For far too long, insurance carriers have viewed publicadjusters as opponents rather than as potential allies. I believethe time has come to end this "cold war" and recognize thatinsurers, independent adjusters, and public adjusters all share asimilar goal--fast, efficient, and accurate claims resolution. Bytaking a team approach, we can collectively do a better job ofservicing policyholders who have suffered a serious loss to theirhomes, businesses, or commercial properties.

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Taking a unified approach would be an important step towardbringing the insurance industry more fully into the 21st century,by both improving transparency for the public, and reducing costlyinefficiencies for the insurer. Today, many carriers are seeking tocontrol as much of the claim process as possible, often delaying orminimizing settlement offers. I strongly believe that such behavioris shortsighted and ultimately harms our industry.

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First of all, these types of claim practices create adversarialrelationships with consumers, and can ruin years of hard-earnedgoodwill on the part of the independent agent. They also havelong-term negative consequences, such as creating a feeling of distrust and resentment among the Americanpublic.

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Let me point out that in today's era of social networking, blogs, and Internet rating services, thepolicyholder's viewpoint is more important than ever. Today'sconsumers are plugged in and they don't hesitate to share theiropinions at every opportunity. Insurers who don't recognize thisfact of life are still living in the 1970s.

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Secondly, an antagonistic approach to the claim process fails totake into account the value that independent adjusters can bring tothe table. There are both tangible and intangible benefits forcarriers who allow their independent adjusters to make decisions inthe field. Certainly, a policyholder who believes the claim hasbeen "settled" by the independent adjuster will be unpleasantlysurprised to learn that decision has been overruled by an anonymousmanager in the carrier's home office.

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Finally, insurers should recognize that public adjusters have animportant role to play in expediting the claim resolution process.For example, they can explain policy limits and coverage provisionsto the insured at the time of loss, and serve as a readilyaccessible source for documentation related to the claim, savingthe insurer time and money. Those are just two of the many benefitsof a team approach.

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Back to the Basics

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Let's take a moment to go back to the basics. Why do homeowners,renters, associations, businesses, commercial establishments, andinvestors purchase property and casualty policies? The answer, ofcourse, is that they want to protect their financial interests aswell as those of their lender.

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If a loss does occur, the policyholder wants a fair, accuratesettlement as quickly as possible so that the property can berepaired, the business can resume operations, and life can get backto normal. Ideally, the payment of a claim should be exactly enoughto restore the owner's property or business to its priorcondition.

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However, there are many obstacles in the claim process thatreduce the likelihood of attaining that goal. One of the majorissues is that policyholders--even sophisticated entrepreneurs andbusiness executives--do not understand insurance terminology andthe clauses in their policies affecting the claim process.Therefore, one of the first steps for a public adjuster brought inon a claim is to ask the policyholder a series of questions:

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o Do you know where a copy of your policy is stored?

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o Do you know what the declaration page says in your policy?

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o Do you understand the concept of a layered policy?

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o Do you know the differences between a business owner's policyand a homeowners' policy?

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o If you suffer a loss, do you know how to send in an accuratereport?

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o Do you understand your responsibilities as outlined in yourpolicy?

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o Do you know how to assess your damages?

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o Do you know how to submit a proof of loss?

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o Do you know the important deadlines contained in yourpolicy?

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Invariably, the insured cannot answer these questions, even ifthe binder or entire policy is right at hand. Let me take a momentto note that there are a number of very good insurance agents whohave done their best to educate clients about filing a claim, butunless a loss occurs immediately after that conversation, thepolicyholder will turn his or her attention to other matters.

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Regardless of the insured's level of familiarity with the claimprocess, the policy's post-loss compliance section is highlycomplex and almost always misunderstood. Deadlines are not clear.Phrases like the "reservation of rights," which stipulate apolicyholder's responsibilities, are almost always ignored ormisunderstood without an explanation provided by a publicadjuster.

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Centralized Processing

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The next obstacle to rapid settlement of claims is the growingtrend toward a centralized approval process. This places manyindependent adjusters in an awkward position. They go to a propertywhere a loss has occurred, assess the damages, and advise thepolicyholder but lack the authority to settle the claim.

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In Florida, for instance, Citizens Property InsuranceCorporation, the state-backed insurer of last resort, has strippedits adjusters of that responsibility. Instead, they are tasked withscheduling appointments with the home or business owner, examiningthe damage, taking photographs, and preparing an estimate. Then,the home office reviews the file and makes the settlement offer.This creates more confusion for the policyholder and delays theprocess.

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If the proposed settlement is below expectations, the insured islikely to haul in an attorney or a public adjuster. If the claimcannot be resolved without going to court, there will be steepadditional costs for the carrier--especially if there is a badfaith lawsuit in addition to the claim itself.

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Even when a claim is resolved without the involvement ofattorneys, there are still significant overhead costs to thecarrier using a centralized procedure. For instance, every claimmust be handled by at least two people--the adjuster in the fieldand the authorizing manager in the office. In reviewing the file,the manager may find some documentation is missing or incomplete,further delaying the settlement.

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Here's another instance where a public adjuster can provide avaluable service for carriers. Many firms have claim software thattracks the correspondence related to a claim, ensuring that boththe insured and the carrier receive the latest information in atimely manner. Claim files can be monitored 24/7 for immediateresponse to document requests. In this way, public adjusters canserve as a convenient, one-stop source of information for insurers,reducing the costs associated with processing the claim.

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Based on our experience in multiple states, the traditionalapproach of allowing independent adjusters to settle claims in thefield is still paying off for Nationwide and State Farm. That'sbecause there's simply no substitute for building a positiveface-to-face relationship with the policyholder, so a claim can besettled quickly and amicably.

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A Cooperative Approach

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For insurers, there are other advantages to adopting acooperative approach with public adjusters. As an advisor to thepolicyholder, a public adjustor can determine whether a claim hasmerit, report any indications of fraud, and determine if a certainloss is actually covered, thus saving the insurer time, money, andaggravation. In some cases, when there is no coverage, an insurerbenefits from having a third-party professional explain thesituation to the insured.

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Next, the public adjuster can gather the appropriatedocumentation needed to support the claim, again saving time andreducing overhead costs. Perhaps more important is the emotional"hand-holding" that public adjusters can provide immediately aftera loss. This is an often overlooked benefit that occurs even with asmaller claim, such as damage from a leak, flood, mold, orsinkholes--a problem in many parts of Florida.

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To evaluate a property damage claim, a public adjuster may bringin licensed architects, engineers, and contractors who can bringtheir expert knowledge to bear on the loss. This is particularlyimportant with replacement-cost policies, since building codes areconstantly changing. For instance, Florida recently adopted a rulethat the entire roof must be replaced if 25 percent or more must beremoved.

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In addition, a public adjuster can also help commercialpolicyholders with the business planning process by discussing thelikely size and timing of a settlement offer, smoothing therelationship between insured and insurer.

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Finally, many carriers don't factor in the long-term socialbenefits of a cooperative claim payment process. That process canmake it much easier for hard-hit local communities to rebuild aftera natural disaster like Hurricane Katrina in 2005 or Hurricane Andrew in 1992. In boththose cases, the affected area's population base shrunkdramatically, reducing both the number of potential insureds, andfuture premium revenue streams.

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Can There Be Harmony?

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Can insurance companies, independent adjusters, and publicadjusters live together in harmony? I believe the answer is yes,when all parties involved in the claim process recognize thebenefits of a team approach.

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There is already an excellent example of why cooperation isbetter than confrontation. For 12 years, the annual WindstormInsurance Industry Conference has brought all segments together tolearn from each other. At the upcoming 2011 conference in Houston,Jan. 24-27, insurers, independent adjusters, and public adjusterswill meet with law, engineering, and construction firms to discusspolicies and procedures to resolve claims in the event of adamaging hurricane.

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We can take this once-a-year example of teamwork and begin toapply it year-round. Together, we can increase consumersatisfaction, improve goodwill and raise the overall image of theinsurance industry.

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Daniel Odess, GC, PA, is president of East Coast PublicAdjusters, Inc., Miami, which assists clients in Florida, theUnited States and in international locations. For more informationgo to www.ecpaclaims.com.

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