By Robb Greenspan, SPPA When a loss occurs to commercial property,the losses don’t end when the flames or shaking stop or when things dry out.
* This is a great article by Robb Greenspan, discussing the process of the commercial property loss, and what steps your client would need to take should they have to file a claim. For more information on commercial policies, or becoming an Independent Insurance Agent in commercial lines, please contact Tague Alliance at (760) 729 - 1143, or firstname.lastname@example.org *
In commercial enterprises, the ramification of losses extends out to employees, their families and customers as well. The Insureds first duty is to maintain the welfare of the business and its employees. The next concern is the continuance of the business. Their last concern should be the insurance claim itself but unfortunately,this can’t be!
The Policy of Insurance demands many steps be taken immediately after the loss occurs. The first step is to notify the broker/agent and carrier. The undamaged property must then be protected from further destruction, separating damaged from undamaged goods in preparation of taking an inventory. This inventory is then followed by pricing the goods, accounting work-ups and documentation of claims through the books and records. After it is all compiled, it must be submitted to the insurance company’s adjuster and accountants for review and the negotiations will then start. If a building loss is involved, protecting it from further damage is the first step prior to determining loss, after that, a Scope of Repairs is developed and then the bidding process starts. The Policy of Insurance demands many steps be taken immediately after the loss occurs. While the Insured is fulfilling the duties and obligations of the contract of insurance, his/her business is usually being ignored. Many businesses fail after a loss because the policyholders neglect to immediately focus on the business continuity rather than dealing with the insurance companies needs. What a claimant really should be doing is to deal with their customers and vendors, their employees and staff to insure the continuity of the business.
• Who Does The Insured Call?
After the fire department, the broker usually receives the first call. The Insured may look to the agent/broker for help. Usually in small losses, the broker’s office can assist in reviewing the policy and give some claims advice. In larger losses this may present a problem. The E&O exposure to the gent/broker is ever present in normal situations, and in a claims situation the ramifications can be financially disastrous. The least of the problem is the unhappy client who questions the broker’s ability to properly write insurance after having to deal with a plague riddled claim. When something goes wrong in the settlement, it can manifest itself in an E&O suit. When a large or problematic claim arises, the broker, many times, will be best advised to stay out of the claims process completely and allow the insurance company to assume the burdens of advising the client in the claims process. However, this has problems too.
• Why Not Rely On The Insurance Adjuster?
The Insurer has strong incentives to keep claims costs down. The heavy claims backlog that plagues most companies restricts the amount of time the adjuster can spend with the claimant. If the adjuster is not available to answer the claimant’s questions, who is? Asking an insurance company adjuster for help or advice is analogous to going to the IRS Auditor for tax advice. One hires an expert to represent them in tax preparation rather than rely on the Internal Revenue Service whose motivation is to collect taxes. The same can be said about the insurance company whose motivation is profit. They, the carrier, are going to do “what’s fair” to them, however, “what’s fair” to an insurance company many not be fair to the Insured, as is the case many times.
• What Help Can An Insured Get?
There is an industry known as Public Adjusters or Claims Consultants for the Policyholder who can help. As claims experts who handle hundreds of claims a year, Claims Consultants know the ins and outs of the claims process. We understand the mentality of the insurance company and how to prepare a claim that they will readily accept. We can give specific advice to claimants based upon our experience with their specific industry and their individual needs. Claims Consultants for the policyholder handle all of the required tasks of claims submission keeping the insured best interest in the forefront of the process, thus allowing the Insured to concentrate on re-establishing their business and their lives. We also reduce the time spent in the adjustment of the claim by the Insured as well as the broker. Our goal is to produce a better recovery for the Insured and quicker than they can on their own with less time spent on the claim and more time spent keeping their business viable. Not all losses require the help of a public adjuster. We usually do not get involved in small cases and most times you can be of help to them in this type of loss. If the claims are over 75K or have problems manifesting themselves at the onset on smaller ones then we are needed.
• What Help To The Broker Is The Claims Consultant?
The Claims Consultant and broker can work as a team, thus making the broker/agent part of the claims process, yet reducing or eliminating, completely, any liability associated with advising clients in claims situations. By assuring the successful settlement of claims, the broker is credited with this success and can expect the continued business from his or her Insured.
Without the professional help of a Public Adjuster/claims consultant, claims can go wrong! If due to circumstances an Insured receives what they perceive as an unsatisfactory answer (over expectation of what their claim is worth), the agent/broker can be blamed for writing bad insurance and will probably lose the account. The professional Claims Consultant can help to assure that this does not happen by accepting the burden and responsibility of the claims process. We steer the client in the right direction and focus the client’s vision as to what their losses truly are (real expectations). Of course if there are real issues such as underinsurance penalties (co-Insurance) we can many times reduce the effects of this by using techniques developed over the many years of experience we have. Most times your client will never know there was a problem if handled properly.
• What Services Can A Claims Consultant Provide That An Agent/Broker Cannot?
The better claims consulting offices are staffed with licensed Adjusters; Inventory Specialists; Accountants and CPA’s; Building Experts and Estimators who are all available to advise the Insured and to help document the claim. Once the claims are properly prepared and submitted, the Claims Consultant will follow through with negotiations so the claims are paid and the property is re-built or replaced quickly. As mentioned above, the Claims Consultant’s task is to fulfill all of the requirements stated in the contract of Insurance after a claim arises. The Claims Consultant can also find the extensions of coverage’s within a policy, thus taking fair advantage of the insurance bought and paid for by the claimant.
• How Is The Claim Prepared?
The first step in a typical claim would be a review of the insurance policy. If problems are noticed at this initial review, a meeting is held privately with the Agent/Broker to discuss any insurance problems that we foresee arising and work out a methodology to avoid or reduce these problems so as not to become issues in the future. Next, a detailed inventory of stock and equipment is undertaken by our Inventory Specialist. At the same time, if Real Property is involved, Building Estimators and Construction Experts are brought in to prepare a detailed Scope of Loss and Damage, detailing all of the necessary costs to rebuild or repair that structure. Once these steps have been completed, the Accountants are called in to prepare any accounting schedules necessary to support values of inventory, stock, etc., as well as to determine the extent of income loss suffered by the Insured. After all of this is completed, it is packaged and reviewed with the client and then submitted to the insurance company. This is where the experienced Professional Adjusters begins the negotiation process. We work until a mutually satisfactory answer is arrived at, thus, closing the claim and leaving both Insured and Insurer satisfied with the outcome. While this tedious process is going on, your client is free to re-establish his business or her customer base and deal with their employees, thus insuring the continuity of the business.
• What Other Services Are Provided?
Although the service provided by each company vary, the better firms will work with you to establish insurance needs and make recommendations on Forms & Endorsements for future insurance purchases with your client . We also can;
Help establish the value of personal property, real property and business income needs for underwriting purposes.
Claims Consultants are available to the Agent/Broker for consultation for underwriting questions.
Provide qualified courses on claims and property insurance for state CE credit.
Of the above list, not all Claims Consulting firms can fulfill all of these duties. One should look for a firm that has the full staff of in-house adjusters, accountants and inventory specialists and other expertise to perform all of the duties above.
• How Does One Choose A Professional Claims Consultant?
Many policyholders feel the need to retain the services of a Claims Consultant mainly because of the time constraints they feel after a loss occurs. A second reason is because they realize that a professional, with experience, can do better than a novice handling their own claim, thus avoiding the learning curve. You can help your client choose the proper Public Adjuster by looking at the criteria listed below:
First and most important, check references of past clients. Not just by looking at the name but by making the phone call. All reputable firms should provide a list of past clients including names and phone numbers for contact.
Check current licensing status of the Claims Consultant. Look at the DOI’s web site to insure that the consultant or Public adjuster is current in their licensing.
Does the firm have membership in both professional organizations such as the National Association of Public Adjusters (NAPIA) or the California Association of Public Insurance Adjusters (CAPIA) Are they affiliated with any other insurance groups such as IIABA, PIA, IBA-West.
Is the professional staff accredited through the National Association of Public Insurance Adjusters? NAPIA issues two accredations. One is the S.P.P.A. (Senior Professional Public Adjuster) and the other is the C.P.P.A. (Certified Professional Public Adjuster). In order to earn a designation, one must go through lengthy education courses and real-time experience in the practice and then pass rigorous tests, similar to the CPCU designation
Does the firm have full support personnel?
Do they have Inventory Specialists on staff? (not contracted out)
Do they have Accountants and CPAs on staff? (not contracted out)
Do they have Claims Adjusters, Building Experts and Estimators to fulfill your client’s needs? Do they have the expertise on equipment and machinery analysis? These are important tools that the public adjuster uses!
Checking with the Better Business Bureau, the local Chamber of Commerce can also lead you to the right Professional Claims Consultant.
In conclusion, by calling in the Claims Consultant at the onset of a claim, Public Adjusters can advise and assist your client on your behalf to steer them in the right direction, thus avoiding the many traps and pitfalls that the Insureds usually find themselves in when handling large claims. If and when problems of value and loss, coinsurance or missing or inadequate endorsements arise, we are there to minimize or avoid completely the effects of these problems thus reducing the exposure to the agent for E&O suits. When the handling of the claim produces an acceptable answer to your client and one that the insurance company finds acceptable as well, the Insured is left with a positive perception of the claims experience and your carriers are happy. The net effect of this is that the client feels the agent/broker did a good job on his or her behalf in placing the insurance with the carrier and this can lead to a long relationship between you and your client.
About the Author: Robb Greenspan, SPPA is a senior partner and second generation owner of The Greenspan Company/ Adjusters International, a public adjusting firm was established in Los Angeles 1946. Greenspan is dedicated to representing the policyholders interest in property claims only. He has written numerous articles and papers on insurance and teaches continuing education for agents and brokers as well as other professionals for over 20 years. Greenspan is currently a member of the Curriculum Board for the California Department of Insurance and past member of the Insurance Commissioners Consumer Complaint and Unfair Claims Practices task force. He holds the Senior Professional Public Adjusters accreditation issued by the National Association of Public Adjusters.