I just finished speaking on a panel with Steve Badger and Jon Held. I want to thank the leadership of the Windstorm Insurance Network to allow us to provide this presentation. My hope was to get insurance industry affiliated individuals with a depth of experience and who are leaders in the field on the panel. Held and Badger come out of central casting as the best people for that. I felt that we could talk about any issue based on our national experiences. Having a policyholder advocate like me on a panel in such a discussion is what the Windstorm Conference is all about. I learned a lot and hope readers of this blog who attended did as well.
One impression that stood out for me was how much Steve Badger hates appraisals where the amounts go up significantly. I feel exactly the opposite. I do not speak for Steve, but he seemed to think that if the prior adjusters, public adjusters and whoever estimated the claim missed items or did not do their jobs fully, the policyholder should not be able to collect for provable amounts. I think Jon Held felt the same way. I suggested that they did because they are aligned with insurance company interests, but their view is significant and should be addressed.
“Gamesmanship” was the reason Badger pointed to the reason for appraisers of the policyholder to come up with amounts not previously determined claimed. He had a chart and then questioned how public adjusters would miss a claim by so much. The problem, especially on larger losses, is that many public adjusters do not pay for all the expert costs and neither does the policyholder. I can tell you that if it comes to my law firm, we hire experts and the claims can go up, a lot, or down. New eyes and views correct mistakes. My view is that getting the policyholder paid fully should be on the minds of Steve Badger’s client and not if they are simply paying more in appraisal.
Still, if Badger means that people are fabricating the amount of the loss, that is not right. But damning the policyholder because the first set of eyes missed the forest from the trees is another wrong. I remember my mother saying something about “two wrongs never make a right.” Getting the policyholder fully paid as promptly as possible is something that I bet Steve Badger and Jon Held will publicly agree with me. They may not be happy when that number goes up in appraisal because their client will not make their profit numbers for the quarter and complain to them about missing their personal bonus, but such is life. The insurance company should not have those types of severity or loss ratio incentives in the first place.
My second impression is that the audience can glean why it is important to put yourself in the other person’s shoes. One example is the “race to the courthouse.” I agree with Badger that people should not race with a letter or lawsuit to name an umpire. I must admit that I was guilty of this 25 years ago when appraisal was not demanded as much as it is now. But, getting an honest, fair-minded and fair process-oriented umpire that can control people who advocate for their position is vitally important. The umpire being unbiased briefly noted Jon Held in my post, Umpire is Biased Based on His Firm’s Work for a Party—Are Appraisers Subject to this Rule?
For policyholder advocates and all public adjusters, my last impression is that we need to place ourselves in the shoes of the insurance company adjusters and managers when considering how to help our clients. While paying an increased amount is easy to say that an insurer wants to avoid, maybe they are upset that previous information has lead them to believe that a proper reserve should be much less than what may happen in an appraisal. Even an estimated reserve with a warning about possible increased amounts due based upon investigation not brought to the adjuster’s attention is far better than “surprise, here is the new higher number that nobody investigated and raised.” It makes the adjusters and their experts look like fools. If you enjoy that gamesmanship and making people look bad, be ready for those surprises for you as well. Most of us are not that much cleverer than another.
Thought For The Day
I think clever people think that poor people are stupid.