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In January of 2007, our company will be celebrating 20 YEARS of serving catastrophe adjusters, independents and insurance carriers.  We have gone from a simple DOS-based estimating system (using only 51 different materials in our first database) to an entire suite of Windows and Web based tools for adjusters, claim managers and executives.

Mr. Brooks, I strongly agree with your post and you have some very valid points.  Over the years we have been approached for takeover but the deals never felt quite right to us.  Our top priority during discussions with potential buyers was to continue to service and support the end users.  The only thing all of our potential suitors had in common (besides cash to spend) was how much more they could get adjusters and carriers to pay for software and services we always felt were priced fairly and equitably for both our company and the end user.

SIMSOL will be around for years to come.  We are not going anywhere.  After 20 years in this crazy and sometimes wonderful business and thousands of happy users we must be doing something right.  We know many of you are forced to use software and would prefer to be able to pick your own brand which would be faster, better, blah, blah, blah.  Maybe that day is coming and maybe sooner than you think.  When that day does come, we will be there.

My brother in business and in life, Frank, myself and all the great folks at our company will continue to create and support great software for our exciting industry.

We know 2006 was a very disappointing year for many of you.  Cats come and cats go - it is the nature of what we do.  Let's hope for a more prosperous 2007.  Thanks for listening

 

Hello Mr. Postava,

Thanks for your general description of your product, and your comments re: selling it only when it feels right.

I posted the message because I hoped to get specific responses to a number of specific issues.

My post was initiated when I read the site comments on various estimating programs, and I saw that each comment seemed to be someone feeling a different part of the elephant.

There were no comparisons between products. Each product evaluation area was isolated from the others.

I've noted that manufacturers often take what I suppose is believed to be the high road, in that they don't wish to compare their product with another one. As though there was something distasteful about a manufacturer comparing his product to somebody else's.

Well, we know that isn't true. Ads compare all the time. I think this high road, by those who take it, present company excused of course, is a transparent excuse to avoid getting down to reality and dealing with the strengths and weaknesses of the products.

For example. to name only one issue that I raised, e mail compromise of business and client privacy. I would certainly be interested in hearing from, not only adjusters, but manufacturers, re: what they think of this. Who does it and who doesn’t, and why. And I hope I don’t hear from the manufacturers a recital of how this is expedient for them–since expediency for them is not the issue.

Maybe expediency for the user is an issue–but how are the users’ and their clients’ business privacy protected, not just from onlookers, but from the service provider itself? The vendor is a third party to the transactions between the user and his clients–how does the vendor hide the information from itself?

I suspect that e mail compromise of privacy is simply a loss to the user that he is expected to accept in exchange for some supposed benefit–which the vendor will describe.

I hope to hear from interested parties re: the specific issues in my opening post.

Thank you.

E Brooks

I, for one, am glad not to be on the receiving end of these questions.......Plead the 5th!! or just say "I'm loooking into it".

 

 

 

Mike, perhaps Mr. Brooks forgets he is not in the courtroom when posting on the web.

As to email compromising business and client privacy, what exactly do you mean?

Do you mean that someone might be playing man-in-middle or doing an IP spoof on the email server so as to access the information in an estimate or claim?  This is not a simple procedure and one that as a computer professional since 1988, when I started writing my first estimating system, I am not familiar with.  My first thought is that this would be an awful lot of work to find out an insured's name, address, coverage amount and proposed settlements.  I do not see how the coverage amounts, policy numbers or proposed settlement amounts would aid someone in identity theft.  Most likely a talented hacker knowledgeable in these techniques and looking to steal something would have larger game in mind.  I am not saying that private claims info should be made public, but I have never seen a SSN or a bank account or credit card number in the claims documentation.  The name and address are probably available in easier ways than hacking a web or email server.

I have never used an estimating system that uses email to transfer claim information, although I have emailed proposed estimates to insured, if they request it.  I have settled entire claims using only email once I had met the insured on site at the time of inspection.

It is rather easy to encrypt email using certificates with public and private keys and to confirm sender identity using digital signatures.  I believe that most CA's (Certificate Authorities, such as Verisign, Thawte and the like) give their personal certificates away for free.  I also do not know one person that actually encrypts their email.

I always assumed (and we know what that can get me) the XactCentral and PowerClaims electronic transfer system used SSL on the web site to which they upload and download.  The SSL protocols use certificates and public and private keys to encrypt all traffic between the client and the web site, with different public keys in use for each client so only that client can decipher the information.  Using a 128 bit certificate, it requires computer power on the scale of a supercomputer to break the encryption.  IMO, anyone with this much computer power and savvy would not waste time hacking insurance claim information.

In fact Windows 2003 Server itself can be configured as a Certificate Authority to produce certificates to deploy SSL at no cost.  One needs to manually load the certificate on the clients to avoid some unsightly but basically harmless messages as the encrypted conversation is set up.

I believe that I raised this issue back in 2000 to see if anyone would come up with the above answers.  But as I remember it, I just got accused of trying to scare people.  And Gale accused me of planning to do it. 

As the preceding might lead you to believe, I have been thinking about this problem for years.  If needed I could set up an unhackable claims upload/download website or FTP server.  It just takes time and thousands of dollars.  It also would only protect the communication between the clients and the web server.  If estimates are emailed to insured, this would offer not protection for that.  But it would be extremely hard for a hacker to hack all the available insured's email servers.  Once again, I hope this is what the upload/download folks are doing.

As for locally verifiable pricing that can be pulled up to show how the line prices are determined, I do not think this will ever be available.  I (actually the database pricing manager did it, but I wrote all the software) priced a 50,000 price insurance repair database circa 1990-91 in conjunction with the aforementioned estimating system.  What I found out is there is not much of a correlation between what the products sell for on the shelf of the local supply house and what the restoration contractors are charging.  I have a rant on this matter posted on my website at http://www.stormcentral.com/pricerant.htm.  (Much of the info on stormcentral.com is outdated, but the rant still works.  I have not updated it since I went back to doing claims on a daily basis late in 2004.) 

I have converted that old DOS database to windows and I use the text of it to this day in my estimates.  I just price it from the guides available, whose accuracy I sometimes doubt.

Man that got long, hope some of it helps.

Jeff Goodman

Good Man Adjusting

Goodman Enterprises

Jeff that was a great post. Emailing claims seem never to really go main steam and with the spam filtering of today emailing large files just does not work out very well. While I can't speak for Xactnet and ComCentral we use SSL with PowerClaim Net Services plus there are four levels of physical security just to get to the server. Just as with the Federal Government many security breaches today have two feet that physically packs the data home. Nothing is totally secure. About the only ones that seems interested in claim files are people like the two sisters in the news a few months ago and they already had physical access.

Hello, Mr. Goodman,
1. I can see that you have done a lot of thinking on the subject of e mail security issues.

You ask what I mean specifically about compromise of business or personal information through the e mail process:

What I mean lacks the technical background you have, but is at the user level which is good enough for me.

I got in touch with Xactimate and learned that I could not buy (actually, rent) their product and install it on my internet-less computer. Yes, I have a machine that has never been soiled by contact with the internet.

So Xactimate told me, if you want to rent our product you have to be in connection with us on the net so we can do whatever we need to do with your computer.
I also understand that X would like all my work product to be routed into their server. Exactly why and the benefits therefrom are not clear to me, as the basic idea was off-putting, so I did not put a lot of energy into pursuing the idea or learning more about it.

You might imagine that to me, as a person concerned about maintaining privacy, this came as a rather rude surprise--and got me to thinking about another product than Xactimate.

So that is exactly what I mean, so to speak.

I also have heard and read that there is a trend to new products in the estimating area in which the adjuster's work product resides entirely on the vendor's server. That of course simply makes the problem worse.

I don't want to reinvent the wheel or the products that are out there--I will leave that to persons with more expertise than me, like you--I just want to know which one would be comfortable to own and use over the long term, given my personal requirements as outlined in my post. I have to assume that there are other persons out there who would benefit from the same discussion.

I note your comment that programs do not actually offer any real assurance that the prices in their database are real. That is disappointing but on further consideration not surprising. I guess I am expecting more than the programs and programmers can offer. Of course, I was lead to expect this by the very same programs through their sales representations.

Still, even if the real rough and tumble of competitive bidding resists any tight pricing, if the database were as tight as possible, some control would be there, and so wide deviations would be seen and caught. I suppose it is as tight as the programers want to make it and are able to make it through market surveys. How tight, what deviation, becomes the question.

Apparently, the programs are not prepared to invest the expense required to create an authoritative and current database of market costs by area.

At one point some years ago I spoke with a contractor and we discussed the fact that (at least at that time) Xactimate had become so much the standard that contractors and adjusters were getting agreed costs simply on the basis of a matching scope--since the pricing was done by X.

What I would like to see is an authoritative price database that could be used to settle claims with little dispute.

The point you make about contractors basing prices on other than supply house costs goes to the question of "soft costs", a polite and rather elliptical phrase for profit.

Profit of course is whatever you can get--but if hard costs can be nailed down, then there is a reference point from which percentage of profit can be determined and controlled.

I recall when I worked for a certain nationwide carrier with a well-earned reputation for conservativeness. Their position was "We are ready to reach an agreed cost which will be profitable for you." The question was, of course, How profitable?

I have found that contractors are by their nature ready to seize on any opportunity to get more profit--they will triple, quadruple, you name it, their costs, the only limit being what the market will bear. When they are dealing with the deep pocket of the insurance carrier, their imaginations soar.

I don't think I have ever met a contractor that believed there was a "reasonable" profit. Reasonable profit is an oxymoron to a contractor. So, enter the estimating program and its authoritative database.

A specific example: Roofers whine to high heaven about worker's comp costs. I would like the program to authoritatively tell me what the rate is for a roofer in State X. Then I can control this roofer's bid.

Going back to your question about why I am concerned about my and my client's personal claim or policy information being on somebody else's computer, that seems to be a self-explanatory thing.

Why should we care about policy or other claim information falling into the hands of others? For starters, it is personal financial information. Policy limits are sensitive information in litigation, that can be used to the detriment of the defendant.

In general, carriers gather a lot of information about their policyholders (too much), which a fortiori has no business in the hands of anyone outside the relationship, which is, for what it is worth, of a fiduciary nature supervised to some extent by the state.

As to the issue of such information being intercepted in transit, the compromise of information seems less likely by this method than by hacking it where it resides–if only because it apparently takes more sophistication to get it this way.

Thanks for the technical information, and

So long for now.

There has always been a discrepency between what contractors charge and actuall retail price for the product. That is true in whatever field you look at.  A mechanic will mark up the alternator he buys at Joes Auto Parts before he puts it on your car, because he ultimately has to warranty that item. Adjusters know (and most insureds also) that the pricing that shows up in the estimate will not be the exact price that will be charged by the contractor, in most cases it is somewhat higher. I'm sure in some areas the pricing needs to be adjusted up. In my area the databases are about 20% high.

I would imagine the cost of making sure every database is exact for every zip code would price most of us out of the business and put us back to hand writing estimates, calling the local Home depot or Lowes to find prices.

Hello Jim Gary,

If you “drill down” as they say into the software database unit cost on an item, you will find on a good program that a lot of research appears to have gone into determining hard costs, soft costs, and burden, for starters at least. Then area multipliers can be applied–but you have to have confidence in them as well. For example, the National Construction Estimator has a multiplier for San Francisco that is 24% in their 2002 book. In 2006 it went up to 26%. But the National Renovation and Insurance Repair Estimator in 2004 puts it at 88%! Which is real? (These are called “area modification factors” by the publishers).

Of course it goes without saying that anyone who resells a product will mark it up. The common number I have seen with body shops and the like is 25%. Your point that the reseller has to warrant the resold product is well taken–a certain number of products are defective and the reseller has to redo the job or part of the job. But even without the warranty expense, the reseller is entitled to a markup for “running it through his books” as it is said.

My initial post assumed all of the above, and went on to the following question about estimating programs:

“I want to be able to show anyone who asks that the values of, let’s say, a unit cost for a square foot of drywall, have been worked out carefully and are the current market price in the area.
This is not a simple thing. Hard costs, soft costs, area multipliers, burden, etc. I don’t want to put my reputation and my principal’s position on the line unless I have confidence in the research that went into the costs, and can defend it.”

As I indicated, if you take a position that a carrier owes, say $300,000. , based on costs that come from a software estimating program database, you want to have confidence that the research that went into that database is accurate and therefore defensible–otherwise you will be embarrassed, your position will lose credibility, and the outcome may and probably will suffer.

You don’t want to go keyboarding merrily through a scope, arrive at some impressive numbers, and later find it will not stand scrutiny. As you know, the worst thing an adjuster can do is low ball a first-party insured, so on the low end that is the major hazard of a poorly researched program.

On the other hand, if you are representing the insured against the carrier, it is not helpful to be found to be high-balling.

In either case, you can be low-range or high-range, however, as long as you are in the range.

When I sit down and scope and price an insured’s loss, and if I am reusing an out of date or unreliable database, I always tense up, especially as I am doing the high value items. My judgement in making necessary changes item by item to the unreliable database is all that stands between me and possible serious embarrassment.

But if I have a program that is current and reliable on costs, I can relax somewhat.

So long for now

I never meant to question the need to keep claims information private.  Every effort should be made to keep this information private.  I was inquiring as to the nature of the threat to this information.

I am working flood claims at the moment and the sixty day deadline for filing proofs is tommorrow.  So I have much to do.

You bring up several issues I feel are key, and I will elaborate when time allows. 

Thanks for starting a good thread.

Jeff Goodman

 

The variables for completely accurate pricing are enormous. Like you guys stated earlier "Hard costs, soft costs, area multipliers, burden, etc". Not to mention these prices are based on specific State and local pricing. Prices are also affected by the need per a catastrophic area. Key West would have a variable price increase based on transportation costs because supplies have to be transported by plane or ship in certain storm situations. Let us not mention the costs to transport and deliver in New York City areas. Ha Ha!

We should not loose sight of the fact that Insurance Policies require "Reasonable Price to Repair or Replace". This means checking with the Home Depots, Loews, Construction Co's, Internet sites, etc...for current available products and prices. We are creating estimates not finite engineering reports. This is why the Supplemental process exists to address the factual final result. This is also why the "Replacement Cost" premium is available. Let us say a million dollar structure had interior hand carved blue marble and trim pieces only found in Italy. Storm caused the tiles to break or crack. The costs is more now than when it was first purchased not to mention shipping costs and to find an artisan or craftsman to cut and lay these tiles. Our estimates, only, need to show a responsible and intelligent approach to these repairs or replacement no matter if you are estimating for a carrier or insured.

I grew up working for my step father's corporation building Casino's and Hotels as a laborer , draftsman then estimator. My higher education in Engineering, Business Law and Architecture helped me succeed with my real father's construction service businesses. I then spent seven years as relational database programmer and web master as an IBM consultant to several fortune 100 corporate enterprises. Having said my background, I can say that Xactimate offers exactly the level of sophistication I need for writing estimates for a Carrier or Insured. Xactimate is not a "low level" engineering report but estimates by nature do not have to be. My current estimates for last years Katrina damage are for residential and commercial, million dollar, large losses and are two to three inches thick and Xactimate gets as "low level" as I need to state the obvious, for estimated damages.

Another idea is to use other software programs that will enhance your report or estimate. I use TopView for very complicated roofing systems. This gives me an excellent roof diagram and data needed for my estimate.

Hello, Brent Young,

Thanks for the input. Your experience is impressive. TopView you say? Sounds interesting. I'll look into it.

E Brooks

Roof diagrams...Don't get me wrong, Integriclaim is great for fast diagrams and Xactimate does a great job creating harder roof diagrams using ("square break"&"Ctrl"). I only mentioned TopView because it is always nice to have an extra roof diagram tool available for our estimate/report productivity.