Doin' the Right Thing in Palm Springs
By Bruce Hillman, JD
From the July 2005 issue of Claims Magazine
I just flew in (and boy are my arms tired!) from the National Association of Independent Insurance Adjusters (NAIIA) annual conference in Palm Springs. Palm Springs is not easy to get in or out of. My presentation to the group was Thursday morning, so of course, in this day and age of air travel, arrival the evening before is necessary. The last plane out to Salt Lake City for a connection back to the Cincinnati/Northern Kentucky International Airport (or Cincitucky, as the easterners who came with our acquisition by Highline Media call the area) was noon. So I was unable to get out the day of my speech and had to remain overnight. Alas, poor me; but, as one of those self-same easterners remarked in response to my complaint about time on the road, “Bruce, there are worse things than being stranded in Palm Springs overnight.” Indeed there are. Stop and smell the flowers buddy—or just sit by the pool.
To my mind, there isn't a better adjusted bunch than the NAII members. These are professionals exhibiting a deep involvement in their profession. There is a close-knit aspect to the membership that portends cooperation, focus, over-arching goals and integrity. Friendliness and courtesy also prevail.
Some of that is because of the family-business nature of many of the member companies. I was impressed by the session (closed to any but those who qualified) just for sons and daughters of independent adjusting company owners. They face the many of the same problems regarding succession and planning that face many of the independent agencies that make up the Independent Insurance Agents & Brokers of America (IIABA).
I particularly want to follow up on some of the items we touched on in my talk before the group, and more, the spirit of it. I was to speak on topics of immediate interest to the group at large—from the perspective of the editors of FC&S what are some of the challenges facing the adjusting profession.
We talked about change in the insurance industry and the increasing speed of change in the world at large. We talked about the transition from agrarian society to industrial society occurring over a period of 60 to 100 years or more, but from the industrial to the information age in just under 20. I told the story of how, in my 23 years with FC&S, the speed of response to subscribers' coverage inquiries has been cut from two weeks to hours.
For example, when I got here in 1982, letters from FC&S users were generally attended to within two weeks from their receipt—that was our stated policy and it was alright with our users. By the early 90s, FAX had replaced letters, and we'd get a “second request” two or three days after receipt of the FAX. Now, in the great age of email, we get questions from subscribers that are followed up by email messages with that damned red urgent exclamation point (!) within hours of getting the original message. We know that this is the speed of your business today. What you had two weeks for 20 years ago you get two hours for today.
We talked about where adjusters get in trouble and the unauthorized practice of law in a rousing exchange touching on the differences between independent adjusters and public adjusters. I reviewed important case law, including the seminal 1939 case of Liberty Mutual Ins. Co. v. Jones, 130 S.W.2d 945 (Mo. 1939), which is a case in which the Missouri Bar Association sued six mutuals doing business in the state over the fact that, of all things, they were making decisions on what was covered under an insurance policy and what was not, without the aid of attorneys. The insurance companies won, allowing them to advance the profession of insurance adjusters.
We talked about how the adjusting business can be the practice of law, and not the unauthorized practice of law, where the adjuster will be held to the standard of a practicing attorney in the event his or her negligence causes harm to an insured. We talked about the developing minority opinion in several states where a direct cause of action has been established against an independent adjuster working on contract for an insurance company, along with that insurer (see Charleston Dry Cleaners v. Zurich American Ins. Co. (2003 WL 22119885, S.C.)
And we talked about, as fellow speaker J. Southall Stone, VP of First Party Claims for Essex Insurance Co. (a Markel Company) put it, adjusters doing “the right thing.” This came out of a comment that there is a perception that insurance adjusters are given bonuses for cutting insurance recovery to claimants. Southall, voicing the opinion of all in the hall, held forth that a bonus structure like that is “not doing the right thing.” That people pay insurance premiums to cover losses they incur, and that minimizing recovery for insureds is not what we're in this business for. That instead, the public policy of being in the insurance industry is “do the right thing.” “I'm not going to pay one dollar more than necessary to indemnify an insured, but I'm sure as hell not going to pay one dollar less, either. And I'll err on that side, if I have to,” said Mr. Stone, who also is an in-coming officer for the Loss Executive Association, to whom he'll be carrying that message.
It was an interesting couple of days. A great meeting program, fine networking opportunities, and just good folks. I just wanted to take some space here to tell the group, Thanks. Keep doin' the right thing and we'll be OK.