 11.2% of the insured value of the structure. He was provided information and variables from 387 TWIA estimated claims of partial damage. After consultation with TWIA retained engineers, he considered 18 different variables from those claims, but found that only three of them had a significant impact upon the wind damage. Those three variables were:

1. Whether the building use was residential or commercial.
2. Whether the building was constructed before 2004.
3. Whether the roof was placed on the structure before 1989.

He determined a “loss ratio” which he defined as the Actual Cash Value payment by TWIA on the partial damage buildings divided by the Insured Value. The average residential payment loss ratio was 9.8%. But, if TWIA paid 11.2%, he calculated that 95% of all Slabbers would statistically have their full indemnity on an actual cash value basis.

There is much to criticize with this work. Indeed, from what we have reviewed regarding the accuracy and low-balling of the TWIA estimates of partial damage, the entire population will have to be revised. We will provide more on the extent TWIA underpays wind damage claims on partial losses.

I expect that two of the many reasons to criticize his conclusions will be that TWIA has paid significantly more on partially damaged structures after policyholders retained public adjusters and that the most significantly damaged structures were not part of the population giving rise to his conclusions. In other words, the data on which he based his determination of 11.2% is fundamentally flawed and his numbers should be higher---assuming his methodology is valid.

To the extent permitted by the Court, we will make the deposition transcript available to the public. It would be interesting to hear others’ views on how TWIA handled the slab claims and on Spelman’s methodology in determining wind versus flood damage.

Yesterday, the Court in Galveston County entered an order directing the parties as to who, where, and how the depositions would take place. The depositions of Jim Oliver, Bill Knarr, and Reggie Warren, along with a host of other TWIA claims supervisors whose names are also listed on the order, will be governed by the Court's order.

Although TWIA argued to have these depositions take place in another County, Judge Susan Criss quickly denied their request and ordered the depositions take place in Galveston County.

The depositions will be taken by members of the plaintiff's Ike Steering Committee. The depositions of Jim Oliver, Bill Knarr, and Reggie Warren will each take place over five days, and all others listed in the order will each take place over three days. The number of days allowed for these depositions can change by agreement of the parties or the Court's order.

How does this order affect cases pending in other counties? The order does not at all affect cases pending in other counties.

How does this order affect my individual case? The purpose of the depositions is to learn all of the information necessary to prosecute each client's case with respect to the issues of the institution (TWIA) and TWIA's pattern and practice of handling claims. This means that the topics covered with respect to the institution and institutional practices cannot be discussed again in subsequent depositions. The plaintiff can, however, ask questions specific to each individual case. This process blurs the line of what can and cannot be asked in depositions because a lot of what is asked in a deposition is dependent upon how it is asked. I expect there will be a number of hearings in the near future with respect to what can and cannot be covered in individual depositions.

When are these depositions scheduled to take place? The depositions of the top three (Jim Oliver, Bill Knarr, and Reggie Warren) are scheduled to begin in the middle of February. A February date is necessary because there are more documents due to come in that TWIA has not yet produced.

In Butler Pappas--A Familiar Foe, I wrote:

John Pappas and I were not only classmates, but also on the Law Review and Moot Court in law school. He was a hardworking student and a very competitive debater. When Paul Butler indicated that they needed to hire more attorneys because of the firm’s growth, I recommended John. I felt he would be a perfect fit for the type of practice Paul Butler was establishing. I have been proven right about that.

John Pappas is as dedicated to the insurance industry as I am to the advocacy of policyholders. It is not uncommon for tough feelings and bitter disagreements to come about between lawyers on opposite sides of a case where the stakes are high. Possibly as a result of competitiveness for our clients, John and I have not seen much of each other socially for a long time. However, while many who meet John may think he has a serious and unrelenting personality, he personally has a light sense of humor. I would encourage reading his From Beautiful Brazilians to Bear-Catchers to gain a glimpse of Pappas’ humor.

John Pappas' ability to use humor to make a point, as sarcastic as it might be, was demonstrated in a recent Mealey's article, Preparation For Deposition, 23-2 Mealey's Litig. Rep. Ins. Bad Faith 15 (2009), where Pappas seriously noted:

The deposition of the designated corporate representative of the insurance
company defendant is, often, the tipping point of the case.

Preparation is paramount to success. It isn't easy, and it isn't fun. The
designated representative usually is a company executive with many
responsibilities and pressures. But there is no substitute for time and effort.
There is no other way. Here is a case in point.

The humorous part included the following exchange:

"Ready for your some cross-examination by an obnoxious Plaintiff's attorney?"

"Yeah. Sure. Go ahead."

"Okay. State your name, sir."

"Kirk T. James."

"Who is your employer?"

"Who is my employer?"

"Yes."

"Ah, ah, XYZ Insurance Company?"

"Do you receive a W-2 form for tax purposes naming XYZ Insurance Company as
your employer?"

"I think so. I'm not sure."

"Does the W-2 form identify XYZ Insurance Company as your employer?"

"Well, you know. Now that you ask, I can't tell you technically who is my
actually employer - John."

"Okay, Kirk, lets stop role-playing for a moment. Before the deposition
begins on Thursday you need to find out the full name of your actual employer."

"Sure."

"Now lets continue with the role playing."

"Okay."

"Why did XYZ deny the claim?"

"Why did XYZ deny the claim?"

"Yes, sir. Why did XYZ deny the claim?"

"Because there's no coverage."

"Any other reason?"

"No."

"Why was there no coverage?"

"John, here is where I need to get more prepared."

"Yep, okay, Kirk. I'll leave you alone. Do you want to get together for
dinner?"

"John, if it's alright with you, I would rather relax at the hotel and try to
read more of these transcripts."

Reading what one's opponents are teaching and doing is an extraordinarily effective method of learning. When humorous as John can be when he wants, the learning can also be fun.