What Is A Claim To Insurance Companies?

       

I am working with Mitchell on a claim, and his claim and my post yesterday got me thinking about claims from the insurance company’s perspective. By way of some background, in the claim that Mitchell is working on the supervising adjuster is being very aggressive and demanding to the point of being insulting and demeaning to both him and the insured. Needless to say it’s gotten off to a bad start and letters have been flying back and forth. But still it got me to thinking about what a claim is to an insurance company.

Now a lot of you may be thinking that a claim is an expense and you’d be right, but I think it’s much more than the money that’s going to be paid out. It gets back to understanding why people buy insurance in the first place. Yes, I know you have to buy insurance if you own a car or mortgage a house, but why purchase from one company as opposed to another? Why do folks say I’ve got State Farm Insurance or Allstate Insurance as opposed to just saying I’ve got homeowner’s insurance or auto insurance? I think it’s because there is a perceived value in the company who sold them the policy and a hope that value will be expressed at the time the claim is made. So when I think of claims, I am thinking of opportunity.

A claim is an opportunity from the company’s vantage point to deliver upon that perceived value. To deliver value in the adjustment, to deliver value in the evaluation of damages, to deliver value in the payment of the claim, to deliver value in the relationship that is established between the parties. However, Mitchell’s experience seems to indicate that the insurance company doesn’t look at a claim as a way to deliver value. They are just pissed off at having to pay. In reality what occurred is that the insured is being perceived by the company as trying to get something they don’t deserve.

And that mindset is a wasted opportunity to deliver on that perceived value.

Imagine how different the relationship between insurance company and insured would be if the insurance company fostered and nurtured the concept that a claim is an opportunity to deliver value in the adjustment process. Imagine if the adjuster were more concerned with building a relationship instead of letting the policyholder know what wasn’t covered and what the insurance company couldn’t do. Imagine if they brought to the table solutions rather than objections. I think the bottom line would actually improve. Sure indemnity might increase slightly, but legal and experts expense would certainly drop.

“Would you like a latte with that drywall?”

Bill

A System Broken

Something’s been gnawing at me lately and this past Tuesday, I was able to see it in action first hand. I attended the Citizens Property Insurance Forum held at the Dadeland Marriott in Miami Florida. It was sparsely attended, which gave me the opportunity to have some one on one time with a senior Citizens claim management person. I had originally intended to got there and express my clients frustration with the Citizens claims process, but considering the paucity of participants it seemed more productive to discuss these concerns privately.

What I can tell you from this private meeting is that the claims handling procedures in place at Citizens are profoundly dysfunctional. I have mixed feelings about this dysfunctional condition. On the one hand, I want to fix it so that the policyholder benefits. On the other hand, Citizens Property Insurance Corporation has become my Best Salesman. The policyholder who runs into the Citizens brick wall is forced to seek the assistance of a Public Adjuster or Attorney to help them resolve their issue. The Public Adjuster resolves the matter through appraisal and the Attorney files suit. The claim gets settled and the policyholder while not particularly happy is paid.

Now here’s the irony: Citizens is not happy with the outcome of the appraisals and they are not happy with the outcome of litigation. Profoundly unhappy might be a more apt description. And yet, as profoundly unhappy as Citizens is with both of these dispute resolution venues, they are not receptive to change. It is the classic Einsteinian definition of insanity: Doing the same thing over and over expecting a different outcome.

Here’s the Citizens claims adjusting process in a nut shell. We investigate the loss. We come up with a position. We proffer our opinion to the policyholder. The policyholder unquestionable accepts our position. Claim is closed. What happens if the policyholder disagrees? Simply put they are cordially invited to piss off!

Missing from this scenario is a key and fundamental aspect of adjusting: communication. Citizens’ believes it is the only party in the equation that is entitled to have any input into the claims adjustment process. This is little more than hubris.

And here we are, resolving claims through appraisal and litigation because Citizens is unwilling to listen, unwilling to talk out differences, unwilling to be flexible, unwilling to negotiate, unwilling to provide anything that even approximates customer service.

Now understand, they take this stance ostensibly because of governmental oversight to which they are supposedly subjected. I don’t buy that, because it ultimately implies that policyholder’s would have to got to their state representative to get claims paid and the representative has better things to do that mediate insurance disputes. A more likely explanation is that the majority of the time their position is simply unsupportable. Appraisal awards and litigation outcomes are evidence overwhelmingly supportive of this observation.

So Good

The other day I met with an adjuster out at a loss. I had heard of this adjusters reputation through the grapevine and the grapevine did not have much good to say about him. Anyway this adjuster shows up with the usual insurance adjuster repertoire of tools: tape measure and camera. This guy was so good that it only took one “o” to spell it and you started with a capital G.

My point in telling this story is not to rant and rail at every adjuster with whom hubris is a personality trait, but rather to point out as I’ve done before that some times losses are not open and obvious. Yet adjusters routinely show up without the tools necessary to do their job beyond what is obvious. The village idiot can see damage that is open and obvious; it takes a professional to see damage that is not.

Here’s the rub: the policyholder depends upon the insurance company to send out a professional adjuster. Those sent out however by and large are not professionals. I know it, you know and the insurance company knows it.

I say the insurance company knows it because they don’t trust these people with authority to agree on scope or price. They don’t trust them! Now here’s my question: if the insurance company doesn’t trust the adjuster they send out to adjuster your loss, why should you?

Damage Appraiser Schammage Appraiser

You’ve got an insurance claim and the “adjuster” sent out by the insurance company is perfectly willing to tell you what isn’t covered but can’t tell you what is covered. Or tells you they can’t commit the insurance company to coverage or payment. What do you do?

This situation is more common than you might expect. Much of the time when we inspect losses with the insurance company adjuster, the adjuster begins the inspection with a preamble something like this: I’m here to inspect the loss and I don’t have any authority to act on behalf of the company. Now I know this statement is B.S., my guys know this statement is B.S., but the adjuster thinks this relieves them of any responsibility for their actions. Having pontificated thusly, the adjuster then begins to go through the loss, taking exception to this damage or that price. They are always willing to tell you what isn’t covered, what they believe to be over priced and what they believe to not be related to the cause of loss. They may even want to take a recorded statement or pick up receipts for repairs and expenses.

All of this is the activity of an adjuster as opposed to a damage appraiser. Their actions negate their words. I hold the adjuster to their actions. I also never trust that adjuster to be straight with me from that point forward.

Now as a policyholder, you may not appreciate this distinction until it’s to late. So what I recommend is that you watch what the adjuster does. If they go through your loss telling your “this is not covered” or that is the result of “long term leakage”, make a note of these statements in your journal. Note as closely as possible the exact wording of their remarks. On the other hand, if the adjuster tells you the roof is going to be replaced or you’re going to get a new kitchen, make a note of this as well. Then write a letter to the adjuster acknowledging the commitments made by that adjuster. Don’t acknowledge a no coverage position, only those things which the adjuster agreed to pay for. On anything that the adjuster takes exception to during the inspection, insist they write you a letter citing the appropriate policy language supporting their position.

The idea here is to document and or confirm everything that was said. If you fail to document it now, while it’s fresh in your mind, you’re at a disadvantage when trying to remember what was said later. If after confirming what was said to the adjuster in writing they try and backtrack, you can then put them on the spot by insisting that they explain their statements.

Adjuster or Damage Appraiser

We have a new adjuster onboard. Mitchell recently got his public adjusters license and was looking for a place to learn the craft. He’s sharp, has good street smarts and had one minor flaw: be believed that an adjuster sent out by an insurance company was a professional. He’s been disabused of that notion.

A client, I’ll call him Hy, had a hurricane loss. Hy called his insurance company, like he’s supposed to do and reported the loss. The company sent out an adjuster who evaluated the loss as below the deductible. Understand, Hy has a rather large deductible, so maybe it’s understandable that the company representative would evaluate the loss as not breeching the deductible. Maybe. A year passes and Hy learns that Mitchell has recently been issued his license, so he calls him.

Mitchell and I inspected the loss and wrote an estimate. The value was well in excess of the deductible. Now if you’re an insurance adjuster reading this you are probably thinking to yourself ‘no surprise here’. Mitchell requests a re-inspection and I tag along. The new and improved adjuster is given a copy of our estimate and begins the process of reviewing it in context of the loss. He agrees that the roof is in need of replacement. He agrees with the estimates’ interior damages. He doesn’t say one word about changes. Mitchell’s thinking ‘all right, I’ve got my first settlement’. I’m watching and waiting. We go over the agreements with our client and then sit back and wait: Mitchell with anticipation, me with reservation.

The check comes. There is no resemblance to the agreements reached with the adjuster. Mitchell’s pissed, Hy’s pissed, I’m pissed. It’s time for a reality check. I know you can’t reach an agreement with the adjuster, but this is news to Mitchell and Hy. The reason for this is quite simple. While the adjuster may have an adjuster’s license issued by the State of Florida, they are not actually adjusters. They are damage appraisers. They look at you with a blank bovine stare knowing full well and aware that the insurance company is going to re-adjust the estimate, unless of course is comes to an embarrassingly small amount. You see the adjuster does not have the authority needed to do their job. Mitchell understands this now. Hy understands this. You should understand this too. Today’s insurance adjuster has no authority, so don’t put much stock into what they say.

We are going to resolve this via appraisal. Appraisal it seems is the only way to reach agreement these days. The tragedy is that most policyholders still believe their adjuster. That’s changing though, one claim at a time. Then what?