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KileAnderson
USA
875 Posts |
 Posted - 04/04/2004 : 10:11:59
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It isn't price fixing. It is a defense against price gouging. If companies didn't have pricing specialists who do the research to determine the local pricing for labor and materials then contractors, who we all know are honest, could charge anything they want. We've all seen it. Contractors often price jobs using different prices (higher) when insurance is involved. If I showed up at a storm and the company didn't offer a price list then I would just go around and scope damage and then pay whatever the contractor said it would cost. I'm sure that would be a wonderful business plan for a contractor but would soon bankrupt a carrier.
Another thing, it isn't price fixing if the customer (the carrier) demands a certain price. It is only price fixing if sellers (contractors) get together and collude to artificially drive up the cost of products or services. Price fixing happens on the supply side, not the demand side of the equation. |
Edited by - KileAnderson on 04/04/2004 10:13:59 |
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Ghostbuster
476 Posts |
Posted - 04/04/2004 : 10:51:23
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Guys, the BIG CHANGE that needs to occur is for the carriers to alter the policy to read the way health insurance policies do with payment to be made based on a 'USUAL & CUSTOMARY' basis.
Our research department here at the opulently and palatially custom decorated executive penthouse suites at your Ministry of Propaganda have determined that the cost figures from health insurance carriers for something as minor as say, day surgery for an adjusters attitude transplant is not based on the suggested retail price at Gold Plated General Hospital. Oh, contraire, it is based on the charges from a Voo-Doo priestess operating from her trailer at the Happy Time Mobile Home Park. (You know the one...it's where they have that sign out front numbering the days since the last tornado.) Yes, yes, and we know what happens next...our pals at Gold Plated General flinch and swallow it whole when they get wind that this is an insurance deal.
Usual & Customary...an elegantly simple solution to a needlessly complicated problem. By the way, the health insurance carrier would not reveal where they got their prices. They said it was confidential information, not for public disemmination. This could be the start of a new method in adjusting techniques we like to to call, The Ol'-Cram-It-Down-Their-Throats. And, it would not be discrimintory either, Insureds, Claimants, contractors, body shops, lawyers, Adjusters, just about everybody will be paid by the new clause.
Could we now get some feedback on this brave new concept? |
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gloverb
USA
54 Posts |
Posted - 04/04/2004 : 11:17:14
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FYI
Builders in Texas now have to be licensed/registered.
"During the 78th Legislative Session lawmakers created the Texas Residential Construction Commission (the "commission") with the passage of House Bill 730. The commission was set up to provide homeowners and builders an opportunity to resolve differences through a neutral administrative process prior to pursuing court action."
"TRCC rules define a "builder" as a business entity or individual who, for a fixed price, commission, fee, wage, or other compensation, constructs or supervises or manages the construction of a new home; a material improvement to a home, other than an improvement solely to replace or repair a roof of an existing home; or an improvement to the interior of an existing home when the cost of the work exceeds $20,000.00."
http://www.trcc.state.tx.us |
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alanporco
USA
112 Posts |
Posted - 04/04/2004 : 11:31:52
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Looks like ReconMan may have a major problem. He's going to have to get licensed and be subject to governmental regulation.
ReconMan, your constant pounding may be finally paying off. I think I understand what you want from all of us adjusters. You want us to pay whatever you say the cost to repair is. When the insurance companies say to do that, I will. I am sure the frustration on every adjuster's part at this web site is that you keep pushing to have us agree to something that we can't. We, the adjsuters, do not set rates, premiums or anything else you have talked about.
Now that you'll be required to be licensed in Texas, where you planning to move? |
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ALANJ
USA
159 Posts |
Posted - 04/04/2004 : 12:22:42
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Kile:
You have it backwards. When a company says this is all we will pay period. Then it is price fixing. I believe the policy says it will pay the cost to repair or replace. I don't believe it says we will pay based on our prices only. What ever the prevailing rate to repair or replace is the amount contracted for in the policy. You keep overlooking something called a (CONTRACT OF INSURANCE). It doesn't matter a hill of beans what the pricing guys say. You never ever mention this little ole contract in your post. You just keep talking about companies going bankrupt or SOP. The ole bean counters always factor in price changes when they calculate the price for their (CONTRACT OF INSURANCE). The insurance companies could place language in the policy that reads we will pay the actual cost to repair or replace according to our pricing. But, they do not. The contract is the controling factor (period) not SOP or price guys in the back room who call up two drunks and a truck for a price quote.
If you can get a lic insured repair firm to agree to your figures then fine. If not then you need to take a closer look at your estimate and methods. Any and all payments must be based upon and within the contract of insurance.
We all need to make a mental note to review this thread a year from now. I for one see major changes coming down the road for this business. I believe we have Mr. Greene to thank for this. Only time will tell.
Maybe we need to kick the ole dead horse one more time and crank up the association thread. If for no other reason then to say we have one. |
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KileAnderson
USA
875 Posts |
Posted - 04/04/2004 : 12:33:30
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| No, Alan, you have it backwards. The customer cannot be guilty of price fixing. Only the supplier can be guilty of price fixing and that is only if they conspire with others in the same field to charge a specific price. One insurance carrier saying we will only pay x for a certain repair is not price fixing. Even if all the insurance companies got together and decided they would not pay more than x for a certain repair that would not be price fixing. Price fixing by its very definition can only take place on the supply side of the equation. That's a fact. |
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katadj
USA
315 Posts |
Posted - 04/04/2004 : 12:36:31
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Question?
If the pricing "guidelines" established by the various suppliers of information, to the various software vendors, whose programs with the blessing of the carriers, we are required to use, are not consistent with the area, or do not reflect the particular loss repair difficulty factor, WHY must we use them?
If, for example, a loss is 100 miles out in the woods, and the price for the repair, using the program information provided is $3755.55. And the insured has received 3-5 bids on the work, all in excess of $5000.00, are we not obligated to pay that cost which is incurred?
Why should an insured suffer a loss on top of a loss? Simple, they should not.
One may think that the pricing information we are required to use is NOT price fixing.
While, in fact, several contractors, in assembly, setting selling prices for their wares would certainly be considered price fixing and a possible a violation of the RICO act, if all conditions were met.
However, to seemingly dictate across the board pricing, for any and all repairs, irrespective of loss conditions, certainly bears some serious thoughts as to that practice.
Our presence is to “adjust” the loss. This includes taking into consideration and all circumstances that are required to return the insured to the condition they were in prior to the loss incurred. To do less would not be properly servicing the loss or the insured party.
Agreed, there must be and will be changes to our industry, just as sure as the speed of computers, electronic transfers, WI-FI usage etc. Just be aware of what you are doing, and how to keep up with and implement the changes.
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Edited by - katadj on 04/04/2004 12:45:28 |
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ChuckDeaton
USA
373 Posts |
Posted - 04/04/2004 : 12:38:02
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My guess is that very few CADO members actually "adjust" most here are "damage appraisers" who inspect, estimate and report to a company adjuster or file examiner. In any event on the insurance side of the loss, the inspector, "adjuster" or "damage appraiser" writes an estimate. The repair person, "contractor", "business entity", or "individual" writes and submits a "bid". The accepted rule in "estimating" is that a minimum of three trades are required before O & P is added to the the "estimate." When O & P is added it is 10 and 10. Simply replacing the run of the mill roof, replacing a faucet, servicing an HVAC or replacing carpet does not generally require the services of a general contractor.
Contractors or individuals come to the amount of their bid by various means. The "estimate" is used by the insurance company to speed up claims, especially the payment of the Actual Cash Value of the loss less deductible. Based on my own experience most estimates are written for an adequate amount to repair the loss less the deductible.
Coverage, under an All Risk except as excluded, Replacement cost homeowners policy is for replacement cost. However, ACV is payable once the loss is determined to be legitimate and covered. Replacement cost is usually based on the legitimate amount the insured paid to have the covered loss repaired and if that paid amount correctly includes O & P them the O & P will, most often, be paid.
Under the current operating procedures, Replacement cost is based on the estimate and Replacement cost less the deductible is generally paid with out forcing the insured to go through the hold back process. This is especially true in storm situations.
A salient point is that the insurance company is not the contractor/repair persons customer. The customer is the insured. The contractor/repair person is actually paid by the insured not the insurance company. |
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Reconstruction Man
124 Posts |
Posted - 04/04/2004 : 12:41:07
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Czar,
You said:
"We as IA's determine cause, coverage, and the money needed to put the insured back the way they were prior to the loss. If this can be accomplished with a contractor of the insured's choice with out O/P, I do not see the problem"
First, many carriers like to have construction professionals to work with. Many homeowners appreciate the same.
Our experience has been that damage scope and reconstruction processes are underassessed by (certain) adjusters who want to avoid speaking with a construction professional. Imagine the money certain insurers could retain by playing on homeowners ignorance of what a
truly "fair and reasonable" construction business
model estimate means.
So far, invitations to (certain) adjusters to sit down together with the homeowner, laptop-to-laptop has gone unaccepted. Hmmm...
FYI, We have worked with excellent IA's and Staff Adjusters. We have worked with some that were simply there to jerk their "client" around and collect their fee...in our opinion. All were there to represent the carrier / carrier portfolio manager.
TDI and other DOI's and courts [the really smart and insightful people] see a problem. You might want to put on their glasses, then take another look at how you may very well be underpaying claims.
We realize damage scope, construction business products,
processes and pricing rules to follow to bring a structure into existance or re-create a damaged structure. We know when [sound construction business]
estimating rules are being "rewritten" on-the-fly by (certain) carrier sent "paste and click" damage scope,
construction business products, processes and pricing estimating "experts".
California, Texas, Maryland, North Carolina, Etc. residents are aware of those kind of "expert" opinions.
You like stories, here's one for you;
Someone calls in to order a pizza. He orders a half pepperoni-half veggie style pizza. He pre-pays for it with his credit card. He has the pizza delivered. It looks perfect. He pays and sits down to enjoy. The first bite seems off a bit. He takes a second bite and it seems off too. He lifts up the meat, veggie and cheese
topping and low and behold, there is no pizza sauce!
He calls the pizza place, and a quick thinking manager has to justify how the missing ingredients paid for, and owed...are not really owed.
"You see", he explains,"even though we charged everyone for it, and knowingly owe it to you, we don't necessarily owe it to you, since some people do NOT like pizza sauce on their pizza. You can take my word on that!"
The pizza eating patron pauses to reflect, then asks why regular pizza costs the same as sauceless pizza, and all the manager has left to reply back with is...
"There is NOTHING I can do about that. I'm just following the "Big Cheeses" instructions". "Also, you can have sauce on if you really "need" it. We have it available on the side too!" The [soon to be ex-patron] does not understand why they are charged for pizza ingredients they haven't received?
Consumer, with financial [robbery] harm proof in hand, sues delivery person, manager and company. Does not purchase pizza from them any longer, tells friends, family and community about the pizza place and their tricky and deceptive client / trade practice.
More and more [educated] pizza house patrons start speaking up.
Pizza house and employee chain is exposed and punished.
Moral of story: You can fool some pizza consuming people some of the time, some all of the time, but not ALL ALL of the time.
---
Carrier anticipated construction products, processes and pricing are part of the pre-charged for premium "pizza ingredients" value factors to "deliver" a homeowner.
Those factors being toyed with, and held back,
when it is time to deliver them whole, and unbiased, is wrong.
Deliver the value of the whole pizza, not a deceptive and superficial version of one.
-Our and others (common sense) reasoning.
Is Czar an acronym for Carrier Zealots Aren't Realists?
Kile,
You seem like a good guy overall. Classes are being held in an ANGER [Adjusters Non-Grounded Estimating Recovery] chapter close to you.
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ALANJ
USA
159 Posts |
Posted - 04/04/2004 : 13:04:26
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Kile:
Insurance company supplies money based upon their fixed prices. I believe this fits your explaination of price fixing. |
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stormchaser1
6 Posts |
Posted - 04/04/2004 : 13:21:13
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| THE WHOLE REASON FOR OVERHEAD AND PROFIT IS TO MAKE THE WHOLE PROCESS EASIER ON THE HOMEOWNER. YOU CAN GET 3 ROOFING COMPANIES ESTIMATES, 3 SIDING ESTIMATES AND 3 GUTTER COMPANIES ESTIMATES AND I'LL BET IT WILL COME UP TO MORE THAN PAYING THE LICENSED GENERAL CONTRACTOR THE OVERHEAD AND PROFIT AND IT SAVES THE HOMEOWNER AND INSURANCE COMPANY A LOT OF TIME AND HEADACHES. JUST PAY THE O&P AND BE DONE WITH IT. |
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Reconstruction Man
124 Posts |
Posted - 04/04/2004 : 13:47:53
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The next "hot" potato:
-Taking construction estimating "Methodologies" to appraisal-.
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Reconstruction Man
124 Posts |
Posted - 04/04/2004 : 14:14:57
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| And the forum becomes awkwardly quiet... |
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KileAnderson
USA
875 Posts |
Posted - 04/04/2004 : 14:40:56
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| Stormchaser, you're wrong. I have seen many claims that include roof and gutters and they quite often come out less when 2 different vendors are asked to give bids than if I had just paid O&P up front. It would be a huge waste of money to pay for O&P on every claim. You think premiums are high now. |
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trader
USA
236 Posts |
Posted - 04/04/2004 : 16:05:40
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Lets Assume every roof claim had to have the usual PLUS a signed proof of loss from the Insured for the $$ amount shown by the adjuster. Also assume every adjuster in town allowed $100.00 per square to R & R the shingles. No other items(lines) on the estimate (Roof only) and 500 adjusters closed 2500 claims each day for 5 days. On the 6th day the insurance carriers received 12,500 phone calls from the policyholder,s . A sample call; "I have had two roofers look at my estimate and stated the scope and diagram was right on; but they said they will have to file a supplemental proof for an additional $17.50 each square + the number squares shown on the diagram to do the work on the adjusters estimate" .
We all know the answer. |
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The perils of poor performance: Volume 1
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