Crawford has acknowledged that the insurance industry it serves is not living up to its good faith claims obligation in a recent publication. Here is the confession about the 2017 Hurricane season which it reported in Today’s Large & Complex Claims Landscape: Preparing for the Perfect Storm:
To adequately respond to today’s evolving catastrophe landscape, insurers need to be prepared with contingency plans for their contingency plans to make sure the “perfect storm” of 2017 doesn’t happen again. Through streamlined, coordinated team response, expert scenario planning and the vast knowledgebase of worldwide claims expertise, insurers can rest easy knowing they’re getting the best possible resources working on the frontlines of catastrophe.
This scenario should never have happened in 2017 or 2018. We had four hurricanes in Florida alone in 2004, and then three major hurricanes in 2005. The insurance industry, including Crawford, learned that it needed extra capacity for adjustment of their customers losses. Field adjusters needed greater line item authority to pay for significant partial amounts of undisputed loss. Florida requires insurers to have these plans in place, but these plans must be made with a wink and a nod that they are being followed or expected to work.
The typical business interruption adjustment does not start for months. Insurers no longer have staff adjusters who have any training about determining the amount owed for a coverage they sell with virtually every commercial policy issued. Instead, the entire claim industry sends their customers’ business interruption claims to third party accounting firms who rarely go to the business loss site, but then ask for financial information months following a loss. Why don’t insurance companies have these accountants immediately go to the business, speak with the policyholders, their bookkeepers, managers and accountants on site and then issue a payment right away? Can you imagine any other industry in the emergency response business saying, “hey, sorry this happened to you, thanks for telling us and we will fix your problem six months from now?”
Crawford knows that quick response is needed for business interruption claims:
Timely, expert response is critical, particularly as business interruption claims account for a larger percentage of loss than property damage. According to one 2015 report, the average large BI property insurance claim now exceeds $2.4 million, 36 percent higher than the average property damage claim.
The report also noted:
‘Bringing forensic accountants into the process early on can ease the ultimate cost burden on the insurer,’ said Morgan. ‘We can assist with the mitigation planning. . .we can be instrumental in [key] decisions early on in the process.’
Furthermore, the value of a closely aligned adjusting team—from accountants to adjusters to outside expert consultants—cannot be oversold when it comes to cost mitigation. Whether or not the team works together on the ground or maintains communication remotely, the 2017 hurricane season demonstrated that a dedicated, knowledgeable team response is essential for fast recovery, with the best possible outcomes for the insured and the insurer.
The insurance claims industry knows what to do. It simply does not pay enough people to do it or it fails to take the actions needed when the moment of truth comes for delivering prompt adjustment.
Meanwhile, the business customers are drained of cash and the executives in the claims industry ignore the obvious ethical problem—they are knowingly delaying cash claim benefits needed right away because of their intentional delay of investigating and adjusting ongoing business interruption losses. Maybe these claims executives should pretend to have no cash income coming personally to them for six months after a hurricane. They will better empathize about why their commercial customers are mad as hell about claim delay.
I encourage readers of this blog to take a few minutes to read through the Crawford report. For public adjusters and policyholders with Crawford claims personnel working their claims, you may want to send this to them as a reminder they have an obligation for prompt payment of benefits and the only way to do that is by giving enough time, effort, and authority to those to work the claim properly.
Thought For The Day
Indecision and delays are the parents of failure.