The best way to ignore or cover up improper and incompetent claims practice activity would be to ask only the guilty party, right? That is exactly what Louisiana Insurance Commissioner James Donelon and Risk & Insurance appear to have done. It seems that Donelon is not only in bed with the insurance industry, but also with the BP oil spill claims adjusters. Everybody in the business knows that most BP oil spill adjusters need a great deal of accounting help, which they are not getting.
Dan Reynolds, from the insurance industry on-line news, Risk & Insurance ran a story, La. Insurance Commissioner, ESIS Deny Claims-Hiring Rumor. He did a terrible job investigating the facts if he wanted to get it right. He helped BP white wash an investigation of the claims process by interviewing only Donelon and then the company in charge of the process, ESIS. He failed to do what any reasonable junior investigative reporter would have done–dig for the other viewpoint and their information. As such, the story is a sham and reflects poorly on an insurance industry news publication that people should be able to rely upon for accurate information.
The article noted:
The claims-adjusting blog Dimechimes ClaimSmentor was one online source that on June 7 mentioned a rumor that BP had instructed ESIS, the oil company’s TPA for Deepwater Horizon oil spill damage, not to hire any adjusters with experience resolving claims from the Exxon Valdez oil spill of March 1989.
"It’s the first I’ve heard of it," James J. Donelon, the insurance commissioner for the state of Louisiana, said when Risk & Insurance® queried him on the rumor on June 16.
More experienced claims adjusters were subsequently hired, according to a June 9 post from Dimechimes ClaimSmentor.
Over the past two weeks, BP has booked full-page ads in newspapers and television featuring claims representatives to reassure claimants that it is fairly and timely resolving claims.
Donelon said that members of his staff have investigated some BP-related claims centers throughout Louisiana. "We have done some visits to claims centers and found them to be operating smoothly, but that is not all of the claims centers and I do not know how many adjusters there are." he said. A surge of complaints would trigger an examination of the claims operations, Donelon added.
Because BP is self-insured, however, an insurance company is often not the ultimate payer of the claim. As a result, Donelon said, it is possible that irate claimants may not be bothered with alerting Louisiana regulators about poor service.
"We can share that the claims professionals working with or for ESIS are experienced in crisis situations and distributing funds to people affected by catastrophes as quickly as possible," Carla Ferrara, a Philadelphia-based spokeswoman for ESIS parent company ACE USA told Risk & Insurance® in an e-mailed response to questions.
Donelon said his department has become skilled at knowing when claims are mishandled given the department’s experience of settling claims related to hurricanes Katrina and Rita in 2005. "We had a million claims in connection with Rita and Katrina five years ago, so yeah, we do know when things are not being handled as they should be, I believe, and we are knowledgeable and experienced and staffed enough to monitor this situation from an insurance regulatory perspective, no doubt," he said." (empahsis added)
Two weeks ago, I wrote Is BP Hiring Ignorant Claims Handlers with Little Dollar Authority to Pay Claims? That following Monday night, I was in Destin, Florida, for an emergency City Council meeting and wrote about my thoughts in Oil and Hurricanes: Here Comes the One Two Punch:
I am writing this post late Monday night, flying home from Destin, Florida. I was in Pensacola earlier, and debated for BP contributing to a $20 billion oil spill trust fund on Fox Business News. Cash is the lifeblood to businesses. If BP does not get money it owes to Gulf Coast businesses soon, business death in the form of bankruptcy will quickly occur to many businesses with resultant harm to employees and their families.
In Destin, the City council convened an emergency meeting which I attended. Fishermen reported oil slicks 4.5 miles from Fort Walton Beach. Given this development, Destin City Hall was the scene of democracy in action. Out of frustration, the Okaloosa County Commission defied federal officers and voted to take self help measures to preserve their water and beaches, claiming they would willingly go to jail, rather than do nothing.
For those who may be critical of President Obama for alienating the British regarding the BP Oil Spill, I suggest that the people of the Gulf Coast really don’t care. The Gulf Coast way of life has been damaged and more is threatened by BP’s lukewarm reaction. Earlier in the evening, elected County officials joined the angry crowd and took measures into their own hands. They voted to take action not approved by the Federal Government. One official threatened use of their own police to implement their own remedy and battle BP oil spill responders.
Others not from the southern coastal states should get the feeling that many local leaders and people of the Gulf Coast don’t care who is upset. They require any action which will keep the oil out of their local waters and off their shores. They are tired of hearing nothing can be done to fight the oil. A comment was made at the emergency meeting that people from Washington D.C. and Chicago don’t enjoy or go on the water or beaches, but spend their time in fancy restaurants. To say that there was "anger in the air" caused by frustration would be an understatement.
If Insurance Commissioner Donelon or reporter Dan Reynolds attended these type of meetings, they would hear numerous examples of delayed and inept claims handling. The group of attorneys that we are working with on our class action cases obtained a recording of that meeting, and just this one example of dozens that indicate the claims payment problems and disconnect between those damaged by BP and the BP claims administrators:
My name is Steve Travin, I am a small business owner and I have some direct questions for Jay, BP. I want to know when they are going to stop spending their multi-millions on their image and advertisements and pay the poor fishermen, the people who work the docks, the waitresses and for everyone and all the hoops that they make you jump through, you go through their office and they make you file paperwork 10 times over and everyday they have another piece of paper for you to file, we get no money to pay our bills. We get promises and we get nothing back out of that. I have a boat that I have put in with BP and I cannot even get a call me to put the boat back in the water.
BP Claims Rep (Jay Prothro): I do understand the frustration of the vessels of opportunity program, it has not been without many faults. It is on its 5th or 6th iteration right now trying to improve the process because it has been just a big calamity of errors. There have been issues with contracts, issues with activating existing vessels, issues with the commercial vehicles versus the private owned vehicles that are just pleasure boats. All of those things are being addressed and they are attempting to call out the pleasure boats now. They are attempting to create a situation where they rotate boats so that the boat owners and the commercial folks who has not had an opportunity to get in the program yet that can be rotated in, that they boats and vessels can be used and they can earn some money as well. We do understand there are some problems with it, and what I would like to suggest, is if you have had an issue with the VFO program that you contact us at the office in Fort Walton and we will do everything we can to help you straighten out those issues.
President Obama understood the problems after meeting with people who live and work in the Gulf, and he forced BP to put $20 Billion in a claims fund and independent review of the claims program. How could any reporter or Insurance Commissioner miss the problems? Numerous other journalists wrote articles on the these problems that were supported by Congressional testimony, as explained in BP Trying to Limit its Payouts, Lawyers Say:
But, in a letter Tuesday to BP head Tony Hayward, Allen expressed "ongoing concerns related to delayed processing times for larger loss claims, claims pending with no action taken, payment calculations for individual loss of income claims (particularly for seasonal workers), translation of claims material and accessibility for the hearing-impaired." Allen also told Hayward, "We would like more information about BP’s plan for continuing loss of income claims, the mediation program BP is putting in place, and BP’s placement of claims coordinators in each state and how these liaisons will engage with local officials."
Allen also informed BP he was appointing Tracy Wareing, who has been working as part of the National Incident Command, to oversee the claims process. Wareing met with BP officials Wednesday and on Thursday reported progress in making the claims process more responsive and open.
"During the meeting, we directed BP to provide clear public information on the entire life cycle of the claims process that they have produced, and ensure that we have greater accountability for the American people," Wareing said.
On the length of time it takes to pay businesses for losses, she said, "we indicated that — and they recognize — that their previous approach of waiting until basically after the books have closed for each month to calculate losses will not work. It won’t get dollars out quickly enough for the businesses that are struggling on the ground."
She said BP promised "a more expedited claims process for these larger-loss business claims that will basically take into account the ability to allow for those businesses to pay their expenses for the upcoming month as opposed to reflective to the last month."
She said Willis, who was at the meeting, would be participating with her in a series of meetings across the Gulf in the next several days to hear concerns about the process.
And she said that they are going to meet with BP’s claims contractor "to ensure that we can make some changes to better explain to the American public what claims are being paid, what the status is of pending claims, and ensuring that they’re being paid timely and fairly." (emphasis added)
I think there has been some progress on getting larger lost income claims paid. Our firm is following up with those success stories, so accountants can learn to put together claims packages that will be approved and paid quickly, for much greater amounts.
Following my speech on Understanding Valuation Issues of Gulf Oil Spill Claims Thursday in Atlanta, an accountant thanked me for explaining that BP needs to hire a legion of accountants who understand and can quickly calculate the amount of money businesses are losing as a result of the oil spill. He then told me that a hotel for which he calculated a lost income analysis was denied a claim because BP’s claims representative thought lost revenue projections had to be performed on a room by room basis. That is a stupid demand and it shows the ignorance of the BP claims representative. Significantly, the claims adjuster did not use the "D" word for denial, but asked for it to be "resubmitted." No wonder BP can claim it has not denied any claims.
Until our elected officials and the reporters get on the ground in the impacted areas and talk with enough people involved with the particular issue, it is hard to get a story correct. Of course, if you want a white wash for BP propaganda purposes, Donelin and Risk & Insurance have done a marvelous job of portraying BP as running a "smooth" claims process.