Miami Herald reporter, Bea Garcia, wrote a very important story, Tackling Contentious Insurance Issues, concerning Insurance Consumer Advocate Sean Shaw. It appears the Roundtable meeting I wrote about in Alternative Resolution Roundtable: Appraisal is the Hot Topic and Is There Any Chance that Appraisal Will Stay the Same in Florida?, is going to be an important last meeting before Shaw takes stances on how Florida legislators should deal with current insurance consumer issues:

As the state insurance consumer advocate, Sean Shaw has a full plate as the 2010 legislative session looms just two months away. He will present regulators and legislators recommendations to improve the claims process for homeowners and possibly increase supervision for public adjusters. The recommendations are the product of several meetings of the Claims Resolution Roundtable, which Shaw hosted this summer and fall with insurers, contractors, adjusters and consumers.

The group has one more meeting the first week in January and recommendations to legislators have to be ready by the end of January.

I really do not know who the property insurance consumers were at the previous meetings. I do not know if there were any. It appeared to me that most participants in attendance were those from the insurance industry and their favored insurance restoration contractors. My impression was that the proceeding seemed more of a love fest for the insurance industry. It is not going to be that way at the January 6th Roundtable, although I expect the meeting will be quite constructive and enlightening.

Unlike many newspaper articles where reporters provide a spin to what is said, Garcia provided questions and the answers given by Shaw. I was troubled by the fact that Shaw sees contractors providing legal advice to policyholders:

Q: You headed the claims resolution roundtable. Did the group finalize its recommendations for the legislature?

A: That’s what we’re doing right now. We got a lot of suggestions. We’re trying to separate the doable from the not-doable, the good from the bad.
Some of them don’t require much legislation. Some might require some continuing education for adjusters or contractors. Some may require letting contractors know what is covered by an insurance policy. Others may require letting insurers know how contractors operate in the real world.

The benefit that can come from legislation or rulemaking is a uniform [claims] estimation system. I don’t know what it would look like yet, but I believe that is one of the recommendations coming from the roundtable. We have another meeting coming Jan. 6.

Shaw’s view of the contractor/insurer/policyholder relationship seems extraordinarily naive. I have legions of horror stories of contractors ripping off policyholders and giving wrong coverage opinions. Many of these policyholders are fairly sophisticated commercial clients. Certainly, if those policyholders are having problems, think about the residential insureds. The consumer protection laws developed to protect consumers from rip-off contractors were mandated because legions of examples were provided to demonstrate a basic need to protect consumers from the sales tactics and performance issues of contractors. Shaw seems to have public recognition of this concern as a consumer advocate. I have warned about insurance restoration contractors in Are Insurance Restoration Contractors Ripping Off Insurers and Policyholders? I even published a comment by a former restoration contractor warning of these problems in Former Restoration Insider Comes Out Swinging Against Florida’s Limitation of Public Adjuster Solicitation.

Public adjusters will be a topic of conversation on January 6, as well. Here is what the Miami Herald story reported on Shaw’s view of public insurance adjusters:

Q: Many insurers are calling for increased regulation of public adjusters, saying these adjusters are responsible for most of the re-opened Wilma claims. What’s your take on public adjusters?

A: It’s a very complicated transaction when you have a claim. The public adjusters serve a vital role in helping homeowners navigate through this process.

Insurance companies will argue — and I don’t want to make their argument for them — that public adjusters are responsible for re-opening claims that are invalid or they’re are soliciting in a way that invites fraud.

There are a few bad actors giving the entire public adjusting community a bad name. But you don’t throw the baby out with the bath. We enforce regulations or come up with new ones to take care of the problem. You just don’t say that public adjusters are a bad thing.

I am looking for the evidence regarding the invalid claims and the manner of solicitation that invites fraud. Insurance claims managers hate re-opened claims. For insurers with a mindset to pay as little as possible, there is only one way to go when a claim is re-opened. Those types of insurance claims managers will do or say anything to express displeasure if it is shown that their original adjustment resulted in underpayment as a result of an initial adjustment that was not thorough, or worse, outcome oriented to limit what a policyholder can recover.

Regarding the solicitation issue, the legislature has already limited the "sign with us and get a free television regardless of if you get anything" solicitation a few public adjusters were offering in Miami. I am curious if there are other solicitations that encourage policyholders to commit fraud and will certainly support such reforms if proven. My impression has been that those were already flushed out a couple years ago and that the insurers use the "fraud" card as a means to improperly classify public adjusters as a derogatory class when they should be more concerned with their own internal management memos which suggest methods to underpay claims.

If I had one suggestion for the consumer advocate, it would be to start asking for those internal memos. Remember how Allstate claimed that its highly criticized claims program, Claims Core Process Redesign, did not apply to homeowner claims until Kevin McCarty’s Office of Insurance Regulation demanded all the memos? Allstate’s lie was revealed when it posted those memos on its website as a result of that investigation. I guarantee that there would be a significant change in the management of claims if our regulators and Sean Shaw would start asking claims management for their internal claims handling memos and directives. Many well meaning field adjusters would applaud such requests that would prove their claims management says one thing publicly and another privately.

If insurance claims management has nothing to hide regarding their internal claims directives, why would they not endorse such requests by regulators? Competitors that cheat at claims would have a much higher chance of getting caught and the propensity to do so would be reduced because the risk of being caught would be much greater. That would be a meaningful suggestion and action by a true consumer advocate. Let’s see if Sean Shaw has the type of courage and vision to really help policyholders get paid quickly and fully.

  • Mike Rump

    Now your on the mark!! Although I would like to see your attitude towards appraisal change a little bit, you are right on target regarding everything else. I look forward to hearing what evidence the carriers present to back up the reopen claims also. I would also like to see real evidence that backs up the wild accusations regarding appraisal and see some real evidence of harm. Also, I think Sean Shaw should check the records of Nationwide. They did away with appraisal several years back and there are rumors they want to bring it back. Nationwide’s records should reveal reality when it comes to who benefits from the removal of appraisal from a policy. My guess is it isn’t consumers who benefit.

    Right on again Chip and I look forward to watching you on TV.

  • Richard Schwartz

    Can you provide us with a direct email address for Sean Shaw and is it proper to show a series of initial claim payments followed up with what the same carrier ended up paying for damages under re-evaluation and without even going to appraisal?

    How about we as Public adjusters turn those documents into his office and copy your office with the same?

    The question becomes why would the carriers pay more money under the re-inspection portion of the claim process, if they paid the full amount of damages during the initial adjustment?

    Again this would be before even going to appraisal.

  • this is a great article and I think you’re 100% correct. I think it’s imperative that insurers be asked to open their books and provide real evidence of their accusations. I am pleased, however, that Shaw realizes that public adjusters are important for consumers and that even if there are a few bad apples.. you can’t paint the entire industry with one wide stroke.

    your ideas are encouraging.;) thanks so much!

  • Chip Merlin

    Mike,

    Just because I write something you agree with does not mean that I am right. We both could have an incorrect view.

    And, I hope you can appreciate that just because my views differ from your views, does not mean I am wrong, either. Indeed, the fact that you agree with me on many topics may suggest you consider the reasoning of my logic in other situations.

    I would also like to share with you my impression that there are many fine and trustworthy insurance industry adjusters and claim managers whom may share experiences on January 6 that suggest a different view on the claim topics which will be discussed.

    It more important that we “get it right” than use the Roundtable as a proceeding to demean others. Sometimes, my impression is that those in the insurance claims industry get an unfair “guilt by association.”

    Still, thanks for the “atta boy” in this instance. I am certain that my conclusion is accurate regarding the internal memos.

  • jeffrey pellet

    lets get the carrier to show cause that Public Adjusters and the appraisal process is the real enemy. For all practical purposes, it is a symbiotic relationship the Public Adjusters have with field claims representatives. Feeding off of others mistakes (in the carriers case of low-balling) or shall we say misguided estimating makes for a claim regardless of its a reopen or newly created claim. As you are well aware, your phone rings from client’s who have already suffered the after effects.

    A chilling thought that a carrier would “willfully turn over internal documents.” Litigate and create new law that has teeth.

  • A public insurance adjuster cannot have a financial interest in the repair or replacement of a damaged property – he or she cannot do the restoration work or be financially involved with the restoration contractor.
    With that in mind, it seems to me to be a direct conflict of interest for an insurer to have a preferred restoration contractor, ie., someone who both determines the cost of the repairs and then performs the repairs.
    In all cases, I believe the insured needs the benefit of a skilled adjuster, both on the insurer side and as an advocate for the insured.
    Additionally, as an inducement to insurers to settle claims correctly the first time, if they have to be reopened and settle at more than, say, 10% higher than the original settlement, they should pay the public adjuster’s fee as a price for their initial poor settlement process.

  • shirley heflin

    I’m going to limit my comment to the fact that Mr. Shaw needs to “get a grip” on the english language:

    He said:

    I can’t believe The Miami Herald would print words that don’t exist (i.e., “DOABLE” & “NOT-DOABLE”)…I realize they were just quoting the guy, but come on!

    It may seem like a minor thing, but it’s not. If this guy is sitting on a “roundtable” that’s making recommendations affecting people’s lives, he should use words that exist! I wonder how he got on this “roundtable.” Further, now that his comments have been printed in a major newspaper and MANY people have read/witnessed his ill command of the english language, I would think his competency and/or literacy should be examined/questioned.

    The issues being examined require the brightest of the brightest – that’s not asking too much!

    SHIRLEY HEFLIN

  • nancy dominguez

    Sean Shaw is the Insurance Consumer Advocate in Florida.. He is chairing the round table. I’ve met him.. he’s an extremely intelligent attorney and public servant and he strikes me as a true advocate for consumers.

    Doable is actually a word – Adj. 1. doable – capable of existing or taking place or proving true; possible to do
    accomplishable, achievable, manageable, realizable
    possible – capable of happening or existing; “a breakthrough may be possible next year”; “anything is possible”; “warned of possible consequences”