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

Hartwig said that since the middle of 2008, employment in the P&C insurance industry has hit a record low as a result of the economic downturn. As a whole, he said that employment in the P&C industry was down almost five percent since the recession began, nearly matching the 6.1 percent decrease in employment in the overall U.S. economy.

For claim professionals, however, the news was grimmer, as statistics show the adjusting profession is taking the biggest hit.

"We have seen a very, very sharp drop in the claim adjusting area, the sharpest drop of all P&C positions in percent terms, around 14 percent since the recession began," said Hartwig. "I do not know precisely what the driver of this is at this point, but the number of people employed in the claim adjuster position today is roughly where it was in 1995."

So, what can you do if you are in the claims industry and want to stay there? I am asked career advice from a number of adjusters, regardless if they are company, independent, catastrophe or public insurance adjusters. Except for experience and reputation, the single most important and easiest thing any claims adjuster can do is prove dedication and passion to this noble business through education. The claims insurance industry "calling card" that everybody recognizes is the CPCU designation. If you enjoy what you do as an adjuster, I strongly suggest you watch this video and then sign up for the courses needed to become a CPCU: 

Here is what he has to say:

Background

I have been very involved over the past two years in conducting forensic engineering investigations for public adjusters, attorneys and individual policyholders that have had and are still having problems with their roofs from the effects of Hurricane Wilma, particularly in Palm Beach, Broward, and Dade counties. I have conducted over 500 such investigations in the past year and half. In this work, I have also reviewed dozens of "engineering reports" prepared by licensed Florida Professional Engineers on behalf of their insurance company clients. As a result, I have written over 80 effective rebuttals of their work which generally can't stand up under scrutiny.

In many cases, a homeowner gets one of these reports and not being a skilled professional reads the report and gives up on proceeding with a claim. Probably for the 500 such clients I have worked for there are thousands more homeowners that read the "engineer's report" prepared on behalf of their insurance company and just gave up. I probably am just working the tip of the iceberg.

In particular, the engineers and the different casualty companies all come up with the same reasons for why damage observed is not a result of hurricane actions and all use the "same" reasons. It would seem that they all got together and decided to tell the "same" story.

As you may recall, in 2005 Hurricane Katrina first crossed the Florida peninsula before making landfall in the Gulf Coast region. In October, 2005, Hurricane Wilma made a path from just south south east of Naples traveling northeast and exiting the state just north of West Palm Beach. It was a large storm and during its transit produced many strong wind gusts that reached from 100-110 MPH that lasted for a brief period.

As a result of the impact of Hurricane Katrina on the Gulf Coast, most Florida based adjusters were dispatched there. After Hurricane Wilma produced widespread damage to southeast Florida, adjusters were brought here from many different locations throughout the US. In many cases, these adjusters had very little knowledge of the construction of tile roofs that were mortar adhered or mechanically fastened with nails or screws. Also, I know, based on discussions with homeowners, many insurance adjusters did not even look at the roofs and offered small sums for "repairs" or told them the problem was "wear and tear" and not covered by their policy.

There are literally hundreds of thousands of tile roofs that were either mechanically fastened with nails or screws and adhered to the roof with mortar patties that were affected by this storm.

The result for mechanically fastened tile roofs is that the lifting action of the wind gusts move the nails creating leak points into the roof or the mortar patties are un-bonded in a particular pattern that occurs on the roof. This empirical evidence is supported by research conducted by the International Hurricane Research Center at Florida International University.

Un-bonded mortar roofs will be flying missiles in the next storm. Due to the slow nature of the leaks from mechanically fastened roof, evidence of the failure will ultimately show up in the house's interior first as stains on the ceiling. This latter effect is a slow process and droughts in 2006 and 2007 have delayed the occurrence of these symptoms.

However, insured clients only have till October, 2010 to make a claim as the statutory limit of 5 years after the storm comes into play.

I can assure you there are going to be many hundreds of thousands of policy holders that are going to be left holding the bag as a result of what appears to be collusion on the part of the insurance industry and the apparently complicit licensed Professional Engineers that work for them.

I have encouraged many clients to file complaints with the Florida Board of Professional Engineers regarding these "engineering reports". To date, the Board has done nothing that I am aware of. As a result of this experience, I am disgusted and ashamed to say that I am a licensed Professional Engineer having been so for the past 33 years.

Proposal For Action
This will be a two pronged approach.

First, We will be developing a web site with multiple domain names directed to it relating to individuals that have had claims denied, improperly settled, or gave up after getting the insurance company's "engineering report". The goal will be to identify such individuals for a potential class action and provide incentive for political action. We will gather names, addresses, contact info, claim information/denial/partial settlement info etc. for a potential class action described below.

Second, another action would be to obtain a ground swell of support by homeowners, public adjusters and attorneys working for claimants to extend the 5 yr. statutory limit for Hurricane Wilma claims by say.....two more years as a result of the 2006 and 2007 droughts and pursue this through the Legislature.

Potential
Casualty Insurance Action
In Florida
related to Hurricane Wilma

Possible Claim and Action:
Fraud and collusion to commit fraud

Global Allegation:
The casualty insurance industry has apparently acted in a manner to defraud its clients of full and proper payment of their rightful claims under their policies for damages incurred from Hurricane Wilma. This includes directions to employees and adjusters to not fully investigate claims, offer minimal settlements for such claims and collude with Florida licensed Professional Engineers they retained in order to deny claims on the basis of fallacious reasons for damage observed.

Specific Allegations:

1. Adjusters were employed that were knowingly not competent to assess damages being adjusted and/or were directed to not investigate damages including not assessing roofs for damage and to offer minimal settlements to clients while assuring clients that such funds offered was sufficient to “repair” damages.
2. Florida licensed Professional Engineers were engaged by the industry and encouraged and/or directed to offer assessments of damages that would result in limited or minimal settlements for roof damages by unsubstantiated allegations of reasons for damages observed that were not related to Hurricane Wilma. Such unsubstantiated reasons include but are not limited to “foot traffic”, “wear & tear”, “thermal expansion”, “improper installation”, etc.
3. Many casualty insurance companies have resisted or refused to open or reopen claims for damages from Hurricane Wilma that are now showing effects of damages from Hurricane Wilma which in many cases result from insufficient settlements for damages and/or their apparently fraudulent efforts to limit initial claims by not properly assessing damage or assigning unfounded reasons for damages in order to limit the financial effect on the companies.

One of the interesting aspects of this conference is the varied opinions of the attendees. I was speaking with an insurance defense attorney who told me that he implores his clients to come to this conference, rather than the PLRB, because the adjusters and claims managers can hear the other side of an issue and anticipate or develop a response.

I am certain that many will disagree with Bruce Holmes. On the other hand, I am quite certain many agree and are pondering how to deal with the issues he has raised.

So, I found it quite fascinating to notice the Antitrust Statement issued by the Property Loss Research Bureau (PLRB)  and the Liability Insurance Research Bureau (LIRB) at their Large Loss Conference this week. The statement provided in part:

Presenters and attendees at the LARGE LOSS CONFERENCE must remember that their respective firms are competitors in the marketplace and the McCarran-Ferguson Act and the laws of some states provide the insurance industry with only a very limited immunity from federal and state antitrust scrutiny. Therefore, the presenters and attendees must exercise care during all presentations and discussions, since even the most innocuous discussions of certain topics might later be misinterpreted as evidence of collusion.

There are a number of important aspects to this statement. First, adjusters at conferences must appreciate that their colleagues from other businesses are competitors in the marketplace. Second, since they are competitors, antitrust laws apply to them. Third, the antitrust exemptions and immunities granted to insurance companies are very limited.

One impression I have of the public policy to allow antitrust exemptions is to provide for sharing of loss history and common form coverages to help regulators make certain that insurance companies would not charge too little and risk financial ruin in an attempt to gain market share. Insurance companies going broke and not paying claims after widespread disaster is never good for the public.

Nevertheless, the Antitrust Statement issued by these entities to the claims executives and adjusters attending this conference correctly warned that collusion can (and normally does) take place and of the specific subjects of discussion which should be avoided between adjusters working for different companies:

At the LARGE LOSS CONFERENCENCE, and all educational, social, and business development events connected with this meeting, there should be no discussion or agreement, formal or informal, express or implied, as to any matters which might give rise to an allegation of antitrust laws. Subjects to avoid include:

*rates;

*underwriting practices;

*marketing strategies;marketing responses to legislative, regulatory, or other developments;

*prices or costs of any products or services offered for sale by insurers or purchased by insurers;

*individual insurance company positions on coverage issues and other matters of insurance policy interpretation; agreements or understandings relating to claim practices, policies, or positions;

*standards by which the performance of any insurer could or should be judged; codes of ethics;

*advantages or disadvantages of doing business in particular states;

*refusal to deal with, or boycott of, potential insureds or suppliers of products or services; use of particular suppliers of products or services; and

*costs or profits of any aspect of any of the above.

I am no expert on antitrust laws. When I first read this, I thought, "what the heck can we talk and learn about from our peers and colleagues if we cannot talk about any of this?" Given this extensive list, I suppose you could talk with your colleagues only about the weather or the Yankees winning the World Series at the networking functions.

The PLRB in particular has excellent materials and information regarding coverage and adjusting issues. I encourage my colleagues in the insurance industry to attend so they can do a better job learning the policy coverages and how to adjust and apply the insurance product. While the PLRB presents one-sided views because it prevents policyholder representatives from attending PLRB conferences, it still has very valuable educational information for claims managers and adjusters.

For example, some of the educational sessions involved Chinese Drywall, Complexities in Adjusting and Measuring Builders Risk Losses with Delay, and First-Party Cyber Losses. These are all very important adjusting topics that adjusters need to learn how to approach and then get monies to their customers suffering from these calamities.

Yet, if the purpose of the PLRB is to educate adjusters to do a better job, and if the adjusters are supposed to be concerned with promptly paying the full amount of benefits to policyholders, why are the PLRB proceedings and educational topics a secret only for the insurance industry? The PLRB claims that antitrust laws are supposed to be obeyed, but the educational information concerning how the products of the insurance industry work is withheld from the customers of these PLRB insurers.

Why would the insurance industry want to keep secrets from its customers about how the customers can expect to be treated if they have a claim? From the consumer's skeptical viewpoint, some may question if the motive is to prevent the insurance product form paying as much as it should. The PLRB and all exclusive insurance industry organizations discussing how their products perform should have their leaders and legal counsel determine whether the secrecy is in violation of law and is to help promote a collusive impact to pay consumers less than what is owed. Otherwise, why have the secrecy? Are insurance claims executives afraid that their customers may learn they are not paying all that is owed? In a scenario where the competitors meet together and can learn from each other, but exclude the parties to the other side of the deal, many should question what is really going on and the reason for the policy of exclusion.

As readers noted in my recent post, Safeco and Liberty Mutual Claims Practices Questioned on a National Basis: Policyholders Organize Against Wrongful Claims Practices, where I informed others of our consumer networking activities regarding Safeco’s and Liberty Mutual's claims handling processes and cases, the customers of Safeco and Liberty Mutual would want to know how certain aspects of their property insurance claims may be handled. The PLRB had a seminar, "Ordinance or Law: A Review of the Additional Coverage" that was taught in part by Fritz Lander and Jamie Minich---large loss quality assurance specialists from Liberty Mutual. Many Safeco and Liberty Mutual policyholders with disputes on these issues may wonder what its claims quality assurance specialists say behind closed doors to insurance insiders versus what their hired attorneys argue in open court.

Is the PLRB just paying lip service to the antitrust laws of this country? Remember a topic to be avoided--"advantages or disadvantages of doing business in particular states?" I wonder if the keynote speaker to this conference, lobbyist and insurance industry legislative strategist, Sam Miller of the Florida Insurance Council, touched on this topic when he presented, "Florida: Hurricane Alley & The Country's Trendsetter in Response & Recovery."

This post came about as a result of Mary Kestenbaum Fortson and me being invited to Baltimore for a meeting to organize an education conference for property insurance claims. Most of the organizers in attendance were public adjusters. They asked me why other insurance industry groups "shunned" their overtures to create a fall property insurance claims conference.

Mary and I were smiling because it seemed they simply did not get it---insurance company personnel are trained that public adjusters interfere with the claims process and have to be treated almost as if they are the enemy during an adjustment. The enemy stigma, once placed into the adjuster's head, does not seem to go away.

Need proof? Go to the Property Loss Research Bureau website (PLRB). The PLRB is the one property insurance conference professional claims adjusters for the insurance industry do not miss. It involves the "who's who" of the property insurance world. Property insurance vendors like HAAG, Rimkus and SEA show up to court possible business with claims managers. Property insurance company attorneys are there as well. They take their clients to dinner and pontificate about claims issues and how well they have beaten down customer claims through litigation.

I only know these things through hearsay. I actually have close friends who go, share their materials with me, and talk about the events at the PLRB. The PLRB written materials are excellent and the speakers are renowned for their experience. I wish I could attend because many of the topics are my passion. However, I am not invited.

On the PLRB web site, guidelines for the attendance and other rules are posted. Believe it or not--a section exists for rules regarding public adjusters. It states:

PUBLIC ADJUSTERS, AGENTS AND BROKERS
The Claims Conference is open only to those employed by the insurance industry and those who, as their primary business, provide goods and services directly to insurers. Others, such as public adjusters, brokers, and agents, are not invited and may not register nor attend. Any such uninvited person found attending the Conference will be asked to leave and will not receive a refund.

I guess the old saying that if you are not for us, you must be against us is alive and well in the insurance company claims industry. I wonder what kind of information and secrets insurance company claims departments and their attorneys, and vendors want to keep from people who help the insurance company customers? I have always felt it hypocritical that insurance company claims executives and their attorneys say they must be honest with their policyholders, but keep claims procedures secret. How can you be honest when you are withholding the truth?

In the agenda, there is even a seminar: "How to Deal with Public Adjusters." That seminar's details indicate:

** Locate local governing authority websites regulating the licensing and conduct of Public Adjusters
** Employ policy provisions to protect the rights of the insurer relative to coverage and policy conditions
** Resolve claims with PAs by skillful negotiation of the scoping and estimating process
** Document the claim file for effective resolution or success in appraisal

It is sad that there was not one insurance claim seminar at the PLRB devoted to the policyholder's main concern--how to get paid fully and fast. Even skeptical readers probably get the point of what the PLRB is about---but I still wish I could go.

The organizers of the new public adjuster claims conference will not have as a spectacular event as the PLRB. Indeed, they may be in serious trouble if they are asking for my opinion about how to organize it. Yet, I can assure there will not be claims practice secrets and everyone will be treated as equals.