2008-10-06T20:44:44Z Public Adjuster Info Copyright 2008, Public Adjuster Info SPHPBLOG U.S. may still join insurance lawsuit



The Justice Department says it is "highly interested" in an August 2006 lawsuit claiming that Allstate Corp., State Farm Fire & Casualty Co. and other insurers defrauded the government by "grossly overstating" Hurricane Katrina flood damages to policyholders' properties and then submitting false claims worth potentially billions of dollars to the federal flood insurance program.



It's the latest turn of events in the suit, filed by Branch Consultants LLC of Metairie, La., in federal court in Louisiana.

In a May 18 filing in the case, the U.S. said it wasn't able to make an informed decision by a court-imposed deadline whether to intervene in the case, and so it wasn't getting involved. On June 5, the court directed the government to intervene by Monday or appear Wednesday to explain why it's not taking over the litigation.

In a filing Thursday, the U.S. said it still hasn't changed its position about not intervening, but Branch "has made significant, detailed allegations that deserve a full and careful investigation," U.S. Atty. David R. Dugas wrote in the eight-page filing. "The United States remains highly interested in the progress of this particular case and intends to remain heavily involved in its development."

Depending on how the case plays out, the government might seek to intervene later, Dugas said.

Typically, most insurance policies cover damage by winds but not by floods. The 2006 case noted that, the way it works, flood claim payments from the National Flood Insurance Program are used to reimburse insurance companies for their administrative services and for flood claim payments that they've already advanced to policyholders.

So "the gross overstating of flood damages benefits the defendants because the damages that are misattributed to flooding should instead have been attributed to wind" or other causes typically covered by the private insurance companies, the Branch lawsuit alleged.

The stock market didn't appear concerned about the potential of the Justice Department intervening in the case. Allstate stock closed Friday at $61.79, down 3 cents.

Allstate has not yet filed a response in the case and therefore declined to comment on the allegations.

But "Allstate remains confident in its claims settlement practices following Hurricane Katrina and is committed to resolving all claims fairly and appropriately," Mike Siemienas, a spokesman for the Northbrook-based home and auto insurer, said Friday.

Bloomington, Ill.-based State Farm also defended its practices, saying it followed National Flood Insurance Program guidelines for expediting flood claims, spokesman Fraser Engerman said Friday.

The latest filing by the Justice Department isn't enough to ratchet up the pressure on the insurers, said Donald Light, senior analyst at Celent, a Boston-based financial research and consulting firm.

But "if the Justice Department is going to join or take over the suit, that will definitely turn up the heat," he said.

It not only would force the insurers to defend themselves against the Branch lawsuit but also would weaken the industry's ability to argue other related cases in front of juries, Light said.

"The insurance industry is not winning a lot of popularity contests along the Gulf Coast," he said.

"People in Louisiana and the Gulf Coast all read the newspaper."

The National Flood Insurance Program has paid out $15.7 billion in claims related to Hurricane Katrina, according to Bloomberg News.

By Becky Yerak
Tribune staff reporter
Published July 7, 2007]]> http://www.publicadjusterinfo.com/blog/index.php?entry=entry070709-224718 2007-07-10T00:00:00Z 2007-07-10T00:00:00Z


Responding to a lawsuit filed by a group of flood victims, lawyers for the administration told the Central Jakarta District Court that Governor Sutiyoso and the five city mayors fulfilled all measures required by a 2002 gubernatorial decree on disaster management.

"The city administration did its best in implementing measures contained in the city's water planning system," lawyer Made Suarjaya said.

He said the system was based on the city's flood mitigation system, which is in accordance with a 1999 bylaw on spatial planning.

The lawyers also said the administration ran several disaster awareness campaigns to increase public awareness of the need to prevent flooding.

They said the administration also mobilized rescue teams during and after the week-long floods.

Victims are seeking Rp 51.7 million (US$5,717) in damages for material losses and Rp 100 million for psychological distress.

They are also seeking a Rp 5 billion community compensation fund and a public apology from the administration.

The trial will continue next week with a response from the plaintiffs. -- JP

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Representatives from the insurance industry are meeting ministers to see how best to deal with the cost of claims following the recent floods.

Ministers have already met local councils to discuss how to spend the £14m relief package announced by Prime Minister Gordon Brown.

UK insurers are facing a bill of around £1.5bn after June's floods.

The government says it is putting pressure on insurers to see that claims are processed as quickly as possible.

The recent bout of severe flooding is estimated to have hit 31,200 homes and 7,000 businesses, mainly in the Midlands and northern England.



'Top priority'

Nick Starling of the Association of British Insurers said the meeting with ministers would be to explain how insurers have been handling the large number of claims the industry had received.

He said: "One of the things we want to do is update them on what the insurance industry has been doing to address these devastating floods.

"The problem with flooding is that the damage is very severe, it takes a long time to deal with, it takes a long time for properties to dry out before you can actually start remedying and rebuilding."

The Communities Secretary Hazel Blears told the House of Commons that pressure was being applied to insurers to make sure those affected were assisted as quickly as possible.

She said: "I hope the house will appreciate how seriously we're taking this issue around insurance to make sure that claims are dealt with speedily, fairly, and [that] there is sufficient capacity to really get on with this, because this is a top priority for members of the public."

'No accurate data'

Environment Secretary Hilary Benn has said the government is to increase flood defence spending from £600m this year to £800m a year in 2010/11.

Insurers have also called for more information on the country's flood defences to help them with offering cover.

"What we have is a map of the country with no accurate flood defence data on there," said Simon Warsop, head of flood mapping at Norwich Union insurers.

"We are desperate for the Environment Agency to share that flood defence data with us."

Meanwhile, a fund to help farmers affected by the flooding is to be launched by the Prince of Wales and the Archbishop of York.

The money is to be especially targeted at farmers whose crops and livestock were not insured.


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GIPPSLAND residents recovering from their battle against devastating floods have hit a new obstacle: getting insurance payouts for damage.

As Premier Steve Bracks yesterday took his cabinet to the scene of last month's floods, some residents in the town of Newry, near Maffra, reported problems with insurance claims.

But Gippsland's residents are likely to get some good news today, with the State Government's Flood Recovery Ministerial Taskforce expected to announce a package worth about $40 million to rebuild roads, bridges and other infrastructure.

In Newry, Don Dwyer said he had lost equipment worth thousands of dollars in the floods that inundated his home, and is concerned he may not get insurance money.


Mr Dwyer, who runs a mechanical engineering business, said his insurance company had told him they weren't sure if they were going to pay any, part, or all of his claim. "They went very quiet and I have been chasing (them)," he said.

He also expressed frustration at what he called a lack of warning that Lake Glenmaggie was flooded and the water was coming downstream. "The water was tearing through the gully at my place and 45 minutes later my wife and children were on the roof. I lost all the gear in my workshop and I just went into the house and saved what I could."

Mr Bracks said he would have further talks with insurance companies, which had already indicated to him that they would look at claims as sympathetically as possible.

"I was very disturbed to hear the reports today about some companies who may not be adhering to that," he said.

At Lakes Entrance, the floods have caused further problems, with a build-up of sand blocking parts of the Entrance, forcing fishing boats to go elsewhere.

Lakes Entrance Fishing Co-operative chairman Peter Clark said the floods had cleared silt from the inside of the channel, depositing it outside the Entrance.

One vessel became wedged on the sandbar yesterday before freeing itself, while another bypassed Lakes Entrance to unload its catch at Port Welshpool.

"It's a catch-22," Mr Clark said. "The floods shifted the sand from one area of concern to the next."

Tourism operators in the town have also been hit, facing cancellations during the school holiday.

The Lakes Entrance Business Tourism Association said there were reports that some owners faced cancellations worth $60,000 to $70,000.

Association board member Darren Chester said the floods would have an ongoing impact as tourism operators were reporting a downturn in bookings for spring and Christmas. "Coming on top of the bushfires from last summer when a lot of trade was lost in the holiday season, then to have a bit of a wipe-out in the July school holiday period, a lot of businesses are suffering severely in terms of cash flow," he said.

Mr Chester said the tourism association had asked the State Government for a three-year $845,000 tourism and marketing campaign for towns in the area.

Mr Bracks dismissed claims by the Victorian Nationals that holding the community cabinet meeting in the flood area was hampering the relief effort by draining valuable resources.

"I think it would be negligent in the extreme if we weren't here," he said.

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Angry that your insurance company isn't moving as fast with that claim check as you'd like? Or maybe the adjuster's offer is less than you need to cover your losses? Perhaps you need your own adjuster.

Public adjusters assume all of the duties necessary to have your claim processed, including making an inventory of the loss and presenting your case to the insurance company. A good public adjuster has experience in the industry and will understand your contract and the company's responsibilities right down to the fine print. In exchange, a public adjuster receives a percentage of your claim.

Finding an adjuster takes some research
"For the most part, people like using (a public) adjuster because they like the idea that someone is working on their behalf vs. someone working on behalf of the company," says P.J. Crowley, vice president of the Insurance Information Institute.

But the decision to hire your own adjuster is far from a slam dunk. Finding a competent public claims adjuster is a lot like finding a medical specialist during a health crisis: It takes some research at a time when chances are you need to move fast.

Because you will be paying the adjuster yourself, you don't want to hire one unless it's really necessary.

"If they're good, it really makes a lot of sense," says Chris Farrell, host of the nationally syndicated television show "Right on the Money!" and author of “Right on the Money: Taking Control of Your Personal Finances. ”And if they're bad at it, you've really created a nightmare for yourself."

There are some horror stories. "Some public adjusters, to justify their fee, will exaggerate their claim," says James Markham, senior vice president and general counsel for the American Institute for Chartered Property Casualty Underwriters and the Insurance Institute of America.

And some insurance company adjusters may bristle if you bring in your own expert, he says.

"Some company adjusters are instantly suspicious or even antagonistic whenever they have to deal with a public adjuster," Markham says.

Ask questions, do your homework
Most often, public claims adjusters are called in for large property claims, says Rick Lambert, chair of the agent and broker section committee for the Chartered Property Casualty Underwriter Society. For smaller claims (less than $25,000) or auto claims, which are typically based on a fairly standard formula, it's probably a waste of money to hire a public adjuster, he says.

If you have a large property claim and are considering a public adjuster, ask yourself two questions: First, is your company acting quickly to replace your losses? Second, have those efforts been effective and fair?

"Is the company out there within 12 hours, or has it been a week since the fire and no one's come?" says Lambert, also vice president of Early, Cassidy & Schilling Inc., an independent insurance agency in Rockville, Md. "Most good companies are going to come out there pretty quick."

Most well-known companies also are going to play fair when it comes to claims, he says. But, Lambert admits, in today's economy when companies are hurting, "Some are going to play hardball."

There are also a few other instances when it could be practical to hire a public adjuster:


You've sustained a partial loss. Half the house burned down. Now you've got to document which of your possessions survived the fire, which burned and which are damaged beyond repair.

You don't have the time to follow up on your claim. Whether you're a two-income couple with kids or a busy professional who travels frequently, filing a claim and following it through will take time, especially if you don't have a record of your possessions and their value.

You had loved ones injured or killed in the incident. If you're spending your days at the hospital or mourning a family member, you may not even want to think about the claims process.

The loss is business-related. Rather than assign an employee to handle the claim, some companies will outsource the job.
Even though you'll want to move fast, you still have to do your homework before you hire a public adjuster.

"It's delegating," says Farrell. "You're hiring their knowledge and expertise. It looks good on paper, but it's easy to get ripped off."

And while it should go without saying that you don't hire the public adjuster who knocks on what's left of your door after a fire or tornado, plenty of desperate folks have done just that and really regretted it.

5 ways to find a reputable adjuster

Poll the people you trust. Call your accountant, your lawyer and your neighbor. Ask if they've ever used a public claims adjuster or know anyone who has.


Contact the National Association of Public Insurance Adjusters. This trade organization, which represents 110 of the industry's largest firms, maintains a searchable database of members who have at least two years of experience and uphold a professional code of conduct, according to David W. Barrack, the group's executive director. In addition, the organization also offers a certification program. A Certified Professional Public Adjuster must have five years of experience and pass an exam, while a Senior Professional Public Adjuster must have at least 10 years of experience and pass a more rigorous test.


Interview the candidates. This should occur once you have a few names that look promising. Ask about rates, references and credentials. Contact their references and quiz former clients on the adjuster's performance. Was the person effective? Available? Fast? Accurate? Did he or she deliver what was promised? If the adjuster claims any kind of certification, get the name of the accrediting body and call it.


Call your state insurance office. Many states license or regulate public claims adjusters. If yours does, make sure your prospect is in good standing with no unresolved complaints. It won't hurt to call the Better Business Bureau while you're at it.


Ask your insurance agent. Sound like a conflict of interest? Not really. You're hiring an adjuster to represent you to the insurance company. So what is this person's reputation within the industry?

Shop for fees, competence and integrity
Generally speaking, the fee is around 10%, and the percentage may vary with the size of the claim, says Barrack. But beware, some public claims adjusters are charging up to 50%, according to Farrell.

Even though shopping for price is important, "emphasize competence and integrity above fees," says Markham. "The ugly truth is that exaggerated claims can cross the line to fraud. And the fact that you have a public adjuster doing it doesn't absolve you."

Don't let the adjuster steer you toward particular contractors, says William W. Baldwin, president of The Baldwin Co., a Charlotte-based public insurance adjusting firm.

"There should be no ties to a construction business," he says. "To me, there's a conflict of interest."

Wonder if your hired gun might damage your relationship with your insurance company, especially at renewal time? A more important question might be why it was necessary to hire a public adjuster in the first place.

"There has to be an element of trust and confidence here," Crowley says. "If you don't trust your insurance company, chances are at renewal time you should be shopping for someone you do trust."
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headline numbers were eye-popping: Allstate reported a record $5 billion profit for 2006. State Farm Insurance's profit climbed 65 percent for the year. St. Paul Travelers' earnings rose sixfold in the fourth quarter, American International Group's rose eightfold.

A year and a half after Hurricane Katrina devastated the Gulf Coast, profits at the nation's major property-casualty insurance companies soared -- and are expected to be strong again in 2007, according to estimates by the A.M. Best Co. rating agency.

Critics charge that the insurers are doing well financially by shorting the people who bought their products -- including hundreds of consumers who still haven't gotten settlements for their Katrina claims. The industry, in turn, denies taking advantage of consumers, crediting its growing profitability instead to fewer storms last year and improved business procedures.

One of the harshest critics, J. Robert Hunter, director of insurance for the nonprofit Consumer Federation of America in Washington, D.C., accuses the nation's insurers of using Katrina and other major hurricanes to try to justify "overpricing insurance, underpaying claims and reaping unjustified profits" at the expense of homeowners and business owners.

Hunter, a former Texas state insurance commissioner, added that he expects the industry to continue to do exceptionally well because it is pushing more risk and more cost onto policyholders.

"They're making homeowners and business owners take on more of the risk through high deductibles, caps on replacement costs and other limitations," he said. "And they're refusing to renew tens of thousands of homeowner and business property policies, especially along the coasts."

Hunter argues that state regulators "have not done the job to control excessive prices" charged by the insurers.

For consumers, the situation is both frustrating and financially burdensome.

Joyce Ridgeway, whose four-family house in the Esplanade Ridge neighborhood of New Orleans was damaged when Katrina hit in August 2005, is still waiting for a final settlement from British-based insurer Lloyd's. She's so far received just $30,000 toward the $85,000 needed to cover alternative living expenses and to repair the roof, gutters and wood siding wrecked by the storm.

Ridgeway, a 52-year-old public health worker, is frustrated that she's still living on the property in a trailer provided by the Federal Emergency Management Agency. Tenants are back in just two of the units.

"I've been doing bits and pieces as I can to get repairs done," she said. "I took my savings, I take my paychecks -- and I have a good contractor who is working with me."

But, she added, "I've waited so long. It just doesn't seem fair."

A Lloyd's spokesman said that if a claim couldn't be resolved locally, it could be referred to the company's dispute resolution department. He added: "We have not received any formal complaint on this matter so are unable to comment any further."

Fewer storms, higher profits

Industry experts argue that the property-casualty insurers did amazingly well in handling Katrina -- the most costly catastrophic event ever in the United States -- and the other hurricanes in 2004 and 2005.

Robert Hartwig, president and chief economist with the New York-based Insurance Information Institute, points out that the industry has so far "paid $41 billion on 1.74 million claims for Katrina alone -- and for the combined 2004-2005 hurricane season, we paid about $81 billion in insured hurricane-related losses."

The industry's profits rose in 2006 in part because there were far fewer storms, Hartwig said.

And, he added: "But the good results have more to do with the fact that insurers saw good results in auto insurance, workers comp and a variety of other areas and in states that don't have a coastline."

Rating agency A.M. Best estimates that the property-casualty industry earned $68 billion in 2006, up from $49 billion in 2005, and that profits could total $62.2 billion this year if the storm season is relatively benign.

As a result, the policyholder surplus -- essentially reserves to cover future claims -- grew to a record of nearly $500 billion in 2006, A.M. Best estimates.

There also has been a change in how the industry actually makes its profits.

Insurance companies traditionally made most of their money by investing consumers' premiums, mainly in bonds. But increasingly, they're relying on so-called underwriting profits, which are premiums minus losses and administrative expenses.

As a result, Hunter, the consumer activist, says that insurance companies have sharply reduced the percentage of premiums paid out in claims. He estimates payouts fell below 70 percent of premiums in 2006, far below the 80 percent that prevailed in the 1990s.

Long-term look

Greg Heidrich, senior vice president for policy development and research with the Property Casualty Insurers Association of America trade group in Des Plaines, Ill., said it was unfair to look at the payout ratio for a single year or a short period of time.

He said that property insurers in Louisiana in 2005 paid out $20 billion in claims, or the equivalent of 20 years worth of premiums collected in the state. After that, Heidrich said, "you want those companies to build back their capital base so they're in a position to pay claims that could be at extraordinary levels in other years."

He also said that more than 95 percent of all the hurricane claims have been settled, "so I have to reject out of hand the notion that profits in 2006 are driven by people not paying claims."

At the same time, he said, he "understands the concerns" of those still waiting for settlements -- especially those caught in disputes over whether the damage came from wind or flood. Homeowners policies typically cover wind damage, but not flood damage.

Genio Staranczak, chief economist with the PCIAA, said that insurance companies also have become better at protecting themselves by spreading risk, mainly by buying reinsurance. Reinsurance is basically insurance for insurers. He estimated that 45 percent of the 2005 hurricane season losses were borne by reinsurers.

Eileen A. Frank, a New York insurance broker who grew up in Louisiana and maintains an office in New Orleans, said that while many hurricane claims have been settled, many others still are pending.

She said that she and others in the industry tried to help clients by pulling together their claims and supporting documents, only to be referred by insurance companies from one adjuster to another and to yet another.

"Payments that should have been made without question are still not being delivered," she said.

Meanwhile, it's become harder for families and small businesses in coastal states to get affordable property insurance coverage.

Frank, who is a member of the Independent Insurance Agents and Brokers of New York, said that insurers wary of predictions of more-active storm seasons don't want new customers -- or are not renewing old ones.

A policy she handled recently for a multifamily house cost the owner $6,000, up from less than $2,000 before Katrina. And, Frank said, it had a deductible for wind damage equivalent to 5 percent of the value of the house.

"Pricing has gone through the roof," she said. "And I don't think we've seen the end of it."

BY EILEEN ALT POWELL AP BUSINESS WRITER
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Universities offering programs of Insurance studies:
Appalachian State University
Bradley University
Cal. State Univ., Northridge
Florida State University
Georgia State University
Illinois State University
Illinois Wesleyan
Indiana State University
Louisiana State University
Old Dominion University
Seattle University
St. John's University
St. Mary's University
Temple University University of Calgary
University of Georgia
University of Louisiana, Lafayette
University of Louisiana at Monroe
University of Mississippi
Univ. of North Carolina, Charlotte
University of North Texas
University of Nottingham
University of Southern Mississippi
University of Pennsylvania
University of Texas at Austin
University of Wisconsin
Virginia Commonwealth University
Washington State University


Public adjuster licensing varies from state to state. You can find a list of State Departments of Insurance here.

The National Association of Public Insurance (NAPIA) awards the Certified Professional Public Adjuster (CPPA) and Senior Professional Public Adjuster (SPPA) designations to public adjusters who have met specific experience and educational requirements, completed a qualifying examination and subscribe to a code of ethics for business and professional conduct.
]]> http://www.publicadjusterinfo.com/blog/index.php?entry=entry070407-123022 2007-04-07T00:00:00Z 2007-04-07T00:00:00Z
The couple’s original claim was for $145,000. They fully cooperated with the police and even passed polygraph tests. While they were cleared as suspects in the blaze and were never charged with any crime, State Farm still refused to pay for the fire loss.

After a seven-day trial, the Insureds were awarded $145,212 for their home and personal belongings, and in addition, State Farm was ordered to pay $500,000 for showing bad faith and $3,000,000 in punitive damages.]]> http://www.publicadjusterinfo.com/blog/index.php?entry=entry070406-124352 2007-04-06T00:00:00Z 2007-04-06T00:00:00Z
An accredited public insurance adjuster not only has your confidence, but also that of company adjusters who recognize that they are dealing with a professional.
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