I was honored to be given the Policyholder Attorney Honorable Mention Award from the Insurance Law Center. It was meaningful because I am a policyholder attorney in every case. However, some who read the comment posted by the Insurance Law Center with the award might have the wrong impression about the success that our firm, not just me, had in the Katrina Cases we litigated. This is what was said:
"Although the litigation spawned by Hurricane Katrina tells a tale that overwhelmingly favors insurers, Chip Merlin’s fine representation of many policyholders in Katrina litigation merits an honorable mention in this award category. The legal arguments raised on behalf of policyholders in the various Katrina cases did not for the most part prevail, but the recognition afforded to members of the insurance bar isn’t always about winning. In the Board’s view, Chip Merlin’s dedicated and ethical work on behalf of policyholders is a true measure of success that merits an honorable mention in this Policyholder Attorney category."
My concern is that most reading this would think policyholders that hired attorneys lost. In fact, the opposite is true. In almost every case we handled, the policyholder won significantly more than what was paid by the insurance company before retaining counsel and significantly more than alternative dispute resolution processes set up by the Mississippi Department of Insurance. While it is true that the anti-concurrent causation legal arguments did not prevail, this did not mean that policyholders did not win. Our statistics indicate policyholders with attorneys "won" in the high ninety percent range despite some poor legal appellate decisions. The Katrina cases were successful where it mattered most to the policyholder–it’s about getting paid.
My impression from Hurricane Katrina is that the insurance companies could have avoided much Katrina litigation. Indeed, the lessons from Katrina claims do not seem to have been learned by all insurers. Much of the treatment being experienced following Hurricane Ike by our large commercial and residential clients seem much worse. Delay is rampant and customer service is poor–these may be understatements. The Texas legislature has significant penalties for insurers that act in such a manner if policyholders hire counsel and press their rights.
I delivered a paper, WHY CAN’T WE JUST GET ALONG? A CRITICAL REVIEW OF PROFESSIONAL CONDUCT OF THOSE ENGAGED IN INSURANCE ADJUSTMENTS AND DISPUTES, at the 2004 Windstorm Conference in New Orleans which made suggestions for better claims handling. It also shows what the insurance company customers should expect:
"The following summarizes the appropriate behavior to expect from an insurance company and its adjusters:
1. Train, promote and encourage adjusters to promptly, honestly and thoroughly determine coverage, evaluate damages, fully pay the insured and help the insured.
2. Abolish claims performance guidelines/bonuses/standards based upon controlling indemnity payments. Claims management goals of claims severity should be avoided because it is establishing unethical, biased claims conduct.
3. Promptly pay what is owed. Do not wait for all the paperwork or other coverages.
4. Promptly evaluate all damages under all coverages with the policyholder. Explain in person and in writing the coverages, explain the process and provide status up-dates. These “joint meetings” prevent disagreements and distrust.
5. Explain to the policyholder all coverages and provide practical examples to policyholders so claim recoveries may be maximized rather than minimized.
6. Give the benefit of the doubt to the policyholder when interpreting policy language.
7. Sharp claims practices should be based on obvious policy language and disclosed at the point of sale.
8. Provide enough adjusters, with enough time and enough support to adjust all coverages.
9. Conduct closed claim file reviews – looking not just for over-payment – but especially looking for areas of underpayment and non-disclosure of policy benefits.
10. Prevent fraud after the claim by “hands on” claims adjustment. Policyholders who (1) know a “hands on” adjuster is currently adjusting the loss and (2) that the adjuster appears to be acting in his/her interests will be far less likely to conduct fraudulent activity."
Many good insurance companies are doing these activities, and even more. However, there are so many complaints from new Hurricane Ike clients, that every claims department doing business in Texas should review some of these basic adjustment points if they want to avoid the unpleasant, embarrassing, and costly scenario of explaining away failures under the process of law. Many of our Hurricane Ike clients have far more colorful language to explain what they want to have happen to the adjusters that fail to fulfill the "peace of mind" purchased with the policy.