Insurers and policyholder reps wrangle over claims delays
Representatives of Florida’s insurance industry and public adjusters — who represent policyholders in claims disputes — fiercely debated how to speed up repairs after hurricanes on Wednesday.
As of this fall, more than 2,000 homeowners were still trying to get claims paid from Hurricane Wilma in 2005. Delays keep people out of their homes longer and can make the damage worse. The gathering — focused on how to improve the so-called appraisal process — is the third on claims delays organized by Insurance Consumer Advocate Sean Shaw, who plans to make recommendations to state lawmakers before the annual legislative session in March.
“Consumers want to get what they deserve. I think all of us are working toward that,” Shaw said.
In the appraisal process — intended to be a cheaper way to resolve claims disputes than going to court — appraisers for insurers and policyholders come up with estimates of the damage and jointly choose an independent umpire to make a binding decision. Several insurers drew criticism from public adjusters recently when they changed or eliminated the appraisal process.
“The insured himself or herself will find it very difficult to get legal representation” for claims under $60,000, said George Meros, an attorney for the National Association of Public Insurance Adjusters.
There were beefs about the appraisal process from both sides and some suggested fixes:
Appraisers for insurers and policyholders can work as umpires who are supposed to be neutral mediators. That can present a conflict of interest. Lawmakers can consider barring that.
Appraisers on both sides often don’t have the same information, which could help them resolve disputed damage estimates more quickly. Chip Merlin, an attorney for policyholders in Tampa, noted that California law requires insurers to provide policyholders with such documentation at the policyholders’ request. He said Florida could require both insurers and public adjusters to provide all damage estimates and engineering reports to each other.
Appraisers for insurers have an incentive to low-ball claims, while those for policyholders may inflate them. “It has become an exploited and broken process” that can cost insurers more than lawsuits in some cases, said Jeff Vanderpool, the chief claims officer for Sunshine State Insurance. William Stander, Property Casualty Insurers Association of America, said the problem is the “unscrupulous conduct” of some people who represent policyholders who inflate claims so they receive a higher commission. High claims costs can lead to rate hikes for policyholders.
“For you to swat a fly with a 20-ton truck is completely insane,” retorted Frank Artiles, of the Insurance Appraisal and Umpire Association and Pinnacle Appraisal and Umpire Services in South Florida. When you “make accusations of fraud and make it sound like that’s the standard rather than the exception [it] is a gross exaggeration.”
Several public adjusters said appraisers for insurance companies often say they agree with the policyholder’s damage estimates but they submit a lower recommended amount to the insurance company so they don’t jeopardize losing the insurer’s business next time. “That happens more times than you can believe,” said John Voelpel an independent insurance adjuster with Voelpel Claims Service in Orlando. Independent adjusters are typically hired by insurers on a freelance basis.
Most participants said it would make sense to require appraisers and umpires to be licensed and create formal procedures for the appraisal process, as is done in other states, so everyone knows precisely what aspects of the damage the umpire must rule on.