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If a picture is worth a thousand words, the above chart is exhibit one about how insurance claims executives feel about claims adjusters that pay more versus paying less to their policyholders. Policyholders often have their claims underpaid because insurance companies reward those claims adjusters who underpay claims. The rewards come from a view and promotion of “high performer” adjusters that pay policyholders less are better adjusters than those who pay policyholders larger and fuller amounts.…
Continue Reading Why is Your Insurance Claim Underpaid? Many Insurance Companies Reward Adjusters Who Pay Less on Claims

I have noticed a trend that insurance companies are placing increasing burdens on their policyholders during the adjustment of claims. It is important for every policyholder to understand their duties and obligations under the insurance contract, however, it is just as important that insurance companies comply with their obligations. When a carrier fails to meet its obligations, most states provide an independent cause of action to hold them accountable. This week is the beginning of a series of posts that I will highlight what the insurance companies’ responsibilities are after notice of a loss is reported.

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Continue Reading Are You Aware of Your Insurance Company’s Obligations When You Report a Loss? You May Be Surprised

Insurance contractors who write estimates for insurance companies with which they have close relationships have a conflict of interest. When contractors are not in league with insurers and they are making truly independent estimates they expect to complete without change orders, I find that the estimates are much higher and more liberal than when a contractor does not expect to do the repair job or knows he can write change orders at a later date.

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Continue Reading Many Insurance Vendors Write Scope and Price Higher or Lower Depending on Whether They Get the Job

A very fine insurance defense attorney, Brian Hunter, made a comment to yesterday’s post, Do Insurance Companies Overpay Claims? with the following observation:

"Second, not only can claims be overpaid, they can be underpaid…."

Assuming this is true, and it probably is based on the law of averages, how can we have any meaningful data? What is the standard against which a claim is judged over- or underpaid? Is it the proof of loss, or the public adjuster’s estimate, or the appraisal award, or something else? Even if we use the most presumably objective of these, i.e., an appraisal umpire’s award, as a standard, then a good many claims I have seen resolved in that manner have been simultaneously underpaid by insurers and grossly inflated by the insured and/or public adjuster.

Of course, in most cases, an appraisal award is a legal fiction that may or may not bear a rational relationship to the amount necessary to repair the property; but it is certainly and merely an estimate. Frequently, the umpire’s award is an average of two competing estimates. Regrettably, few court-appointed umpires have any specialized training in the construction fields, and many have never written an estimate of their own nor done any kind of construction work. Maybe a better standard is needed.

What we do not have is reliable data in Florida during the past several years comparing claim payments with amounts spent by policyholders to actually accomplish like kind and quality repairs. (If I am wrong, I would love to see a source.) Changing the law to require insurers to pay actual expenditures, and not mere estimates of replacement cost (some honest, some not, all estimates nevertheless), would bring greater certainty to all the parties, I think. Yet this is opposed by the same folks, i.e. public adjusters, bemoaning the lack of accuracy in claim adjustment.

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Continue Reading Insurers Track Overpayments

Motivated claims adjusters need to study, improve, and be noticed for their skills and dedication. The May edition of Claims Magazine featured two stories I found interesting for different reasons. One article every adjuster should read is "Designation Envy-Why CPCU Should Matter to You." The other article, "Emerging Transformed-New Challenges Create Opportunities for Independents," should be read by claims practice attorneys and experts because it provides a glimpse into claims cultures designed to reduce amounts paid to policyholders.

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Continue Reading Claims Magazine and the CPCU Designation are Worthy Educational Investments for Claims Professionals

Our firm has a videotape somewhere in our library of a former State Farm adjuster that was known as a Claim Re-inspector.  He is now a public adjuster in Tennessee, still very religious, and a person I run into at conferences once in a while.  Every time I hear the term “claim leakage,” I think of him, the role he played at State Farm, why he left after being “pegged” for management, and his videotape.
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Continue Reading Is Claims Management Only Concerned About Overpaying Claims?