Claim Adjuster and Agent Relationships- Part II

June 12, 2008


 Months ago, I wrote about the difference great relationships between adjusters and agents can make while out  on claim assignments. If you missed that post, here is a link:

Interestingly at this week’s ACE conference, Rose Kuba of Arthur J Gallagher Risk Management made a presentation with many of the same comments and providing additional suggestions for enhancing the claims experience for policyholders. Here is a link to the article summarizing her presentation:

Carriers taking notice on Blog comments- USAA responds to blog comments on 3.5 million punitive award

April 11, 2008


Remember recently I’d posted a blog about communication efforts carrier’s need to make with all the new popularity of news blogs and other blog sites? Here is a link if you missed that blog.

Well, USAA is one carrier taking notice and has issued a response to an article out of San Antonio which received over 90 comments from readers regarding a punitive damage award against USAA (which the response says they will appeal by the way). There is some interesting reading both over at Rossmiller’s blog which will give you some background on the case and the 3.5 million punitive award as well as in USAA’s side of the story and information about the appeal. You should take the time to scroll through the 90 or more by now comments and see also the comments by alleged employees about working conditions there.

If you don’t believe blogs are starting to catch the eye with carriers- read this article where USAA responds to blog entries (make sure to click on the words in the article about 90 comments and it will take you to them. It’s interesting reading with 3 or 4 USAA employees even posting about what a terrible company USAA has become for adjusters…(hopefully they are just poor employees on a mission but we never know from the outside).

Here’s David Rossmiller’s story about the 3.5 milion dollar punitive award against USAA:

Overhead and Profit Claim Settlement Issues Under Attack in 3 ongoing cases?

April 10, 2008

Today I received a google alert on yet a 3rd overhead and profit suit file. This case, Chivers v. State Farm. Case No: 2004-294-3 in TX ,dates back to 2004 but in an April 9, 2008 news article, apparently the case is still pending and three insurance carriers -State Farm, Foremost, and Farmers are seeking to have the Judge removed from this case.

Without more details, it’s hard to know what all of the current activity is about other than I was able to locate a few recent news stories on the case that provide a summary of the allegations against the carriers (without seeing the Complaint and other documents, I don’t know how many carriers or others are named in the suit). Unbelievably, according to one of the news articles, the judge was requiring Foremost produce copies of 600,000 files which they indicate would cost them approximately 45 MILLION dollars to produce.

Here is a link to the most current news article on the case about State Farm filing a motion to recuse the judge saying that Foremost and Farmers join in the motion:

This link above says in part:

“The original lawsuit, filed Sept. 8, 2004, alleges claims of civil conspiracy, unjust enrichment, fraud, and constructive fraud by accusing the insurance companies of not disclosing or paying to the insured’s the general contractors’ overhead and profit, whenever the repair of an insured’s loss required the services of at least three trades. ”

The article mentions that Farmers and  Foremost have joined  State Farm in the motion.

This article below says the case was heading to the Arksansas Supreme Court over the judges instruction they had to copy all 600,000 files.

If you follow our blog, you will recall two other recent blogs we’ve done on some other recent activity regarding overhead and profit lawsuits. You can click here  for the Sher case in LA where the judge allowed 25% overhead and profit and a 20% contingency fee for unspecified and unforeseen/unknown damage and here to find the blog on the OK class action case on overhead and profit.

In summary- it looks like we have three (and possibly more as there could be others I just haven’t seen anything about in the news recently) cases with three different issues on the overhead and profit:

1) Chivers v. State Farm. Case No: 2004-294-3– issue overhead and profit when three trades involved- Arkansas case 

2) Sher case v. Layfayette Insurance– LA case- issue was flood definition and levee breaks but on page 25 of judge’s decision he allowed 25% overhead and profit PLUS a 20% contractors contingency fee as the plaintiff’s expert witness testimony was unopposed. Make sure to read the link above for a discussion on that as the expert used info from a Lousiana State Office Volume on state facilities. By the way- since I wrote the blog on Sher yesterday, I’ve run across and insurance article stating that the American Insurance Association president has praised the new decision on the case based on the flood provisions being upheld. AIA represents 350 insurance carriers. I wonder if he even realized the info on the overhead and profit on page 25 of the judges decision doesn’t follow insurance claim settlement normal procedures?

3)  Burgess et al. v. Farmers Insurance Company, Inc. et al.-Class action case in OK on standard 20% overhead and profit and here is a brief summary from some of the links in the blog we did on that:

This is the website for the Burgess et al. v. Farmers Insurance Company, Inc. et al. class action lawsuit.  Homeowners have sued Farmers saying that they improperly withheld payments for general contractor’s overhead and profit (“O&P”) from amounts paid on claims under homeowner’s insurance policies to citizens of Oklahoma.   The Court has not decided if the Defendants did anything wrong. You need to decide whether to stay in the Class or exclude yourself, and you need to decide this by May 16, 2008.

It will be interesting to watch these 3 cases and see if we can find out how they are resolved. Hopefully, someone with access to PACER will provide pdf’s on these cases so we can read more detail and understand where exactly these cases stand at this point and how they end up getting resolved.

I’d recommend sharing this information with your claim managers in case they are not aware this overhead and profit issues are under attack. They may want to seek clarification from carriers on their current expectations on your estimates before you begin submitting closed files only to find out your estimates require revision to comply with any possibly new carrier expections on overhead and profit entries on your estimates.

Appeal -Opinion Overturns Punitive Damages in Broussard vs State Farm

April 8, 2008

Judge overturns the punitive damage award on this major wind vs water insurance case in  Broussard vs State Farm.

Read what State Farm has published about the Appeal Court decision:

And here is an earlier post State Farm has up on their website about filing the Appeal on this case which explains all of the issues they felt were pertinent:

Note that this second link on the State Farm site has links to the appellate brief they filed.

The FOLO story carries the Judge from the Fifth Circuit’s Opinion which overturned the punitive award here:

There are numerous comments well worth the read to understand various opinions about this decision from both sides of the fence (policyholder attorneys and insurance carrier lawyers as well as the public).

Here is an AMBest link to a webcast done by Attorney, David Rossmiller (of InsuranceCoverageBlog fame) that everyone should take the time to listen to that explains the uphill battle insurance carriers faced on Katrina litigation cases with juries understanding coverage and hearing these cases in the midst of devastating views of Katrina damage as they arrive at the courthouses. This webcast was done after the initial decision on the punitive damages that were initially set at 2.5 million but later reduced by the judge to 1 million. Although those damages are now overturned, this is great information for adjusters and adjusting firms and carriers to listen to and a good training tool to understand or provide more insight into the view from an insurance carrier counsel standpoint:

Attorney Chip Merlin of the Merlin law group who represents policyholders versus insurance carriers had written about the Broussard initial case after attending the Appellate hearing as a spectator and I think it’s an important blog post to understand the policyholder’s attorney side of the wind versus water debate-especially his discussion about the difference in the burden of proof for insurance carriers as well as policyholders depending on the policy type as a named peril coverage or an all risk coverage which should provide good training information for adjusters who may not yet understand the issues. I always think we need to be trained for both sides of the issue so we better understand EVERYTHING we need to take into consideration when determining the absence or presence of coverage. Here is the link to Merlin’s blog on the case:

Note that Chip Merlin is conducting a 6 month “countdown” for policyholders in MS on the Katrina Statute of Limitations deadline and with the down fall of the SKG-Scruggs Katrina Group and the group by the remaining partners- KLG-Katrina Litigation group after last week’s court decision (I’ll post on that in a seperate topic shortly) I’m guessing that many of those policyholders with pending cases that must now find new counsel will be heading Merlin’s way with this advertising campaign and with the strong reputation of his firm for handling these type of issues for policyholders. Here is a link to a webcast interview he did on 2/29/08 on the 6 month to go to the statute advertising the looming deadline this coming August on the 3 year anniversary:

This additional policyholder perspective blog on the slab cases from Katrina ties all of these articles as well as the Sun Herald story together and you should take the time to read this article:

David Rossmiller, Attorney at the Insurance Coverage blog has posted a pdf of the opinion and comments are starting to come in but he hasn’t posted too much info on it yet but I’d check back to see his full post when he has time to get it up. (Rossmiller is an attorney who represents insurance carriers):

I’ll continue adding links to other relevant news stories on this topic throughout the day as more opinions become available. To keep the link to check back for updates, just click on the blog title and you can copy and paste the link to yourself or for others to check back late today for new additions to this blog entry.

 I’ve stressed many times I think it’s important that those of us in claims understand not just what we are hearing at the carrier level but also what policyholders and others writing about these issues have to say so we have the full picture and can better understand how important the decisions we make as adjusters can be with all of the ramifications those decisions can have in future litigation when not properly handled.

The days of sending new folks out to adjust claims without an experienced mentor should be long gone in our industry for the sake of policyholders and for the improved image of adjusters in the eyes of the public. No one should have blinders on who has been following Katrina litigation. I pray those in the claims community are learning from any mistakes that were made during Katrina to improve claim handling in the future. We all know that you cannot please all insureds all the time due to coverage restrictions in various policies but we should be able to avoid mistakes of the past by learning from them and by joining mentoring partnerships between carriers, adjusting firms, and carrier claim staff and independent adjusters. The time for training is not AFTER the event at induction centers but by holding seminars all year long for folks certified to handle a carrier’s claims. Too often, nothing is done until POST event other than the initial carrier certification requirement which often is limited to estimate issues and code of conducts but normally includes little information on hot topics and issues that develop during the year that independents may need an update on. Many of the more regional type of carriers provide no training for independents and we are forced to learn their carrier file requirements as closed files are returned for corrections to meet their reinspector or supervisor guidelines. Independent adjusters find this an extremely frustrating situation when files are rejected for correction when they weren’t given carrier specific  guidelines to begin with. While there are general claim handling standards in the insurance industry, each carrier has their own company interpretations adjusters need a handle on BEFORE they go out and meet with the public. I’m hopeful that together we can improve on that mentoring relationship throughout the year when adjusters can study and retain information much better without the added stress of hundreds of pending claims on their desk after a storm.

***Update 4:30 pm 4/8/08- here’s another interesting blog by a Punitive damage blog group:

Update- here is a punitive damage website blog that says this ruling means that at the new trial ordered that even if the carrier loses, the insured cannot be awarded punitive damages: (when you click on the link, scroll way down to get to the blog entry)

This blog says in part:

“More relevant to our purposes, the court held that, regardless of the outcome of the retrial, State Farm could not be liable for punitive damages”

Here is another article located quoting the Broussard’s attorney as to why part of the court’s ruling is favorable to policyholder’s for just another view on this decision from the insured’s lawyer’s standpoint which says in part :

“William Walker, a lawyer for the Broussards, said he was disappointed but not surprised by the court’s ruling.

“If we retry the case, we fully anticipate that we will be able to get a jury verdict in our favor for the entire policy limits,” he said.

Walker also hailed a portion of Monday’s ruling as a victory for policyholders: The 5th Circuit rejected State Farm’s claim that the Broussards had the burden of segregating covered damages, such as wind, from non-covered damages, like flood water.

“It will help every other person who has to sue an insurance company in Mississippi,” Walker said of that finding.”

Here’s a link to that full AP article:

Allstate releases McKinsey Documents!

April 7, 2008

We are pleased to notify you that Allstate has released the controversial McKinsey documents. We wrote about these documents previously in our prior blog since they had been in the news so much lately. See links below to find all of our prior blog information on the documents. This is GREAT news for the insurance industry and claims folks in light of the Allstate press release comments which says in part the following:

Allstate believes public criticisms by people with a vested interest in creating an inaccurate picture of the company’s claim practices have been based unfairly on only snippets from the documents taken out of context.
We continue to believe that the documents deserve protection as containing trade secret and confidential proprietary information and that our actions to protect them from general disclosure have been appropriate. However, because of the need to address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole, we have decided to make the documents public.

Here is a link to the entire press release that contains a link to all of the documents as well- click here
Let the sunshine in on these documents where YOU can make a decision for yourself regarding this information. I do believe this can FINALLY put to rest all the controversy that has surrounded these documents by attorneys who have made every attempt to take a small “snippet” as Allstate calls it and turn them into alleged wrong doing in just about every case that goes the suit route on Allstate claims. By going public with them, hopefully this is one step further towards our goal for a much improved image we are working so hard to establish for insurance adjusters and adjusting firms who work directly for insurance carriers and must follow their management instructions for claim handling.

Here is a link to the documents that Allstate has provided- Click here

**Note you will have to first click on a link on the Allstate site that says you accept their terms before it takes you to this link to download the documents.

Here is a link to our prior blog on the McKinsey documents if you want more history on the documents as well as information in the news recently by those trying to get at these documents to include the FL Insurance rating hearings where the requests for these documents kept coming up in recent months-Click here

4/8/08- Update- click on Comment for links to two other articles posting negative comments about Allstate releasing the docs for opposing views so you know two sides of the story.

6/7/2o1o Update- I was just notified by someone today that the links no longer are available in this blog so here is one I could locate a new link for which is Allstate’s archived press release about the release of these documents. Here is the new link:

Adjusters- Read about Class Action lawsuit in OK on Overhead and Profit issues

April 2, 2008

The majority of adjusters on our rosters handle property versus auto claims or a combination of both thus I believe many of you would be interested in knowing about the Class Action lawsuit going on in OK against Farmers Insurance styled Burgess et al. v. Farmers Insurance Company, Inc. et al.

An excerpt taken from the Class Action website for this case says that:

This is the website for the Burgess et al. v. Farmers Insurance Company, Inc. et al. class action lawsuit.  Homeowners have sued Farmers saying that they improperly withheld payments for general contractor’s overhead and profit (“O&P”) from amounts paid on claims under homeowner’s insurance policies to citizens of Oklahoma.   The Court has not decided if the Defendants did anything wrong. You need to decide whether to stay in the Class or exclude yourself, and you need to decide this by May 16, 2008.

This is an important case and you may wish to share a link to this blog with your claim managers at the adjusting firm level or if your an independent claim manager, you might wish to share this with your insurance carrier management as they may wish to discuss this with their corporate legal departments to review their current position on the overhead and profit issues discussed in this case.

Here is a link to the first article with links to all of the court documents to include the complaint:

Click here

A link to the lawyers representing the class members:

Click here

Here’s also an article about it from a negative anti-Farmers site with their posting on the case:

Click here

It seems we are hearing more often about suits involving these issues. Here is an example from a 2007 article  addressing the standard 20% and the belief by some that 20% was not enough for Katrina claims in a case against State Farm and one against Travelers (any lawyers viewing- any updates on these cases would be great!): Click here for that article

Contractors are also discussing these issues on some of their forums and blogs: Click here for an example

These articles and developments are just one topic example of why it is utmost important that you obtain your training on estimatics and claims handling by reputable firms that are up to date with current events with issues which could effect our claims industry. Too often I hear about new adjuster turned estimating school with no understanding of claim management issues or current issues going on that students need to know about. Always check out the experience and qualifications before you sign up for the multitude of estimating classes out there these days on the market!

Cori Rigsby January 2008 Deposition- Hoped to Remain Anonymous -Let’s Compare

March 29, 2008

Attorney David Rossmiller  has posted a newer January 2008 deposition for Cori Rigsby taken after her loss of income from the Katrina Scruggs Group (now Katrina Litigation Group).

This should provide interesting weekend reading and comparision to an earlier deposition we’d posted taken in November prior to Scruggs indictment and all the events which have taken place. At the time of the earlier deposition, they were still being paid going into their second year.

I’ll post any interesting comparisons between the two if there are any major discrepancies between the two. See Rossmiller’s 3/28/2008 post (click here) for his comments regarding her January 08 testimony that she hoped to remain anonymous (hard to believe when her earlier deposition said she reported it to State Farm the day after the data dump weekend…also consider the number of associates they brought in to help with the data dump weekend). Here is a link to our prior blog on Rigsby’s earlier deposition if you want to read both for yourself to compare the two. Wouldn’t it be great to have a copy of ALL of the depositions they both have given (Kerri and Cori) and compare the details of ALL of the depositions? I’d volunteer my time to compare them all if anyone has links to all of them for viewing. There remains a big question as I believe Rossmiller points out as to when they began their relationship with Scruggs- December 2005 or February 2006 as they testified to although this differs with other info available. That would be a major development if they pin down the fact they have provided inaccurate information on the initial meeting dates as many suspect (two additional months of their access to files and documenting their allegations?)

So what do you think about this more current deposition? As an adjuster or adjusting firm, are you glad to see these whistleblowing sisters have lost their income they were getting at a time that many experienced claim adjusters and managers were without income after no major storms in 06/07 while the Rigsby’s were drawing 150K for little to no work as they testified to in earlier depositions? Do you agree or disagree with Rossmiller’s guess that the Rigsby’s careers are “radioactive” in the independent adjusting or staff adjusting/management field? How about as public adjusters should they make a decision to flip if they cannot get employment again on the independent/staff side of claims?