Complaints Lead to Probe of La. Insurers’ Hurricane Claims Handling

May 17, 2006

  • May 17, 2006 at 2:12 am
    no flood insurance says:
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    What do they expect when everyone who did not have flood insurance is filing a complaint with the DOI? Of course the ratios are going to go up, common sense would tell anyone that…..

  • May 18, 2006 at 3:09 am
    maurice r. jones says:
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    The complaint I have is that, here it is at least six months after the strom and I am still out of my home. because the insurance can\’t make up their minds on what or how to pay my claim. And I think they nshould be on your list, to be looked at very, very closely

  • May 18, 2006 at 4:42 am
    Roger Poe says:
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    Synthetic Claim Settlement Check List

    1. Are labor dollars needed for all materials installed missing from roofing, dry-wall, etc. trade labor costs?

    Allstate believes that a 3000 SF shingled roof that needs 3300 SF of materials AND 3300 labor costs for the completed project, should only show 3000 SF labor costs in their \”fair trade\” estimates.

    By the way Allstate, the extra labor line that the MS/B IntegriClaim program data has for clean-up work is VERY different cost wise from the unit labor costs that should apply to the 300 SF production costs.

    Job site clean-up work costs throughout a projects\’ duration is QUITE different from ACTUAL trade production installation work unit costs.

    2. Cross reference actual regional material and labor costs, especially in early estimate paperwork put out to claimants.

    MS/B\’s storm surge databases verses \”new\” construction costs data, and Craftsman Publishing\’s \’2006 National Renovation & Insurance Repair Estimator\’ should give pretty close [post-catastrophe] reconstruction costs in a given region.

    If [Allstate] used new construction costs as an estimation base, then MS/B data costs for different regions in Louisiana should be easily proven by referencing a copy of MS/B\’s software version used by the general construction public, not necessarily the version that Allstate had designed for their own use.

    Since both Allstate and MS/B realize actual (before hurricanes Katrina / Rita) new construction price data for Louisiana, any synthetically LOW, or missing, MS/B construction COMPONENT costs for REconstruction labor, materials, sales tax, and primary-general-subtrade contractors overhead and profit, etc. values will show up throughout their estimates.

    Be aware though that, from the start of forming a construction estimate, \”NEW\” construction labor, materials and overhead unit costs are going to be QUITE LOWER than historical REconstruction unit work costs, especially after a storm).

    Reconstruction costs can easily be 30-50%+ higher than new construction costs, plus post storm materials, labor and business overhead cost market increases add even higher costs to reconstruction costs.

    3. See if ALL Contractor Overhead and profit line items are missing from estimates. Replacement Costs depreciated = Actual Cash Value, and still have those collective loss value costs woven in.

    4. If not line itemed seperately, have them prove that roofing, fencing, carpeting, etc. specialty trade contractors business overhead and profit costs are in the unit costs of each specialty trade.

    Allstate has been using a basic 29% contractor\’s overhead and profit margin line item that some adjusters are touting as being THE primary-general Contractors business overhead and profit line item.

    Actually, an additional 10%and10% (20%)overhead and profit factor is recognized by Allstate, if one\’s would, perchance, know to ask about those [basic] primary-general contractor mark-up factors.

    5. See if Allstate claims that primary-general contractors are only \”necessary\” if there is structural damage included in the loss.

    6. See if either company expects that premiums paid them for replacement procedures and costs of a structure anticipate the general public to act as their own contractor, OR does MS/B type data, used in part for actuarially estimating future replacement costs of a structure, at an insurance agents desk, historically account for primary-general contractor involvement first and foremost, with their own staff and sub-contractors support.

    6. See if Allstate claims that 2-3 or more specialty trades work is required before a primary-general contractor is \”necessary\”.

    7. See how many field adjusters were required during the life of a claim.

    8. Audit claim estimates from the nicer neighborhoods verses claims from the less well off neighborhoods.

    9. Interview a mix of claimants to see how they were treated in person, or by mail / e-mail, or over the phone.

    10. Interview Allstate / Pilot Claim Service and Saint Paul Travelers adjusters, and contrast their claim handling views with other [independent adjusters] views.

    11. Publish specific examination results based in part on the above check-list so as to benefit the general public.

    12. Resist anyones notion that such [publically known] construction data, and/or insurers market conduct is a \”trade secret\” somehow.

  • May 18, 2006 at 4:48 am
    ClaimHawk says:
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    Posted On: May 7, 2006, 5:53 pm CDT
    Posted By: Martha Kirwin
    Comment:Federal Judge in Mississippi \’Storm Surge\’ Case Upholds Home Insurance Flood Exclusion


    I have been an adjuster for six years. Having grown up with a homebuilder and insurance agent for parents, it was a natural choice after grad school.

    Until December \’05, I worked for a large catastrophe adjusting firm. My husband and I worked together while traveling the country, earning a fabulous income, and meeting extraordinary people.

    Prior to 2004 I experienced very few instances of practices by insurers that I would have labeled negligent, illegal, or deceptive.

    In general, most insurers appeared to have an interest in settling claims quickly and fairly within the boundaries of their contracts. In order to achieve good will, I have seen insurers pay for losses(food replacement, etc.) that were not legitimatly covered under the policy.

    During this period, one of the most difficult aspects of my job was explaining coverage to the insureds.

    After grad school, I took a three week, 120-hour course on policy coverage, after which I felt as though I had obtained an acceptable level of understanding on how to interpret property coverage language.

    Yet, on many occasions thereafter, I made mistakes. It soon became evident that the vast majority of policy holders had an extremely limited knowledge of their coverages.

    Not surprising, given that they do not take three week courses.

    In 100% of the scenarios in which I have adjusted losses, the insureds were either surprised to learn that some portion of their property was not covered or limited to some degree below that which they understood to be limited.

    Prior to 2004 however, these situations did not typically result in tragic outcomes for the insureds. In each instance, I encouraged the insureds to contact their agents for clarification and recommendations for updating or upgrading their coverages.

    Unfortunately, beginning with the four hurricanes in 2004, claims adjusting practices have changed dramatically. Suddenly, roofs, carpets, awnings, and a litany of other trades are no longer allowed to be considered for Overhead and Profit by many insurers.

    Taxes and O&P are no longer are part of the calculation for ACV. We \”negotiate\” different prices with individual insureds as if we were purchasing an automobile.

    My neighbor might have been paid $1400 per Square for the same roof that I was only allowed $900 from the same insurer.

    To my astonishment, I have come to know that most of the claims that I have adjusted were estimated with a price database that is 70-110% below actual market pricing.

    And worse, these people who I left \”knowing\” that I had worked diligently to find all the coverage available to them, were taking the proceeds of those claims and settling for those amounts.

    The majority had no inclination that they had alternatives or could file supplements or dispute in any manner, the amounts of the settlements.

    Needless to say, after two years of struggling with the ever increasing restraints and borderline illegal practices to which I was forced to impose on these uninformed consumers, I resigned my position as an independent adjuster.

    In December of 2005, I opened a public adjusting firm in South Florida. Now, we experience on a daily basis the abhorrent practices of insurance companies and those adjusters who represent them.

    Understand that it is my position that there are companies that handle their claims quickly, precisely, and professional in total compliance with the contract.

    However, those companies are in the vast minority.

    Last week, we filed a Civil Remedy on behalf of one of our clents siting 19 violations of statutes by one of the largest insurers in the state. My firm is representing over 300 clients currently and this is our current statistical compilation:

    287 claims open in excess of 180 days.

    143 in violation of at least five Florida statutes relating to adjusting practices.

    These numbers represent staggering figures. On the average, we collect 293% more money from the insurance companies than was estimated originally and we achieve this by using the same adjusting practices that I have used for six years.

    Mr. Poe, on behalf of those in this profession who take pride in said profession, I will apologize on behalf of these representatives of our industry, who with obvious disdain and disregard for the wide-spread consequences of their arrogance and flagrantly, biased disrespect for their insureds, contractors, attorneys or any others who oppose or even call into question their righteousness, honor, or the finality of their opinions.

    Their defensive, territorial chest-beating and sophomoric, belittling statements are a clear indication of exactly why consumers need protection. Whether or not your business practices are ethical is completely beyond my discernment; however, I appreciate your seemingly sincere interest and dedication to making a difference in our industry.

  • May 18, 2006 at 5:25 am
    ClaimHawk says:
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    FOR IMMEDIATE RELEASE Release Date: 10/13/2005

    Storm Demand Surge Research, Support Continue, says MS/B

    LOS ANGELES â€â€Ŕ OCTOBER 13, 2005

    A team of cost researchers at Marshall & Swift / Boeckh (MS/B) continues to monitor material and labor costs in areas affected by Hurricanes Dennis, Katrina, Ophelia, and Rita.

    MS/B’s ongoing research reveals price changes at a significant number of locations due to increased demand.

    In response, a total of nine storm surge databases are now available for users of the IntegriClaimâ„¢ property claims estimator.

    Property adjusters rely on current storm demand surge pricing to assure that claims are estimated with prices that accurately reflect material and labor costs at the local level.

    The nine locations are:

    Mobile, Alabama Fort Lauderdale, Miami, Panama City, and Pensacola, Florida
    Baton Rouge and New Orleans, Louisiana
    and Gulf Port and Jackson, Mississippi.

    “The storm surge data we post on our Web site is data we’ve researched, validated, and can defend,” says Jonathan Kost, Vice President of Claims Products at MS/B.

    “If other data is used on estimates in the field, we will seek to understand what caused the change, and make appropriate and timely modifications if necessary, but we will only be able to stand behind cost data that we publish.

    At the end of the day, we are in the business of providing easy to use claims systems with accurate, localized data that we and our clients can be confident in.”

    MS/B’s researchers are closely monitoring possible demand surge pricing at thirteen locations, including wildfire-affected areas in the United States and tornado-damaged sections of Ontario, Canada.

    Demand surge databases are developed, posted, and updated on a regular basis as warranted.

    The databases are accessible by IntegriClaim users 24/7 from any browser and are a free service included in MS/B’s Catastrophe Response Plan

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