Insurer testimony before Senate Select Committee on Property Insurance Accountability in Tallahassee, Florida on Monday revealed an industry crying poor while laughing all the way to the bank. It revealed the inherent vulnerability with the legislature’s ability to regulate an industry that is allowed to divide itself into smaller and smaller pieces. Allstate is the case in point. Allstate is earning more money than ever before, but Allstate Floridian, according to its Chief Executive Officer, Joseph Richardson, Jr. is on the brink of insolvency. (This from an article in Insurance Journal)
Over the years insurance companies have gotten increasingly smaller while the parent operations have gotten increasingly larger. This paradox allows the industry to claim losses as a basis for rate increases without exposing the parent company to scrutiny or litigation. This business model effectively divides the pie and places the risk upon the residents of the state to “bail out” the smaller company in times of disaster when those residents are most in need of protection. What happens to the parent company: they get to declare themselves the victims of the same catastrophe while not being exposed to excess loss.
The solution is simple. Pierce the veil of the subsidiary and look at the entire company rather than being content with a small slice. Doing this with Allstate would reveal a company that is far healthier that testimony would lead you to believe.
Showing posts with label florida. Show all posts
Showing posts with label florida. Show all posts
Wednesday, February 6, 2008
Monday, February 4, 2008
The Collins Center
Florida is embarking upon a new journey: The Collins Center as a means for resolving disputes via the appraisal mechanism in the insurance policy. Advertisement aside, I have elected to participate in this project. After two days of training, I can say it’s promising.
Appraisal in Florida is symptomatic of a system broken. More claims are resolved today via litigation and appraisal than ever before save in the aftermath of Hurricane Andrew. The question that must be asked is why? Why does the public (insured’s, adjusters and attorneys) see appraisal as a necessary evil to resolve disputes with their insurers? Quite simply there is no one on the insurance company side to negotiate with. No one who has authority to agree on loss and value. No one who is authorized to commit to coverage. No one who is able to share information at that vital early stage in the adjustment process. That lack of field adjuster authority creates an attitude of mistrust amongst all involved.
The truth is that the insurance company does not trust the decision making capacity of those it hires for the adjustment of the claim to make the right decision. That lack of trust is then veiled behind secrecy and obfuscation with the intended result: delay of payment and frustration on the part of those who are in dire need of the bargain of the contract.
From the ashes of destruction rises the Phoenix. The Collins Center is a non partisan organization with its hands in many projects. It has undertaken to provide a bit of sanity in the appraisal process by taking out of the loop a key component: selection of the umpire. Parties agreeing to utilize the Collins Center will have an umpire appointed by the center on a rotational basis. This rotational appointment hopefully will result in a perceived absence of bias with the umpire. Time will tell how well this system will work. In the interim, I am willing to give the process a chance.
Not all public adjusters support this program, but lets face it the system is broken and anyone bringing sanity into the process is welcome in my opinion.
Appraisal in Florida is symptomatic of a system broken. More claims are resolved today via litigation and appraisal than ever before save in the aftermath of Hurricane Andrew. The question that must be asked is why? Why does the public (insured’s, adjusters and attorneys) see appraisal as a necessary evil to resolve disputes with their insurers? Quite simply there is no one on the insurance company side to negotiate with. No one who has authority to agree on loss and value. No one who is authorized to commit to coverage. No one who is able to share information at that vital early stage in the adjustment process. That lack of field adjuster authority creates an attitude of mistrust amongst all involved.
The truth is that the insurance company does not trust the decision making capacity of those it hires for the adjustment of the claim to make the right decision. That lack of trust is then veiled behind secrecy and obfuscation with the intended result: delay of payment and frustration on the part of those who are in dire need of the bargain of the contract.
From the ashes of destruction rises the Phoenix. The Collins Center is a non partisan organization with its hands in many projects. It has undertaken to provide a bit of sanity in the appraisal process by taking out of the loop a key component: selection of the umpire. Parties agreeing to utilize the Collins Center will have an umpire appointed by the center on a rotational basis. This rotational appointment hopefully will result in a perceived absence of bias with the umpire. Time will tell how well this system will work. In the interim, I am willing to give the process a chance.
Not all public adjusters support this program, but lets face it the system is broken and anyone bringing sanity into the process is welcome in my opinion.
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