New Report Rebuts Consumer Group’s Criticism of Med-Mal Insurers

April 28, 2006

  • April 30, 2006 at 9:42 am
    Roger Poe says:
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    4-30-2006

    How about a study of claim settlements that are suppose to reflect solid replacement – reconstruction business estimating methodology.

    Quick for-instance, I just received a State Farm estimate from a client.

    Now check this out this summary page, and see if you can help the public understand it is NOT a synthetic construction \”estimate\”;

    Summary For Hurricane

    $10,103.19 Line Item Total
    $114.67 6.000% Materials Sales Tax __________
    $10,217.86 Replacement Cost Value
    $ 2,607.44 Less Depreciation
    __________
    $7,610.42 Actual Cash Value
    $ 761.04 Overhead @ 10%
    $ 761.04 Profit @ 10%
    __________
    $9,132.50 Actual Cash Value W/O&P
    $2,272.00 Less Deductible
    __________
    $6,860.50 Net Actual Cash Value Payment

    Two (hard-to-detect) synthetic / false construction estimation points…

    1. Contractor overhead and profit was NOT applied to the ACTUAL projected loss replacement – reconstruction value sum, ($10,217.86), but to the DEPRECIATED $7,610.42 sum. Hmmmm…

    2. The estimated business profit value is THE SAME as the business overhead factor.

    Since anticipated (10% profit) can only be measured against the whole investment risk of a project, a SYNTHETIC profit amount exists. Again, Hmmmm…

    Care to see some more underpayment schemes?

    rogerpoegc@yahoo.com



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