In 2008, Chip Merlin posted about insurance fraud involving public insurance adjusters. In the post, A Few Bad Apples, Chip candidly wrote about how public insurance adjusters are hated by most insurance companies because of a perception that public adjusters engage in wrongful behavior. Public adjusters have a difficult job. Their goal is to often convince insurance companies that that a policyholder has been shorted and more money needs to be paid. Since most public adjusters work on a contingency fee percentage, it is not uncommon for their words and work product to be heavily scrutinized. Even when a public adjuster is correct about a claim, it is not uncommon for carriers to continue to hold firm in their positions. This is a frustrating scenario but the ethics and duties public adjusters have to their clients should never be compromised.

Ethics and professionalism are frequent topics presented at public adjusting association meetings and public adjusters nationwide should join these associations. Many states, like Florida, California, and Texas, have their own associations. NAPIA welcomes members from states across the country and "for more than 60 years, NAPIA members throughout the United States have joined together for the purpose of professional education, certification, legal & legislative representation, scholarship & research, marketing opportunities, and promotion of the public adjusting profession."

Policyholders need public insurance adjuster representatives to help them navigate the claims process and because of the highly technical issues that are often involved in these claims, public adjusters must be educated, ethical, and not allow for improper claim presentation.

Instead of handling certain claims in an ethical and proper fashion, a New Jersey adjuster has recently pled guilty to third-degree insurance fraud in connection with insurance proceeds collected for clients.

According to the Insurance Journal,

[B]etween July 31, 2005 and August 13, 2010, [the adjuster] submitted property damage claims to four insurance companies claiming that damage was sustained and repairs were completed at properties located in Paterson, Newark, Irvington, and East Orange when, in fact, the repairs were not completed.

This type of representation hurts the reputation of a group that that is constantly fighting to promote the good works of their services. The advice Chip Merlin gave readers in 2008 still rings true.

When a public adjuster is involved, it reinforces the perception by those acting on behalf of the insurance industry that ‘public adjusters just cannot be trusted.’ The old adage, "a few bad apples can destroy an entire basket," comes to mind when I hear or read stories like the one cited above. Public adjusters must beware that if this perception persists, they could be in danger of having licensing statutes disappear or severely limited in the states that allow public adjusting.

Public adjusters should take this advice to heart and join together with other public adjusters in associations.

  • Mike Rump


    While it is true that carrier’s harbor a distrust of public adjusters (I did too when I was on that side of the fence) Public Adjusters as an Industry are not perpetrators of Fraud and deceipt. This was clearly pointed out in the OPPAGGA report which was written just a few years ago. In my humble opinion, much of the problem with our industry was caused (once again) by bad legislation when our legislature relaxed the licensing guidelines and qualifications to become a public adjuster. This was opposed by FAPIA, but was pushed through in a misguided attempt to fill a void. What resulted was a flood of new unqualified public adjusters who caused some problems by their inexperience and lack of knowledge. In addition, there were indeed a few bad apples in this group. FAPIA continues to push for stringent enforcement of the laws that apply to our profession and we continue to push for better education and ethics guidelines. I appreciate your attention to this matter and we all love your leadership in this important area.

  • Stanley K. Kaufman

    Distrust by anyone sometimes is due to a lack of understanding or in the case of Public Adjusters is not limited to just the Insurance Carriers but others as well. Knowledge by all people as to what exactly a Public Adjuster does and how he conducts himself is important.

    There are numerous ways to correct the mystics of Public Adjusters that have been debated over the years and that is to educate all people about Public Adjusters. A large part of the public have no concept about Public Adjusters. We need to go back to the basics of what was done years ago in speaking to large audiences at various organizations levels such as Kiwanis or even religious congregations. There are numerous opportunities for Public Adjusters to educate the public on both insurance coverages as well as What Is a Public Adjuster.
    Laws to control the conduct of a Public Adjuster are not the solution to the problem. But a code of ethics as well as education are the most important facts. This by the way is also true of Insurance Adjusters working for the Insurance Industry.

    There needs to be a control over Insurance Adjusters who spoil the reputation of the Insurance Industry as well. There are some states where they are independently licensed. However, nothing has been seriously attempted to control their lack of Ethics nor their Lack of Knowledge with or without a license.

    What a world it would be if both the Adjusters and Public Adjusters were to conduct business with the same Code of Ethics and Knowledge.

    I have been in the Insurance field for over 60 years and have enjoyed the work I do to this day. I also hope I conduct myself professionally with a good code of ethics and knowledge. There is not a day that goes by that I truly can not say I have learned something new.

    To all my Public Adjusters / friends keep up the good work. You are desperately needed to help others less fortunate and who lack the knowledge you possess.

  • Chip Merlin


    Nicole made this post and comments about public adjusters almost each Saturday. Most of her stories are quite flattering about the work you and most of your colleagues do every day.

    Unfortunately, we come across stories and learn of others that are not indicative of ethical behavior. To be fair, we think there is a need to discuss those rather than pretend problems do not exist. While I wish it was as easy to point the finger at the ease of obtaining a public adjuster license for the reason for wrongful conduct, I honestly do not think that is the cause. Instead, most fraud by public adjusters is rooted in individual greed.

    On the other hand, some insurance companies typically have group and cultural fraud as their claims problem. In those cases, claims managers allow or demand a culture of claims payment minimization rather than looking for ways to quickly pay all benefits that are owed the customer.

    Thanks for your comment and taking the time to share your view.

  • Chip Merlin


    Thanks for your interesting comment coming from years in the industry.

    My view is that legislation and regulation will never stop those bent on breaking those rules out of greed. However, the enforcement of those rules may keep many more in check.

  • Naomi Sanders

    We should guarantee ourselves in approaching right public adjusters. We should consider these things trustworthy, honesty and have a work ethics. It’s sad to know that other good public adjusters might have a bad image because of the irresponsible ones.