KATT'S 008 Commentary
The coming year of “007” sounds like another James Bond flick sans Title.
Now we are asking the same questions in 2008, the answers remain the same.
With all the disappointment of ’06 , and ''07 with respect to hurricanes and tropical storms, and with many adjusters holding down the fort by reverting to prior employment, living off savings, working at differing occupations, it is no wonder that we all have a similar question or expectation at hand. And many have fallen off the cart, filing babkrupcies, getting divorces, separations, etc. IT ain't fun anymore
Will '08 be like ’04 and ’05 or will we be relegated to what happened in ’06 and '07?
There are as many forecasts and predictions out there as there are meteorologists and risk managers and naysayers and procrastinators and prestigitators. In other words, NO ONE KNOWS. Not even Dr. Gray, RMI, or Joe Basardi.
What we do know is that IF there is an impending occurrence, we will be inundated with telephone calls and emails asking if we are available to be put on stand-by.
What exactly does this mean? Well for some it means they know that their phone is working. For others it means they have a company that has their name listed in their data base, or they have had their name gleaned from a website such as CADO, ClaimSmentor, Claims Pages, or another site.
Yet, for others it means they have a guarantee of being put to work by the firm that called them, IF they choose to go that route. It is not unusual for one to receive as many as 10-15-20 calls to be put on stand by. This has happed to me, many times.
For the newer adjuster, there are some things that you should know before committing to anyone to actually accept a position, they are as follows, not necessarily in order of importance.
1) Who is the IA Firm? An older established inter-national firm? (For instance, GAB, Crawford, THG, and Cunningham-Lindsey. A larger regional or national firm? (Such as Pilot, Ebrel, Renfrow,Worley) A well established franchised or smaller regional firm? (Custard, Frontier, FARA, RJMW and many of the ones listed on the CADO roster of vendors. These all have ratings established by people that have worked for them and have posted their opinions, it is worthwhile to investigate these posts. A start up company that has little financial backing, or catastrophe loss experience? (It’s not fair to render an opinion in this venue, so look and learn for yourselves.)
2) Is there a guarantee of the initial amount of files? Some will say that they are waiting on the carrier to determine the amount of files and will not give an answer. Others will give you some idea of how many files you will be given. To travel a long distance 1000-3000 miles at your expense to receive 20 files that net you 2000.00 or so dollars is a real fool’s errand. Make sure your expenses are covered. Some IA firms and carriers guarantee you a daily stipend to show up and pay you to stay there until the files arrive and are distributed. (It does happen)
3) What is the fee schedule? Each firm has a certain fee schedule arrangement in their catastrophe schedule. It may vary from one fee for TS to a cat 2-3 and then change for a Cat 4-5. It is paramount that you get a copy of the schedule BEFORE you leave for the loss assignment location.
4) What percentage % of the fee schedule are they willing to pay YOU? The fee schedules change from IA firm to firm and from carrier positions also. They can vary, for the adjuster in charge, from 50% to 75% depending on the quality of the adjuster, the work product presented, the work history of the adjuster, the productivity of the adjuster, the talent and versatility of the adjuster, and other related items, such as photos, proper documentation, explanation of conditions, location of the loss and cost differentials required to return the loss to the pre-loss conditions. The interpretations of the policy, policy knowledge and application there-of. So, you see, there are many factors involved in the assignment of claims as the acceptance of claims. The absolute worst thing one can do is to take a claim that is way over your head and will not be adjusted correctly, and may end up in a legal beagle courtroom. It is much better to return the claim to the IA firm and most likely they will replace it with not one but two or more.
5) Who are the carriers the IA firm represents? This can be important in rendering a decision as to whom to work for. Some carriers opt to align themselves with staunch and reputable vendors, while others can only get an emergency workforce from what may be referred to as lower tier vendors. Also, the claims settlement practices of some carriers just goes against what we all are taught and expect to be able to provide. Each and every carrier has their own way of adjusting claims, and it is not within our purview to do anything but follow their directives. The golden rule applies here, “He who has the gold, makes the rules”
6) Under which format will you be employed? Most of the catastrophe adjusters work as independent contractors and are paid weekly or bi-weekly. These are referred to as 1099 employees in that they have to be responsible for all of their own state, federal, & local taxes, SS and Insurances. There are strict Federal guidelines which must be adhered to for you be a true 1099 employee and you should investigate what they are. The next classification is a temporary employee in that you are provided E&O insurance, workmen’s compensation insurance, but none of the benefit packages of the true employee. Then we have the employee, who is afforded the same insurance coverage as a normal employee and has taxes taken out and is supplied with a W-2 at the end of the year. It is very important to determine your status, as many items which can be deductible as a 1099 are not allowed as a temp or other employee. Check with your accountant as to which way is best for you.
7) What amount of the additional charges, levied to the carrier, will be paid to you? In days of old there were always added charges to a file, photographs, mileage, telephone calls, postage costs, etc. These were normally paid to the individual that incurred these costs. Things change, as we moved from 35MM film and processing to digital photographs, some felt that digitals cost nothing. Well, that’s their opinion. What does the camera, paper, ink, printer and time element cost, nothing? hardly. Then there’s the mileage factor, where we now pay 500-900 % more for fuel that we did years ago. Some of the IA firms and or Carriers still pay a small portion of the incurred costs. Others will pay you a percentage % of these costs, just as they do your percentage % of the fee schedule. In other words, you are absorbing 100% of the costs and getting back anywhere from zero to 75% under these options. Be careful, ask the right questions, and make sure you fully understand what and when you will be paid.
There are a few questions that are always should be asked when called for stand-by or deployment.
A) Who are the carriers? Refer to above.
B) What is the fee schedule, please fax or email to me. Information Please.
C) What is my percentage of the fee schedule? This can have a serious impact on your decision. 60% of $100.00 is $60.00, however 75% of $80.00 is also $60.00 and yet 70% of the same $100.00 is $70.00. So, it is simple arithmetic folks. Know what the schedule is and your percentage of the add-ons and you will have all the information you need to make an informed decision.
D) Who is the storm manager? This can become an all-important part of your decision. We all have had experiences that we would never again wish to have. Sometimes these relate directly to the storm boss and his way of handling the files. Does he/she play favorites; do they critique your files correctly and assist in getting them approved? Do they issue kick-backs indiscriminately? Are their file examiners proficient, experienced and knowledgeable, or are they just have-to-have people that we spend hours educating? Real time consuming to have to re-do files several times for no apparent reason or risk being at the whim of a bad hair day, IYGMM.
E) If a new company, get references. Many times there are numerous start-up companies. You should check on them, if they are listed on CADO, or you can make calls to adjuster friends and acquaintances, or check the BBB
F) Get a copy of their Contract which they will wish you to sign. Make sure you get a copy of anything that you sign, it’s just a good business practice. As with every claim, treat every employment opportunity as if it may go to court. The more ammo in your weapon, the better chance you will have to survive.
This is just a basic guideline for the newer adjusters, and perhaps some who have crossed over from the staff side and others who have not thought of some of these items. It never hurts to be a Boy/Girl scout and believe in their motto: “BE PREPARED”