Claims Trainer Sees Industry Failings Firsthand With His Own Katrina Loss

Some insurance industry poll figures find the vast majority of homeowners are happy with the treatment their Hurricane Katrina claims received, but don't tell that to claims expert Carl Van.

Mr. Van–a home- and businessowner in Gretna, La., located across the river from New Orleans–is still battling with his carrier to recover his claim for living costs and repairs to his house, more than a year after the hurricane hit.

“I'm on my twelfth adjuster,” said Mr. Van, president and chief executive officer of the International Insurance Institute.

Mr. Van has written extensively on proper claims handling. (In fact, he's written a book on the subject–”The 8 Characteristics Of The Awesome Adjuster”). He also frequently leads claims training sessions at insurance companies and industry conferences–including the National Trends Track put on by this magazine at the annual Workers' Compensation Educational Conference in Orlando.

However, Mr. Van declined to reveal the name of his carrier because, in a supreme irony, he actually does work for one of the insurer's other divisions, he noted.

At first blush, Mr. Van's woes appear to be in the minority. Indeed, according to an Ipsos Public Affairs group survey taken for the Insurance Information Institute in August, 80 percent of Louisiana homeowners claims had been settled, and only 18 percent said they were dissatisfied with the way their insurer handled their claim.

But Mr. Van said he is skeptical about those numbers, and believes the bad attitude of claims personnel in handling policyholders impacted by Hurricane Katrina will generate a mass of litigation, ultimately costing insurers billions.

Even taken at face value, he added, having nearly one-in-five claimants dissatisfied is no cause for celebration, especially with thousands of claims still in play.

Mr. Van said he is disappointed in the way his business sector has performed, and related an extended saga of being on the receiving end of some horrific claims-handling practices.

From his own experience and his anecdotal knowledge of what has been occurring in the area, he predicted that the insurance business is going to lose $5 billion “over the attitude we sent out,” and as a result of an unsympathetic, unhelpful response, there will be “a swarm of bad faith suits.”

Rather than work from the perspective of providing customer service, he said, some insurers took the attitude of finding any way they could to deny claims and “making sure we don't pay a dime we don't have to.”

In his own case, he said, he tried to be proactive and make a claim for additional living expenses while he was unable to return to his home. He was told he could not receive anything without a damage report.

Eventually, when he was able to make a brief return visit to his home, he found his pool was infested with swamp debris and a resulting swarm of insects made the house uninhabitable.

His insurer, he said, without ever sending an adjuster, rejected his claim for living expenses and said he was getting “technical” when he noted policy language that covered the entire premises.

Later, after he paid to have his pool cleaned so he could return home, an adjuster failed to arrive and kept him waiting for days to look at the house, he said.

The adjuster also found problems with dates on bills he submitted because the adjuster failed to recognize that power outages in Mississippi delayed entry of the bills.

When he teaches proper handling of claims, Mr. Van advises his audience to acknowledge the importance of the claim to the policyholder, show empathy and understanding for their situation, let the policyholder know their worries are normal, reassure them that the claims handler has experience in handling claims, and promise to do a good job.

In his own case, among some of the negative remarks he related: “Well, we didn't cause the hurricane,” and “My job isn't customer service.”

“The thing that worries me is the total oblivion to the fact that they are not treating people well,” he said of claims officials he has dealt with. He said he was told curtly by one adjuster, “Today's my day off,” and many days have gone by as calls he put in about his claim went unanswered.

Mr. Van said he has been sent denial letters for exclusions that did not apply to his policy and was first denied his claim before any inspection had been made.

The company, he related, excluded his claim for cleaning up the mess in his pool, citing a pollution exclusion–to which he responded that the pollution was the result, not the cause, of the loss.

What amazes him, Mr. Van said, is not the technical mistakes that he sees being made, but attitudes that range from indifference to “we're going to do anything to deny a claim.”

“The industry is in for a surprise when people don't just walk away” from pursuing their claims, Mr. Van warned, citing a report that when the Aug. 29 deadline for filing suit in Louisiana over Katrina claims arrived, the line to the office in the Orleans Parish Civil District Courthouse was out the door.

Meanwhile, Mr. Van is still waiting for a response from his carrier on the last letter he sent them disputing their findings for his claim.