The Independent Insurance Claim Adjuster Resource

The appraisal clause is designed to be a simple and low cost form of mediation in the event of a disagreement on the value of damages; generally limited to property claims.  Much like mediation, there are few written rules governing the appraisal clause.  In the appraisal process each individual party (the insurer and the insured) select a competent appraiser and then the appraisers come together and select and umpire who, in the event the appraisers cannot reach an agreement, hears each appraiser’s findings and then makes a ruling on the matter.  When the appraisers cannot decide on an umpire they can petition a local court or judge to assign one at random

In most states an appraiser can be anyone including an engineer, an independent adjuster, a public adjuster, an attorney, or your best friend.  The appraiser should be independent and impartial from the claim process that preceded invocation of the appraisal clause.   It’s important that the appraiser understands the rules and processes through which Appraisal is completed, and have some background on how insurance polices work.  If an appraiser doesn’t properly understand the boundaries of appraisal Read more…

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Why Public Adjusters are enemies of Independent Agents – October 2nd, 2010

by Phillip A. Crimaldi

As if the insurance claim profession isn’t plagued with enough problems, I came across an obscure article titled “Why Public Adjusters are not enemies of Independent Agents“, published in March of 2010 by Ronald Reitz, CPPA, on the Insurance Journal’s website.  After much consideration, the article was undoubtedly written as a stunt to drive web traffic for the Insurance Journal and Mr. Reitz’s own business, if not in an attempt to help any unsuspecting insurance agents be removed from their rights to sell insurance for a conflict of interest.  Unfortunately, the article was also a slap in the face to independent insurance agents and public adjusters nationwide.

Although this reply addresses the basic outlying conditions of how Mr. Reitz provides stretch-of-the-imagination conditions and suggestions to independent agents, the underlying fact is that he goes to great length to expose the agents’ errors and omissions coverage by suggesting the agent gets more involved in the claim process.  The fact is that many insurers prefer their agents stay out of the claim process because they have employed claim representatives with a focus on excellent customer service.


Under the heading “Here’s why working with a public adjuster can be good for an independent insurance agency and for its customers:”, Mr. Reitz goes on to give six numbered paragraphs and a few guidelines which are so far the opposite of helpful, that they actually demean that intelligence of the insurance community.  At best, Mr. Reitz’ theory on befriending independent agents is an insult that warrants an apology to independent agents, public adjusters and their employees.  We arrived on this conclusion through the following analysis of the article, by the paragraph:

1.  Mr. Reitz explained that after a disaster, insureds have hundreds if not  thousands of questions and that as an independent agent, they’ll be coming to their independent agents and agencies for answers.  Worse, as an independent agent you’ll be having to answer the phone every few minutes to resolve your client’s fears! He continues on that as an agent you’ll have to read the policy and get back to them, and that you might find yourself at odds with the insurer “if you add your own opinion or interpretation of the policy language“.  

We disagree in full, Mr. Reitz. The article first tries to instill fear in the young and unsuspecting agent by employing a Captain Obvious approach.  Any agent knows that when disaster strikes, his phone is going to be ringing off the hook and that the duty to support his clients will be called into play.  The mere concept that you’ll have to “resolve their fears” is the biggest lie I’ve ever read on the web.  Although insured may have some fears initially on the claim process, it is highly doubtful any agent would have any ability to even resolve anything at any point in the claim process.  Agents are removed from the claim process for good reason and to revisit the history of how and why claim representatives were introduced to the claim process would be over-extending ourselves into the obvious need for at least some impartiality.

Read more…

We discussed and defined neighboritis in this post, in hopes to create awareness for a condition that should be alarming to all independent adjusting companies and adjusters alike.

Neighboritis occurs when a roofing salesman convinces one property owner in a neighborhood that their home was damaged by hail and then gives that property owner an incentive to “spread the word” to others in the area.   Often times the damages are not caused by hail or the hail had no effect on the condition of the subject structure components.  In some cases roofing sales people have been known to intentionally inflict mechanical damage the to roof while conducting a review of the roof condition.

The effect on adjusting companies and independent adjusters occurs in the following parts:

1. Generally, insurance professionals are paid on a flat rate to conduct surveys and adjustments of structural roof related insurance files or claims.  This occurs on a rising agreed fee schedule that motivates the surveyor or adjuster to seek out all damages.  The more damages found, the more likely that the reporting party will be able to bill a higher amount because the monetary value will climb to the next level on the fee schedule.
2. The insurance professionals who do not recommend replacement (deny a claim) of a roof for lack of damages are not immediately trusted by their clients and asked to re-visit the same property based on a contractor/salesman claiming that damages do exist.  Often times the reporting party is not allowed to request additional billing and is asked to re-visit on the principal that damages may have been overlook.  The reporting party wishes to service their client well and therefore provides an exemplary service by re-opening the file at no little or no cost, all in hopes to keep business from their client.
3. In the time lapsed between the initial survey and re-opening of the file, more than one roofer has likely set foot on the roof, or neighboritis has occurred; generally.  Perhaps a neighbor has had a roof replaced or a sales person had an opportunity to create mechanical damages.
4. The insurer fails to take a interest in hiring a forensic engineer primarily due to the cost of such a service.
5. The costs associated with creating supplement reports and re-opening files is never accounted for in the fee schedule.

This pattern, no matter how far a claim might be over-indemnified, has become the standard for all roofing claim scenarios.  More often than not, we are finding patters where insurers actually had a roofing sales person on their roof but that they did not admit it when initially asked or even in person.  The foregoing conditions are a direct result of neighboritis and insurers, along with the general public should be made aware of these facts.

Insurance carriers and third party administrators rely on independent adjusting companies in their growth stages, particularly if they wish to abstain from growing beyond a certain percentage of the market share (e.g, to not compete with large competitors).  Small adjusting companies provide a personalized level of service that small and start up property insurers require to maintain retention rates.  Carriers that discourage additional time and expense billing to affirm or deny previous findings are posing a risk to themselves in the future because small adjusting companies cannot consume the lost time spent on these issues and this results in a direct loss for the reporting/adjusting party.  In order for those adjusting and reporting companies to grow into sustainable businesses they must spend that time elsewhere (marketing, etc), or convert it into billable time; even if only breaking even.

An easy and responsible solution would be for insurance carriers to set a new billing standard for handling the re-opening of files which were initially denied.  First, these carriers would have to trust that independent adjusting companies would have no interest in falsely denying claims just to obtain additional billing.  One way to help support this would be to only allow additional billing at the actual cost rate (no profit) of providing a second survey, rather than at a normal T&E rate which is more profitable.  It keeps the adjuster paid for his time which allows insurers to require a different adjuster from the same company attend the re-inspection.  These ideas help keep small adjusting companies in business and prevents the larger ones from taking too much of the market share; all at a minimal expense to the insurer.

Do you have thoughts on this subject? Please leave a comment!

If you have worked with more than ten claims resulting from any kind of hail storm you’ve probably been exposed to what is commonly known as “neighboritis”.  Neighboritis is practically like a bad case of the flu; it spreads easily. The only logical cure is awareness of this costly and time consuming problem.

Neighboritis is a serious condition that needs to be addressed because it is damaging to independent adjusting companies and independent adjusters. The effects of neighboritis in relation to independent adjusting companies are discussed in this separate post.

Neighboritis happens in following stages:

1. A roofing sales person claims to be a hail expert and finds a neighborhood that was never really exposed to hail damage, or was exposed to hail that did not caused damages.  The sales person knocks on a door and claims to be a roofing expert, explaining to the homeowner / insured that they were exposed to hail and that they have damages on their roof.  The roofing sales person then offers the homeowner a new roof at NO COST, but only if he can inspect their roof right away and usually before the insurer is even notified of any potential claim.
2. The roofing sales person then works to smooth out any skepticism the property owner has by explaining the various values of a new roof in relation to property value.  Homeowners catch on to the concept that they could end up with a new roof at no cost and it takes little convincing that hail may have fallen and damaged their roof when they weren’t aware.
3. The salesman convinces the homeowner that they need to conduct a brief roof inspection to see the hail damages.
4. The salesman pushes the homeowner to sign a “contingency agreement”, although usually unenforceable by law.
5. The roofing sales person gives the property owner incentives to “spread the word” (neighboritis) by offering $500.00, $1,000.00 and larger referrals if neighbors sign on for their roof at no cost.
6. In the worst case scenario, the roofing salesman tells a story of his or her working with neighbor John Doe on his roof for hail related damages; all of which are a result of only having a contingency agreement.
7. One or two inexperienced property insurers pay for roof replacement when it was completely not necessary or by having mistaken mechanical damages for those caused by hail, thereby initiating one roofing salesman to claim that other roofs were replaced because of hail damage.  In extreme circumstances, a roofing company may have been hired outside of an insurance settlement to replace an aged roof and the same company comes back several months later, after hail occurred in a remote area, advertising that a nearby neighbor had their roof replaced (not indicating why) and thereby starting a frenzy in the area.

As you can imagine, the question has and continues to remain about what happens when said roofing salesperson is up on the that roof with no supervision? What is the viewpoint of a profitable insurance adjusting company on neighboritis?

Eight years ago I was on a roof with a roofing salesman named Mike who would bend down towards the shingles every time I turned around to take a photo or put my eye up to the viewfinder.  I couldn’t help but notice the little yellow lighter Mike was clutching from the corner of my eye.  Just as I suspected he was making his own damages hoping I would mistake them as those caused by hail.  Mike wasn’t the first nor the last but these salesman have wised up to creating false damages in front on insurance claim professionals.  Since then I’ve personally witnessed and documents familiar conditions on 8 other occasions; most of which occurred prior to the times we were expected to meet for a survey.

So, to answer the question of what could happen when a roofing sales person is on a roof with no supervision or oversight – let’s just say the potential for mechanical damages not caused by hail exists.  Neighboritis is a deceiving tactic used by roofing sales persons and companies to extract money for claims that do not legitimately exist.

Neighboritis can be prevented with awareness.  One way to help prevent this condition is for insurers to notify their clients in high-hail areas that roofing salesmen are out and to be aware of their sales-roof inspection tactics.  The general population in hail and storm chasing contractor areas can get used to the idea of joint roofing surveys prior to allowing a financially motivated roofing salesman on a roof.

What do you think about changing the ways that insurers and property owners work with roofing companies?  We’d love to hear your input – leave a comment!