One thing I learned during my two years as a young employee at Paul B. Butler & Associates ( lka Butler & Pappas) was to say that you were a master at saving the insurance company's money by put people in jail for insurance fraud or do not pay based on the account of fraud made for happy insurance customers who are anxious to send us more business. Insurance companies send deals to claims providers who do everything to say that the insurance company's customers are fraudsters and fraudulent people for a number of reasons. In fact, insurance fraud is never right. But from the amount of what insurance claims providers say it does, insurance companies must sell the most defective product in America if it magically turns so many law-abiding people into crooks.
At the evaluation panel I attended the Windstorm Conference, Steve Badger seemed quite emotional about some issues where he felt it was wrong behavior. He posted a comment on my blog post, Impressions of the Windstorm Panel Involving Steve Badger and Jon Held :
I also liked the discussion. Thank you for the invitation to participate.
As you could tell, these two issues bother me (greatly increased / inflated measures and unilateral judges). They represent pure gamemanship to manipulate the evaluation process to gain a tactical advantage in the process. That's completely wrong. It is not in line with our agreed goal of achieving an "honest and fair price". and resulting evaluation process. Of course it can happen. But that's not what we're seeing. My examples used in the webinar and many others involve a gross inflation of the damage measure. Should we believe that in one example, the experienced public adjuster was so poor that his measurements were short by over $ 50 million? Wow. No one should use him anymore if he is so bad. Second, should we believe that the lawyers who tried the case, before demanding an assessment before the trial, hired an incompetent expert in litigation whose number was less than 20% ($ 45 million less) of what the appraiser found the damages?
We both know what's going on here. It is the law of large numbers. Come up with a crazy loud speech and then let the original claim number look good to the judge. It's wrong. And in some cases it is deceptive. Unfortunately, there are policyholder valuers who routinely do this and get lots of deals. If a valuer I hired told me that our action to buy or repair a roof was wrong and that the right action was zero in every claim, I would stop hiring him. In addition, in the rare case where an insurance company's valuer measures a claim to less than the insurance company's specified action, the other party is satisfied and says "you can not do that".
Well, if the policyholder's assessor can increase their measure by 100%, or sometimes 500%, then that's fair.
Likewise, completely new damage components should not be included for the first time in the assessment. There is no dispute about these receivables as they were never adjusted. They must be returned to the adaptation process for evaluation. Then evaluated.
In a comment responding to Steve Badger, John Minor apparently has some insight into why Steve Badger's public example of a huge increase is wrong:
Or it could be the difference between $ 3 per square to cover a roof and $ 35 per square for exchange including code and furnishings on 50 and 70 year old school buildings X large SF. Maybe it's it? This study was at the University of Florida and had a number of engineering experts that State Farm had kept in Hurricane Katrina disputes. Given Minor's expertise and the insurance company trying to get away with repairing a foam roof, I would suggest that there are probably more facts in the rest of Steve Badger's example.
I once had a large case go into an assessment where the insurance company said that the damages were less than the deductible. The board had called me because their roofs fell in and many residents could not live in their units. The evidence revealed that the independent adjuster had a lame leg and never walked on any of the roofs – he adjusted on a golf cart with a maintenance man. The price was over 24 million dollars. I'm sure someone at the independent adjustment company had to find an excuse for the huge increase and probably made an opinion about me rather than looking at the hard truth that they failed to do their job: Find all the customer's
There are also judges in evaluations. When I attend injury conferences where judges talk about their role, they often note the error of the "losing side" blaming the judge when the evidence, with photos, videos and documents, supported a discovery – much higher or lower than the assertions made by insurers or policyholder. They often talk about the credibility lost when an adjuster does exactly what Badger complains about – which are unreliable claims and estimates. Judges who use common sense will know that they can not trust anything a person says if statements are just wrongly inflated or underestimated. at least that a public adjuster or policyholder does not have the means to pay engineers and experts to do a proper job. A typical example is windows in large buildings that are exposed to wind damage. It can cost hundreds of thousands of dollars to do such an analysis of large structures. Insurance companies do not want to pay for that type of analysis and simply leave that aspect of a loss outside their estimate of claims.
Earthquake damage to large structures is usually underestimated for the same reason – the cost of determining whether damage exists is significant. One can spend a lot of money and discover that there is little or no harm. But you have to spend the money for that investigation to show how much there is and how to fix the damage. Changes up and down of estimated earthquake damage can be significant by paying the high costs of doing a proper investigation.
So I have to disagree with Steve that "we both know what's going on here." And when intentional overestimation is going on, I suggest that there is also very intentional underestimation. I bet we both agree that "two mistakes do not do right."
Thought for the day
And I think both left and right should celebrate people who have different opinions and disagree with them and argue with them and disagree with them, but try do not just shut up.
– Roger Ebert