| Author |
 Topic  |
|
JimF
USA
1014 Posts |
 Posted - 01/21/2003 : 09:13:36
|
BTW, I do agree with both you and Darryl that the claim should be adjusted properly, without regard to how large or small the settlement amount may be.
As Darryl correctly points out, the roles that adjusters and lawyers have in the insurance process are often at odds, as are the avenues available for resolution. |
 |
|
|
Ghostbuster
476 Posts |
Posted - 01/21/2003 : 10:05:12
|
Well, yeah...the legal folks do live in their own rarified ego driven designer atmosphere, and do look down on us sweaty trolls laboring in the field. So, what?
When a loss payable gets down to the loose pocket change level, the selling of the adjustment becomes a test of our salesmanship. Often a loss less than the deductible is easier to 'sell' than if it breaks the surface. I seem to recall the smallest disbursement I ever wrote was for $.78. At this level, the Insured takes it as a personal insult regardless of the facts. Then come the nasty phone calls and reinspections and meetings with the agent and supervisor and yet more phone calls from all the way up the managerial line. In other words, "To Hell with the facts, just get em' off my back!"
Smart adjusters often use the Blue Hair Factor in these situations, wherein if the Insured is older than dirt, on oxygen, and a walker, then the guiding principle of 'benefit of the doubt' becomes like Santa Clause in July. The young whippersnapper supervisors may try to apply conventional wisdom, but very quickly, their rearends are set afire and a new lesson of life is learned.
|
|
|
|
CCarr
Canada
1200 Posts |
Posted - 01/21/2003 : 10:45:35
|
Jim re your 1/21 09.08 post, I don't necessarily disagree that a $10 payment on a $1985 claim 'would not play well in front of a jury'. But, but, but - that can not get in the way of a properly adjusted loss by the front line adjuster.
Going back to my 1/20 15.35 post, I want to emphasize my paragraph with the capitalized "IFs" - IF all that happened, why is that the "darndest thing" according to Bill the lawyer, whose comment - in that regard and in the context it was presented - I interpreted as I noted in my follow up post of 1/21 06.54?
A mathematical example of how this could and does happen is easy to create. The 'why' it happens is for many reasons and lies primarily with the insured and secondly with the agent.
The essence of my posts relative to this 'roof story' aside from the need to express my frustration of it, was to try and counter the inherent 'fear' or 'gunshy' attitude that new or junior adjusters may take from such a scoffing attitude of the adjusted claim example presented by the litigation community.
What the eventual outcome of this matter may be will be determined by many factors outside the conditions of the contract. If it is Bill's or others belief that there should be a minimum payment of $1000 per any covered loss - then the carriers should add that lovely clause to their Loss Settlement wording. |
|
|
|
JimF
USA
1014 Posts |
Posted - 01/21/2003 : 11:22:27
|
Clayton, again I suggest setting up and posting the example for newer and junior adjusters to see how this very situation as presented could occur by way of coinsurance penalties.
Further, I would suggest that there is still some subjective judgment utilized in determining the coinsurance penalty, and it is here, that every benefit of the doubt should be given to an insured.
There are obvious unknowns here which I would like to know as I am sure you would as well, and in a real life situation, I suspect you and I would go the extra mile to see how and why it is/was that this insured was so underinsured.
I do agree with that wise sage Ghostbuster, that the 'Blue Hair Factor' DOES and SHOULD at times come into play in some claims situations, and this could be one of those times. (More on that later).
|
Edited by - JimF on 01/21/2003 11:26:33 |
|
|
|
CCarr
Canada
1200 Posts |
Posted - 01/21/2003 : 11:57:02
|
I've done the math, using the Loss Settlement clause of the HO3 - if in fact it is a residential claim. The only thing I'll say on that, if it is a homeowner claim, is that the limit of insurance would have to be no more than $39,600. The strict use of the word 'co-insurance' by a litigator may mean it is a commercial claim on a roof, and hence there would be more specific math to apply.
Either way, in this thread, I feel it would be apporpriate for lawyer Bill to present the actual scenario so we can see how the numbers and situation developed, and then be better able to judge the "darndest thing"; determining whether it was adjuster error, adjuster stupidity, or a litigator's contempt for the proper adjusted numbers - or maybe both.
Part of our collective organizational problems with these forums is that we often talk about subjects that a week or a month from now we can never find - because their content no longer bears much resemblance to the topic. That is just a general critique, I'm as much at fault for that as anyone, but it is something we should all try and concentrate on when we post; hopefully some of what we say is used as furture reference material by someone.
In this case, with your suggestion for another thread and an example, I recalled doing that, and fortunately after a short search found it.
I think the residential application of the issue is explained in the "Coverage forum" in the "Under insured / Co-insured thread", and in my post of 12/13/02 at 16.29 |
Edited by - CCarr on 01/21/2003 12:09:51 |
|
|
|
Tom Toll
USA
154 Posts |
Posted - 01/21/2003 : 22:41:57
|
All are original questions from Lawyers.
Was that the same nose you broke as a child?
Now, doctor, isn't it true that when a person dies in his sleep, in most cases he just passes quietly away and doesn't know anything about it until the next morning?
What happened then?
He told me, he says, "I have to kill you because you can identify me."
Did he kill you?
Was it you or your brother that was killed in the war?
The youngest son, the 20-year-old, how old is he?
Were you alone or by yourself?
What is the meaning of sperm being present?
It indicates intercourse.
Male sperm?
That is the only kind I know.
Can you describe the individual?
He was about medium height and had a beard.
Was this a male or female?
How long have you been a French Canadian?
How far apart were the vehicles at the time of collision?
Mr. Clark, you went on a rather elaborate honeymoon, didn't you?
I went to Europe, sir.
And did you take your new wife?
Do you have any children or anything of that kind?
I show you Exhibit 3 and ask you if you recognize that picture.
That's me.
Were you present when that picture was taken?
Were you present in court this morning when you were sworn in?
Now, Mrs. Johnson, how was your first marriage terminated?
By death.
And by whose death was it terminated?
Do you know how far pregnant you are now?
I'll be three months on November 8.
Apparently, then, the date of conception was August 8?
Yes.
What were you doing at that time?
Mrs. Jones, do you believe you are emotionally stable?
I used to be.
How many times have you committed suicide?
So you were gone until you returned?
She had three children, right?
Yes.
How many were boys?
None.
Were there girls?
You don't know what it was, and you didn't know what it looked like, but can you describe it?
You say that the stairs went down to the basement?
Yes.
And these stairs, did they go up also?
Lawyer: What device do you have in your laboratory to test alcohol content?
I have a dual column gas chromatograph, Hewlett-Packard 5710A with flame ionization detectors.
Judge: Can you get that on mag wheels?
Only on the floor models.
Have you lived in this town all your life?
Not yet.
All you responses must be oral, ok? What school did you go to?
Oral.
Are you qualified to give a urine sample?
Yes, I have been since early childhood.
Doctor, how many autopsies have you performed on dead people?
All my autopsies are performed on dead people.
Do you recall approximately the time that you examined the body of Mr. Brown?
It was in the evening. The autopsy started about 8:30 p.m.
And Mr. Brown was dead at the time, is that correct?
No. He was sitting on the table wondering why I was doing an autopsy! |
|
|
|
ALANJ
USA
159 Posts |
Posted - 01/22/2003 : 08:37:50
|
Clayton:
Thank you for the personal slam. I am not an attorney yet. However, I set for the bar next month. I am not attempting to slam anyone. You made several comments concerning the handling of the claim.
1) The coinsurance was handled properly.
Something has come up down here, (lower 48) concerning coinsurance. It appears that agents, (underwritting) uses one method to determine replacement cost, (the basis to determine coinsurance), and the claims department uses another. Do the Insurance companies in the cold frozen north use the same or similar methods in underwritting and claims?
If not, it opens the door for the insured. Insured claims he relied upon the repersentation of the agent in determining the replacement cost of the property. Determinal reliance whould be a great assertion in equity to bar insurance company from applying coinsurance penalty. I believe Mr. Kelley was attempting to avoid potential litigation when he gave the adjuster advice.
What would your defense be if the agent/underwriting used one method to determine replacement cost and the claims department used another? This is not a slam, just an honest upfront question. |
|
|
|
CCarr
Canada
1200 Posts |
Posted - 01/22/2003 : 12:01:56
|
Hi Alan, you are not 'welcome' by the way for your 'thank you', as there was no intent to 'slam' you; and for your interpretation of such I do sincerely apologize. The 'slam', if that is what it is referred to as, was my objection to Bill's apparent scoff regarding his 'roof story', that he directed to you; that's all.
At this point, I do wish this was in a thread whose topic title beared some relationship to the subject matter, because I think by the time we are all done; useful information will be derived on the issues that may have some future reference use.
I do wish we could get the details of that 'roof story', as I related in past posts there are too many "IFs" to know if there is an adjustment issue or just the perception of little value from the loss.
I'm sorry I don't understand the context of your statement, "the co-insurance was handled properly". I say that because I don't know how any of us can determine that from the information provided. As well, the apporach to the issue would be different if this was a Homeowners policy - Loss Settlement Clause, or a co-insurance clause in a commercial wording.
Regarding your comment concerning two methods of determining co-ins, it wouldn't surprise me if this is widespread throughout North America. Just one more inconsistency within the industry.
I assume our 'co-ins' talk is regarding commercial risks. What would these two 'methods' be that are used to determine RC?
Dealing with the first 'group' - agents / underwriters - determining RC, I do believe that it is fairly well established that the onus is on the insured, not the agent, to establish the amount of insurance required. The agent's role is to provide advice, guidance and direction that the insured may need to meet that end. However, as you know, reality doesn't always work that way, and there is considerable ambiguity in just what is 'advice', 'guidance', and 'direction' and what it may entail.
But, it is clearer that the carrier underwriter does not participate in this 'exercise'. The underwriter receives the required information on the account from the agent as a submission, and decides to accept or reject the account, and / or quote a premium based on what has been provided.
The carrier may, through their own loss control services or that being vendor supplied, carry out their own inspection / valuation of the risk - pre or post binding. If this information indicates a sufficient variance in the amount of insurance (and I have seen huge swings both ways) that was requested, the carrier then - through the agent - conveys that to the insured and asks and / or mandates an adjustment.
Therefore, I have split this first 'group'. If the carrier relies on the agent's submission, then the carrier is not accountable for an under insured position at a later loss date.
If the carrier relied on their own sought after data, and it proves later to be inadequate and is a factor in a later claim under insured position, I have seen the co-ins factor waived in those instances; and I add that it would be the logical approach for any carrier in that scenario.
It is easy to say a carrier could care less about an insured later claiming in litigation that he relied upon the representation of his agent in determining RC. However, by the time litigation ensues, of course the carrier is also named - in that 'deep pocket' hunt for relief.
How does a claim department determine RC differently from the agent / underwriter? I don't know, without some indication of the two 'methods' you suggest. However, in that question you posed above, I do again separate the agent from the underwriter, in that they do not jointly determine RC. I'm sure agency / carrier contracts all across the land clearly lay out the differences between the independent insurance agency and that of the contracted with carrier. I do know that this contract is always relied upon by a carrier when such situations occur.
I don't doubt Mr. Kelley was attempting to avoid litigation when he gave the adjuster 'advice'. But, in essence he was fundamentally trying to achieve a better settlement for his client. Was there a better settlement attainable? Again, if we knew more we could all assess that. I'm sure Bill had at least a little more background on the issues before he concluded it was the "darndest thing".
Alan, study hard for next month, it's the culmination of a lot of hard work; that few people may realize the effort required. |
|
|
|
Newt
USA
657 Posts |
Posted - 01/22/2003 : 14:59:52
|
AJ, When you take that test, you may want to take a MOJO with you. On second thought you may freak those people out if you pulled out a MOJO and started to chant and shake it over the exam.
Good Luck on it anyway:>) |
|
|
|
wfkelley
8 Posts |
Posted - 01/27/2003 : 21:37:07
|
I did not intend to create friction in the group with my story. I will give you to entire story, but it is quite boring. The actual intent of my "darndest" comment was that to save a couple of hundred dollars, the adjuster, while possibly correct in his coinsurance calculation, had provided a settlement offer that Joe Juror would have been shocked by.
As for the details, here are some pertinent facts. The same company had written coverage for this building for over ten years. During that time, the renewals had steadily included annual increases in value. Also, during the insured period, the building had experienced a fire claim for which no coinsurance was applied.
I was not advising the adjuster not to do his job, but there are intangible at play in any settlement offer. One of them should always be whether more assets of the carrier are being placed at risk than need be just to provide a technically correct, but difficult to justify in a court, settlement.
While I am hopeful that the claim does get settled, I can tell you that the insured does not understand the concept. The valuation used by the adjuster came from a book, and not from actual building cost for the area. A jury would certainly not understand how someone who had paid his premiums for over ten years could get such a result. And the company must bear some responsibility for not previously pointing out the underinsurance, if there was one.
But the point was lost, and I was certainly not trying to demean the job of the adjuster. IN FACT, my entire purpose for visiting your forum was to help me in dealing with adjusters on a more friendly basis since I have suddenly become "the enemy" when I was on their team just a short time ago.
Thanks again for everyone's input. I like a good spirited debate.
Bill
|
|
|
|
JimF
USA
1014 Posts |
Posted - 01/27/2003 : 22:02:25
|
Bill, it is hard enough to sometimes explain coinsurance calculations to new adjusters and agents, and to then follow with demonstrations of actual usage by examples and math calculations.
I cannot begin to appreciate the difficuly an insurance defense attorney would have in trying to relay this concept to the average jury, nor do I realistically expect many to remain awake for such an arduous adventure. Selling individual jurors on reading War and Peace in it's entirety, to me at least, would be the comparable and likely easier exercise.
As most adjusters know or should know, the lot or underlying land value of a house/lot represents approximately 20% of the total market value which would be placed on a home for sale. That is a 'rule'of appraisals and value which is fairly standard around the U.S. Further, it is one of the reasons homes are required by insurers to be insured for 80% of value.
My next door neighbor just bought a 6,000 square foot home on a country club golf course about 15 miles outside of my city (Greensboro, NC) and his purchase price was somewhere between half and a third of what the same or a nearly identical home would have brought on the main country club golf course here in town. For purposes of illustration, let's say he bought at the more distant home for $250,000 yet a comparable home in a more desirable location would have been $750,000. Therefore, real estate consultants would say the first home's lot value is approximately $50,000 while the comparable lot would be worth $150,000; thus leaving a 'pure' value on the improvements as $200,000 and $600,000 respectfully.
Here is where one of the major coinsurance problems which cause materially false results creeps in: the average adjuster (who may know insurance but not necessarily real estate valuation and appraisal factors) would use a computer estimating software program or Marshall-Swift program or guide to calculate a 'replacement cost' and were that adjuster in this marketplace, the guidelines would not differ significantly if at all in arriving at a 'real world' replacement value. Taking the land values out of the equation, should result in factoring the higher or lower values of the two contrasted homes. But as this example shows, or would show if properly calculated to reflect same size, same features, same layouts, and nearly identical homes, such a measurement would end up with different and more importantly, disparate results.
Hope this helps and I for one, welcome your input, comments and presence to this adjuster website. |
Edited by - JimF on 01/27/2003 22:11:12 |
|
|
|
CCarr
Canada
1200 Posts |
Posted - 01/28/2003 : 14:29:44
|
Hey Bill, thanks for coming back with a few more details on that 'roof story'. This thread is more of a mild example of spirited debate, I don't think you created friction and if I did I'm sorry. It it's friction you're looking for it can best be found in another thread, 'the' friction has not yet found this thread.
As I see it, this claim at its present state, will be found on a carrier's desk, the IA since having concluded their involvement; if in fact it had been assigned to an IA.
From that 'carrier desk' perspective, I could see the following analysis.
The following additional information has come forward;
(a) the same carrier has written the account for over 10 years
(i) one point in Bill's favor
(ii) it would be of benefit to know if the same agent has held the account for that period. Lets say it was the same agent.
(b) renewals have had annual increases in limits
(i) it would be beneficial to determine if those increases were solely programmed CPI increases, or whether at any time the insured requested an increase in limits. Lets say the annual increases were only programmed as per the CPI.
(c) the building had experienced a fire claim while insured with this carrier, for which no co-ins was applied
(i) now this is an item that does need to be studied further, carrier management must know more about this
(ii) was that claim below the co-ins waiver limit a/o on the same wording?
(iii) or for whatever reasons was the limit determined to be sufficient to avoid penalty, if so what methods and reasoning were used?
(iv) or was the co-ins clause not properly considered?
(d) regarding co-ins with this claim, the insured's lawyer suggests the co-ins calculation was correct, but at the same time says that the adjuster obtained the valuation from a book and not actual building costs in the area
(i) the carrier would have to look closely at this 'contrast', i.e. the suggestion of a correct calculation versus the method used
Now Bill, while all this was going on, whether it be a $1985 claim, or one with 2 or 3 more 'zeros', you are very correct in stating that a carrier should always be aware of, ".... whether more assets of a carrier are being placed at risk than need be just to provide a technically correct .... settlement".
One of the important spreadsheets a claims manager must comment on at least quarterly is the one titled "Files in Litigation", and of particular interest to the claims manager's bosses is the sheet (hopefully only one) titled "Suits Against the Company".
With all that in mind, the file has hit the claims manager's desk, a seemingly insignificant loss:
damage estimate $1985.00
co-insurance penalty $ 974.77
settlement amount $1010.23
deductible $1000.00
check to be issued $ 10.23
With the last file note likely being, 'insured disagrees and refuses settlement, and has hired a lawyer'.
So Bill, the CM and you will likely have a chat. Likely it will come out that there is no objection to the $1985.00 estimate, the co-ins math process was likely correct but the methodology was suspect, and you would tell / remind the CM how foolish the $10.23 amount looks like. The CM will probably say that he wants to look into the co-ins issue, but that a settlement amount of $1010.23 doesn't look foolish, and that the carrier is not accountable for the deductible in place that yes, does drastically minimize the net amount of the payment. You will again re-emphasize how 'others' would perceive $10.23 against $1985.00, and the CM will tell you he/she will get back to you.
Going back to my point (c), the CM has to determine the 'history' of the co-ins application in that previous fire loss. If that explanation results in a 'contrast' to this claim, i.e. for whatever reason the limit was determined to be sufficient to avoid penalty, and that result is not in 'flux' with annual CPI numbers, the carrier has a problem as serious as if it is determined that the co-ins was not properly considered in that fire claim.
If that contrast is evident, a wise CM will have a check issued for $985.00.
However, if those hills can be climbed by the CM with reasonable and proper explanations, he/she then has to consider point (d), which does indicate an inappropriate method to calculate co-ins. With the 'numbers' seemingly being so far off, it is likely that the building was under insured, at least to an 80% co requirement; if that was the case.
In that situation, a wise CM would be looking for a split on the co-ins penalty of $974.77, and would likely concede to only taking 33% or 25% of the noted penalty; unless other more compelling data was made available.
A PA may look at this situation differently, but I haven't got my leg up and over that fence yet.
But Bill you 'come on back', at any time with more of your interesting situations and / or input. |
|
|
|
LarryW
USA
126 Posts |
Posted - 01/29/2003 : 17:47:02
|
| There is no co-insurance clause in the regular Homeowner policy |
Larry Wright |
|
|
|
ChuckDeaton
USA
373 Posts |
Posted - 01/29/2003 : 18:27:04
|
| Good point and an often overlooked point, LarryW. There is a replacement cost provision but not co-insurance. |
|
|
|
ChuckDeaton
USA
373 Posts |
Posted - 01/29/2003 : 18:37:37
|
| In comparing the new DDS/IC we noticed that there were three different version of the valuator. Now that would make applying the replacement cost provision or co-insurance a dicey business. |
|
|
|
Topic |
|
|
|
Attorney - Part 2- Damage Multiples
Forum Locked
