Church Mutual has not been so friendly and acting in good faith to its Louisiana policyholders. A federal judge in Louisiana made this closing statement about a trial with Church Mutual where Engle Martin acted as Church Mutual’s independent adjuster:1

This Court is concerned with Church Mutual’s handling of insurance claims, or for the lack of better terms, their repeated mishandling of claims and failure to resolve claims. The Court has observed that of all the insurance carriers that proceed through the Court’s Case Management Order, Church Mutual settles the least number of cases pre- certification—only approximately 20%–whereas the majority of cases settled pre-certification by other insurance carriers range from approximately 80-100%. The Court finds that Church Mutual has established a pattern of systemic failure to resolve insurance claims during the Streamlined Settlement Process.

The court further made these findings: 

After considering all of the testimony and exhibits, the Court finds that CM grossly mishandled First Baptist’s claim. The record clearly exposes CM’s failure to adjust the claim. CM made numerous errors and mistakes as noted herein. CM failed to pay the Church what was due under the policy, and every payment it made was untimely. The Court finds that CM had notice of the proof of loss on September 8, 2020, the date of the first Engle Martin Report. That report estimated the total loss to be $630,000 and noted the significant damage to the Church properties. Louisiana Revised Statute 22:1892 obligates the insurer to make payment within 30 days of proof of loss. Thus, CM’s Advance of $100,000 made on October 12, 2020, was untimely, as well as all subsequent payments. See French v. Allstate Indemnity Company, 637 F.3d 571 (5th Cir. 4/4/2011) (‘If part of a claim for property damage is not disputed, the failure of the insurer to pay the undisputed portion of the claim within the statutory delay will subject the insurer to penalties on the entire claim.’)…

Based on the evidence at trial, the Court finds that the Engle Martin Report grossly under adjusted the claim. The Court finds that the estimate prepared by Mr. Chambers to be the only credible adjustment made by a Louisiana licensed adjuster. The Court accepts Mr. Chambers’ estimate as the covered damages CM was obligated to pay under the policy, with some adjustments that will be discussed below.

The Court further finds based on the evidence presented at trial, that CM’s handling of the claim was arbitrary and capricious, and therefore in violation of Louisiana Revised Statute 22:1892. As such, First Baptist is entitled its unpaid losses, statutory penalties, costs, and attorney fees.

The Court addresses and calculates those losses, statutory penalties, and attorney fees as follows.

…CM relied exclusively on Brett O’Steen’s estimate, which this Court does not accept nor find credible.

One of the most amazing aspects of current property loss adjustment by many insurers is how little time they spend investigating the loss by speaking with their own customers. The new method is to quickly determine a gross measure of loss and then hire non-licensed “experts” who come up with the damages. The court recited how Church Mutual and those with Engle Martin followed this pattern of property adjustment:

Mr. Fink was not aware of any person from CM who spoke with either Pastor Oliver, Rachel Gremillion, or any other representative of the Church. Mr. Fink visited the Church one time on March 3, 2021. Mr. Fink testified that other than this one visit, no one else from CM ever visited and/or inspected the Church after the Hurricanes. Mr. Fink also testified that the only other person from CM to visit the Church was Mr. Ellis, who only visited the Church once.

Mr. Fink decided that an engineer and construction consultant was necessary because it was a large loss in excess of half a million dollars. Mr. Fink also testified that even though he was an adjuster, he relied on Mr. O’Steen to provide an estimate of the damages. Even though Mr. Fink was capable of preparing an Exactimate estimate, he chose not to do so, and he did not adjust the claim. Mr. Fink was unable to point the Court to any adjustment of the Church’s claim by CM, Engle Martin, or Young & Associates. Instead, CM relied on the estimate of Mr. O’Steen who is a construction consultant and not a licensed adjuster.

Mr. Fink also testified that CM had its own adjusters who handled large losses, but none of these adjusters prepared an Xactimate claim or adjusted the claim.

The federal judge correctly noted the problem of the insurance company hiring unlicensed claim surrogates to adjust the loss. This is a common and growing wrongful practice by many property insurers. I noted this and other articles about this practice in Is JS Held a Claim Surrogate? Do Not Miss Today’s Tuesday At 2 With Chip Merlin, and Insurance Surrogates and Insurers Delegating Those Duties Do Not Want Surrogates To Be held Accountable For Failing To Provide Honest and Good Faith Treatment In Washington.  

This trial finding is certainly not good for the adjustment reputation of Church Mutual, Engle Martin, or Bret O’Steen. Everybody has a chance to correct past mistakes. It will be interesting to see what Church Mutual does to address this situation. 

Thought For The Day 

It’s very important that we don’t make the same mistakes twice. That’s a big part of improvement.

—Kirby Smart

1 First Baptist Church of Iowa Louisiana v. Church Mutual Ins. Co., No. 2:21-cv-02472, 2023 WL 4423531 (W.D. Lou. July 10, 2023).