Subject: Risk and Loss (Underpayments) = Fat Contingent Profits?:
Posted On: April 2, 2006, 12:22 pm CDT
Posted By: Roger Poe
Comment:
4-2-2006
Before the flood coverage victory dance gets underway by certain insurers, some other claim loss coverage value issues need careful consideration–
Can insurers create illegal profits by collecting (actuarially factored) premium dollars you and I are (knowingly) owed by insurers, and then use adjusters to deliberately and deceptively misadjust claim loss values?
Are actuaries ignorant of deceptive claim settlement practices that can give them synthetic construction loss value data?
Does Allstate Insurance Company, and their associate, Pilot Claim Service, take the lead in the insurance industry in requiring their adjusters to \’knowingly underpay every claim\’?
Is State Farm Insurance, Safeco, USAA, Farmers and other insurers following the Allstate / Pilot lead in Texas, Florida, Maryland, Mississippi, and elsewhere?
From [catadjuster.org] a mature Allstate Insurance Company claims examiner replies to an aspiring contractor turned insurance adjuster;
__________
\”Brooks Todd Posted – 12/18/2003 : 19:10:52
——————————————
I just recieved my adjusters liscence, from The Great State of Texas. I have 22 years in construction (framing, roofing, sales & concrete). I am an excellent estimator, and can build anything from a dawg house to a church.
I am having a hard time finding a job in the adjusting field. I know what my angle is now. Imagine having an adjusters liscence, and being a contractor. I am calling Allstate tommorow. You have to change with the times.
I would not advise calling Allstate if you wish to keep your integrity intact.
After almost 7 years with them and having held a variety of positions, including the sole Quality Evaluator for the entire southern half of Texas, I finally became fed up with their approach to requiring every adjuster to KNOWINGLY UNDERPAY every claim and left them this past July.
The head of Allstate in Texas – Gary Briggs – had the nerve to stand up in front of an agent\’s meeting last spring and say (QUOTE) \”I love the new HOA+ policy! It doesn\’t cover anything and WE STILL GET TO KEEP THEIR MONEY!\”
I used to tell people whose claim I was handling that \”the good hands of Allstate were right here\” as I held my hands out for them. I could no longer do that in good faith and look myself in the mirror so I left.
One of these days the Texas DOI is going to catch up with their property handling practices and then it will all hit the fan!
Good luck with anyone else!
Kevin Hromas Country: USA | Posts: 75
Can insurers (2003, 2004, 2005,2006) contingent windfall profits be generated illegally by such fraudulent claim settlement conduct?
Quote from an insurance regulatory agency;
\”–Indemnity is the basis and foundation of insurance coverage.
The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.
This objective REQUIRES that the insured receive a payment EQUAL TO that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.
The calculation of this payment results in UNDER-compensation if an insurer deducts prospective contractors\’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.
Conversely, THE INCLUSION of contractor´s overhead and profit and sales tax on building materials DOES NOT OVER-COMPENSATE AN INSURED for the amount of the loss BECAUSE these items represent PART OF the insured´s loss.
Generally, the objectives of indemnity will be met if actual cash value is calculated as replacement cost with proper deduction for depreciation.
–there is NO SITUATION in which the deduction from replacement cost of depreciation and contractor´s overhead and profit and/or sales tax on materials will be the correct measure of the insured´s loss.
–Premiums charged must NOT be excessive for the risks to which they apply.
Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are DETERMINED ON THE BASIS OF the replacement cost of the structure.
The VALUE of contractor´s overhead and profit, as well as sales tax on building materials, has been INCLUDED IN the limit of liability for which the insured has PAID premium.
If the insurer in determining actual cash value EXCLUDES costs that are INCLUDED IN the determination of liability limits, on which the insured´s premium is BASED, the insurer reaps an IllEGAL WINDFALL because the insurer receives premium on insurable values for which loss may never be paid.\”
Actuaries base loss risk data, in part, on claim adjusters loss payment conduct, per management instructions.
Are actuaries being misled by synthetic construction loss claim value adjusting practices?
Is addressing fraudulent claim settlement practices too large of a public issue for insurance regulatory agencies, or the judicial system, to handle?
Would the reinsurance market confidence level be undermined by such unfair claim loss settlement conduct?
How does individual claim settlement replacement cost values / risk loss reserve dollars, verses claim dollars ACTUALLY paid, compare?
Does intentionally underpaying claims equal grand theft of consumer premium payment dollars?
__________
Clear replacement cost coverage values owed is not always volunteered to unsuspecting premium paying consumers, who may only be aware of how much money they received, and not how the money they received was determined.
Kind of like a toy store owner keeping change owed to math naive kids.
The kids are happy with their toys, and yet are clueless as to how they have been financially deceived, so that another can gain.
Can claim loss values, pre-paid for by consumers, be invisibly and deceptively kept from them if insurers / adjusters do not openly disclose loss values that are inherently part of the loss?
The 29% contractor\’s overhead and profit line that is commonly displayed on Allstate replacement cost value construction estimates, only reflects SUBCONTRACTOR overhead and profit loss values and NOT the additional (premium calculated) 20% (minimal)Primary-General Contractor overhead and profit loss value.*
Whether a contractor is used, or not, those replacement loss values are part of the WHOLE value of replacement value policy covered losses…
49% is a lot of premium replacement cost dollar value being paid for.
Claim loss naive adults being shorted 20% / $200.00 per $1,000.00 coverage is serious business. 49% miswsing equals $490.00 per $1,000.00.
I\’ve experienced Allstate, Safeoc, USAA, State Farm, Farmers and the TWIA (Texas Windstorm Insurance Association) adjusters doing this over and over again between Florida and Texas, between 2002-2006, with my clients, and neighbors.
*Allstate / Pilot Claim Service construction speak has been noted in recent hurricane catastrophe zones.
They claim;
1. \’A general contractor is not \”needed\” to replace a roof.\’
2. \’A general contractor is not required because there is not any structural damage\’.
3. \’There is no structural damage, but the amount of work does not require a general contractor\’.
4. \’The homeowner can be the contractor for a single or multiple (roofing, fencing, carpeting) trade \”loss\” repair\’.
5. \’We can get thsi \”done\” for our price\’.
Actually, the construction replacement costs of a structure, established at an insurance agents desk, and underwritten, calculates / anticipates / pre-pays for prospective primary – general contractor involvement to replace the structure by using various speciality trade subcontractors.
Single speciality trade (roof) losses contain primary – general contractor value AND roofing contractor value.
The roof is simply a single part of ALL of the speciality trade construction components that make up a whole structure that are put into place by a primary – general contractor.
Insurance premiums account for primary – general contractor involvement, first and foremost, and their business overhead and profit costs which are applied to all subcontractor trades work, which work includes their own overhead and profit costs.
Unless a structure can \”poof\” into existence on it\’s own, agent calculated
premium values necessarily contain primary – general contractor labor, materials, sales tax, business overhead and profit cost factor value.
Claim loss values should disclose those construction replacement cost values, whether a contractor is used or not.
All said,, claims CAN be knowingly and intentionally underpaid, and deceptively anticipated profits can exist, as long as the general public allows that conduct to go on unaddressed.
Interestingly, the general public is awakening and standing up to such unfair / fraudulent conduct by certain insurers and adjusters conduct.
Not too mention making a lot of serious accusations that don\’t seem to make a lot of sense. Who needs to hire a general contractor for a simple roofing job?
Hey Roger why don\’t you at least try and keep your postings on topic to the story. This story has nothing to do with Allstate underpaying claims. And you\’re really just annoying by posting that stuff on every single hurricane thread. Go fight your cruisade someplace else.
Whether we all realize it or not, this ruling affects all homeowners policies across the entire U.S. Finally a Judge that doesn\’t bend to political pressures!! Had this ruling gone the other way, we personal lines agencies could have been facing dire times.
insray:
Not just the agencies, but companies as well. There is a real underwriting reason flood isn\’t covered on homeowners or other property policies. It\’s why the federal plan was started in 1969.
We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. By continuing to use our site, you accept our revised Privacy Policy.
InsuranceJournalArchive
Subject: Risk and Loss (Underpayments) = Fat Contingent Profits?:
Posted On: April 2, 2006, 12:22 pm CDT
Posted By: Roger Poe
Comment:
4-2-2006
Before the flood coverage victory dance gets underway by certain insurers, some other claim loss coverage value issues need careful consideration–
Can insurers create illegal profits by collecting (actuarially factored) premium dollars you and I are (knowingly) owed by insurers, and then use adjusters to deliberately and deceptively misadjust claim loss values?
Are actuaries ignorant of deceptive claim settlement practices that can give them synthetic construction loss value data?
Does Allstate Insurance Company, and their associate, Pilot Claim Service, take the lead in the insurance industry in requiring their adjusters to \’knowingly underpay every claim\’?
Is State Farm Insurance, Safeco, USAA, Farmers and other insurers following the Allstate / Pilot lead in Texas, Florida, Maryland, Mississippi, and elsewhere?
From [catadjuster.org] a mature Allstate Insurance Company claims examiner replies to an aspiring contractor turned insurance adjuster;
__________
\”Brooks Todd Posted – 12/18/2003 : 19:10:52
——————————————
I just recieved my adjusters liscence, from The Great State of Texas. I have 22 years in construction (framing, roofing, sales & concrete). I am an excellent estimator, and can build anything from a dawg house to a church.
I am having a hard time finding a job in the adjusting field. I know what my angle is now. Imagine having an adjusters liscence, and being a contractor. I am calling Allstate tommorow. You have to change with the times.
Brooks
khromas Posted – 12/18/2003 : 23:06:22
——————————————
Brooks,
I would not advise calling Allstate if you wish to keep your integrity intact.
After almost 7 years with them and having held a variety of positions, including the sole Quality Evaluator for the entire southern half of Texas, I finally became fed up with their approach to requiring every adjuster to KNOWINGLY UNDERPAY every claim and left them this past July.
The head of Allstate in Texas – Gary Briggs – had the nerve to stand up in front of an agent\’s meeting last spring and say (QUOTE) \”I love the new HOA+ policy! It doesn\’t cover anything and WE STILL GET TO KEEP THEIR MONEY!\”
I used to tell people whose claim I was handling that \”the good hands of Allstate were right here\” as I held my hands out for them. I could no longer do that in good faith and look myself in the mirror so I left.
One of these days the Texas DOI is going to catch up with their property handling practices and then it will all hit the fan!
Good luck with anyone else!
Kevin Hromas Country: USA | Posts: 75
http://72.14.203.104/search?q=cache:LH8RbB9s00UJ:www.catadjuster.org/forum/m_899/mpage_10/key_/tm.htm+gary+briggs+allstate+intentionally+underpay+&hl=en&gl=us&ct=clnk&cd=1
__________
Can insurers (2003, 2004, 2005,2006) contingent windfall profits be generated illegally by such fraudulent claim settlement conduct?
Quote from an insurance regulatory agency;
\”–Indemnity is the basis and foundation of insurance coverage.
The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.
This objective REQUIRES that the insured receive a payment EQUAL TO that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.
The calculation of this payment results in UNDER-compensation if an insurer deducts prospective contractors\’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.
Conversely, THE INCLUSION of contractor´s overhead and profit and sales tax on building materials DOES NOT OVER-COMPENSATE AN INSURED for the amount of the loss BECAUSE these items represent PART OF the insured´s loss.
Generally, the objectives of indemnity will be met if actual cash value is calculated as replacement cost with proper deduction for depreciation.
–there is NO SITUATION in which the deduction from replacement cost of depreciation and contractor´s overhead and profit and/or sales tax on materials will be the correct measure of the insured´s loss.
–Premiums charged must NOT be excessive for the risks to which they apply.
Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are DETERMINED ON THE BASIS OF the replacement cost of the structure.
The VALUE of contractor´s overhead and profit, as well as sales tax on building materials, has been INCLUDED IN the limit of liability for which the insured has PAID premium.
If the insurer in determining actual cash value EXCLUDES costs that are INCLUDED IN the determination of liability limits, on which the insured´s premium is BASED, the insurer reaps an IllEGAL WINDFALL because the insurer receives premium on insurable values for which loss may never be paid.\”
http://www.tdi.state.tx.us/bulletins/b-0045-8.html
__________
Actuaries base loss risk data, in part, on claim adjusters loss payment conduct, per management instructions.
Are actuaries being misled by synthetic construction loss claim value adjusting practices?
Is addressing fraudulent claim settlement practices too large of a public issue for insurance regulatory agencies, or the judicial system, to handle?
Would the reinsurance market confidence level be undermined by such unfair claim loss settlement conduct?
How does individual claim settlement replacement cost values / risk loss reserve dollars, verses claim dollars ACTUALLY paid, compare?
Does intentionally underpaying claims equal grand theft of consumer premium payment dollars?
__________
Clear replacement cost coverage values owed is not always volunteered to unsuspecting premium paying consumers, who may only be aware of how much money they received, and not how the money they received was determined.
Kind of like a toy store owner keeping change owed to math naive kids.
The kids are happy with their toys, and yet are clueless as to how they have been financially deceived, so that another can gain.
Can claim loss values, pre-paid for by consumers, be invisibly and deceptively kept from them if insurers / adjusters do not openly disclose loss values that are inherently part of the loss?
The 29% contractor\’s overhead and profit line that is commonly displayed on Allstate replacement cost value construction estimates, only reflects SUBCONTRACTOR overhead and profit loss values and NOT the additional (premium calculated) 20% (minimal)Primary-General Contractor overhead and profit loss value.*
Whether a contractor is used, or not, those replacement loss values are part of the WHOLE value of replacement value policy covered losses…
49% is a lot of premium replacement cost dollar value being paid for.
Claim loss naive adults being shorted 20% / $200.00 per $1,000.00 coverage is serious business. 49% miswsing equals $490.00 per $1,000.00.
I\’ve experienced Allstate, Safeoc, USAA, State Farm, Farmers and the TWIA (Texas Windstorm Insurance Association) adjusters doing this over and over again between Florida and Texas, between 2002-2006, with my clients, and neighbors.
*Allstate / Pilot Claim Service construction speak has been noted in recent hurricane catastrophe zones.
They claim;
1. \’A general contractor is not \”needed\” to replace a roof.\’
2. \’A general contractor is not required because there is not any structural damage\’.
3. \’There is no structural damage, but the amount of work does not require a general contractor\’.
4. \’The homeowner can be the contractor for a single or multiple (roofing, fencing, carpeting) trade \”loss\” repair\’.
5. \’We can get thsi \”done\” for our price\’.
Actually, the construction replacement costs of a structure, established at an insurance agents desk, and underwritten, calculates / anticipates / pre-pays for prospective primary – general contractor involvement to replace the structure by using various speciality trade subcontractors.
Single speciality trade (roof) losses contain primary – general contractor value AND roofing contractor value.
The roof is simply a single part of ALL of the speciality trade construction components that make up a whole structure that are put into place by a primary – general contractor.
Insurance premiums account for primary – general contractor involvement, first and foremost, and their business overhead and profit costs which are applied to all subcontractor trades work, which work includes their own overhead and profit costs.
Unless a structure can \”poof\” into existence on it\’s own, agent calculated
premium values necessarily contain primary – general contractor labor, materials, sales tax, business overhead and profit cost factor value.
Claim loss values should disclose those construction replacement cost values, whether a contractor is used or not.
All said,, claims CAN be knowingly and intentionally underpaid, and deceptively anticipated profits can exist, as long as the general public allows that conduct to go on unaddressed.
Interestingly, the general public is awakening and standing up to such unfair / fraudulent conduct by certain insurers and adjusters conduct.
rogerpoegc@yahoo.com
A contractor… I knew it! Gets in the middle and stirs things up, and when it\’s all over he walks away with the check!
Damn, and I said I was through with him…
You\’re overcomplicating the issue.
Not too mention making a lot of serious accusations that don\’t seem to make a lot of sense. Who needs to hire a general contractor for a simple roofing job?
This is a victory for contract law.
Rodger sounds like a public adjuster that got caught charging 30% for a claim.
Hey Roger why don\’t you at least try and keep your postings on topic to the story. This story has nothing to do with Allstate underpaying claims. And you\’re really just annoying by posting that stuff on every single hurricane thread. Go fight your cruisade someplace else.
Roger needs a sedative.
Whether we all realize it or not, this ruling affects all homeowners policies across the entire U.S. Finally a Judge that doesn\’t bend to political pressures!! Had this ruling gone the other way, we personal lines agencies could have been facing dire times.
insray:
Not just the agencies, but companies as well. There is a real underwriting reason flood isn\’t covered on homeowners or other property policies. It\’s why the federal plan was started in 1969.