Episode 45 – Insurance Claim Estimates Change & Are Supposed to!

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Media coverage has intensified over an allegation by three independent insurance adjusters that Florida property insurance companies are cheating their policyholders out of rightful claim payouts.  The three accuse the industry of altering their field adjuster reports and reducing claim payouts – all without their knowledge or approval.

Former Florida Deputy Insurance Commissioner Lisa Miller sat down with two independent field adjusters and an attorney who represents insurance companies to learn their perspective and just how damage claims – and their payouts – are ultimately decided and by whom.

Show Notes

The three adjusters and their allegations first appeared in public last December to testify during the Florida Legislature’s special session which resulted in a series of new consumer insurance reforms.  The reforms included the end of one-way attorney fees for property insurance lawsuits, the end of Assignment of Benefit contracts, and a further tightening of claim practices, among other things.  These were all abusive practices by bad actors against insurance companies and policyholders that were blamed for driving up the cost of insurance and creating market turmoil.

Shawn Kelliher, Independent Insurance Adjuster, Cape Coral, Florida

Shawn Kelliher of Cape Coral is a 16-year veteran in the insurance adjusting business.  His first 13 years were working for Farmers Insurance Company as a desk adjuster and then as a catastrophe field adjuster, including large loss and complex claims across the country.  He said “it’s absolutely not the case” that insurance companies are out to get everybody and explained that there are many legitimate reasons why field damage estimate reports change.   Field adjusters often don’t know what damage is covered by the insurance policy. 

“Some policies have actual cash value only coverage, some policies have specific exclusions for certain items and a lot of times we don’t know that,” Kelliher said.  “So we see and document the damage and that goes in our report and that’s sent up (to the independent adjusting firm or insurance company), only to be later found out that, unfortunately, in those circumstances where they (the policyholders) don’t have coverage, those items have to be removed or taken out of the estimate.  And it’s not a malicious situation,” the Naples, Florida native said.  Kelliher said he’s seen it many times over the past three years that he’s been an independent adjuster in Florida.  He said he works for a variety of adjusting firms and across a vast array of insurance carriers, doing both residential and commercial work. 

Vanessa McGonigal, Independent Insurance Adjuster, Cooper City, Florida

Vanessa McGonigal, an independent field adjuster from Cooper City agrees.  Often times, she said she is not aware of any changes that may take place in the final adjusting report on a claim.  “If we’re preparing an estimate for all of the damages we see and we submit that and coverage is not afforded for something written on our estimate, where is it that we should give permission to have that removed?  If it’s not covered, it’s not covered,” McGonigal said.  She began her career in 2009 as an estimator for a general contractor and then five years ago, became an independent field adjuster.  She said she has worked for a couple of independent insurance adjusting firms, doing both residential and commercial claims, including from Hurricane Ian.

Both McGonigal and Kelliher said that if there is a change to the estimate, sometimes they make it, sometimes their adjustment firm does it, or the desk adjuster at the insurance company, depending on the change and the situation.

“They’ll call me and say, ‘Hey, you know, I read your report, I saw your photos, this is what I was thinking.  Can you kind of explain your thought process here or justify what it is that you put in your estimate?’ and we’ll have a conversation about it,” said Kelliher, who has worked “several hundred” Hurricane Ian claims.  “And ultimately, again, ultimately, it’s the carrier’s determination of coverage.  As independent adjusters, we have zero claims authority to extend coverage.  The adjustments that are being made, are to bring the estimate accurate, or in line with the policy or coverages as endorsed.”

McGonigal outlined the steps she takes as a field adjuster from the time she is assigned the claim to delivering her report on damage.  She said her typical day could include handling up to 15 Hurricane Ian claims.  That doesn’t leave a lot of time – nor should it – for follow-up, unless there’s a question or a dispute about damages, the Hollywood native said.   

Robert Schulte, Attorney, Monson Law Firm, Tampa, Florida

Robert Schulte is an attorney with the Louisiana-based Monson Law Firm, working in its Florida office.  He has represented Florida insurance companies in homeowners and commercial insurance matters since 2012 and is skeptical of the three adjusters’ allegations against the industry.  “In the weeks before their December testimony, there was a YouTube video featuring the same folks and if you look at the description of that YouTube channel, it says, “We’re politically involved, where appropriate, to help consumers maintain the ability to hire professional and legal representation,” Schulte said.  “And so it should be no surprise that it seems like there’s an agenda here and maybe there’s a misunderstanding of what’s going on.”

The industry responded to the adjusters’ allegations by saying what they described is not common practice and at least one investigation is underway by regulators.  The Florida Legislature responded this spring, in part, by passing Senate Bill 7052, which Governor DeSantis signed into law.  It requires that any altered or amended insurance adjuster’s report include the following three elements:

  • A listing of all the changes;
  • The identity of the person ordering the change; and
  • An explanation for any change that reduced the amount of the estimate.

“I do think that what’s happened here is some give and take by the legislature,” said Schulte.  “More transparency is part of what the new process is with the new laws.  Is it just right?  Is it too far?  Or is it not enough?  We just have to wait and see, while these things work their way through the legal system,” he said.

Host Miller noted there is skepticism by some in the insurance marketplace, given that independent adjusters are independent contractors, who are often paid based on a percentage of the claim.  She asked both McGonigal and Kelliher if there is a built-in temptation by adjusters as a result to inflate the claim estimate.

“I do believe that there could be some fellow 1099 field adjusters that think about that and do that, it is possible, yes,” said McGonigal.  “The answer is absolutely yes,” said Kelliher, who said that he’s done re-inspections often for estimates that are almost rejected because of the way they were written.  “Some adjusters are unscrupulous enough to write for increased or padded damages that are just not supported.  So you know, just because the adjuster wrote an estimate that’s $100,000 does not mean that $100,000 estimate is supported,” he said.   The bottom line?  “If the estimate was written inaccurately, by all means, it needs to be changed and adjusted to make it accurate, even if it does reduce that adjuster’s estimate,” Kelliher said.

Schulte went on to explain specific instances where the estimate of damages is reduced.  There are lots of moving parts to a property insurance claim with multiple interactions among multiple parties.  “I think that what would help people is to understand how it’s not just one person that makes the decision, and that it’s the insurance company that’s making the decision,” Schulte said.   “The insurance company is putting together all of the pieces of the puzzle to arrive at a fair evaluation of the claim pursuant to the policy.”

Host Miller reminded listeners that out of the more than 710,000 Hurricane Ian claims at last report, the number of those having problems with claim payments “according to the Department of Financial Services statistics is very, very small, less than 1% is the number that I’m hearing,” she said.  “Less than 20 or so questionable claims by these three adjusters are the recent focus of so much of the media’s attention.  We’re missing the forest for the trees,” Miller added.   She said the Florida Department of Financial Services Consumer Helpline exists to help open communication lines and help resolve complaints that do exist between consumers and their insurance companies.  “As Florida’s CFO Jimmy Patronis recently told a reporter, ‘There’s two sides to every story.’”

Links and Resources Mentioned in this Episode

Florida Adjusters’ Charges of Doctored Damage Reports Get Wider Spotlight (Insurance Journal, March 13, 2023)

Key Provisions of 2022 Insurance Consumer Protections & Market Reforms (Lisa Miller & Associates)

SB 7052, the Insurer Accountability Law of 2023 (Bill Watch, May 8, 2023, Lisa Miller & Associates)

HB 837, the Civil Remedies (Tort Reform) Law of 2023 (Bill Watch, May 8, 2023, Lisa Miller & Associates)

Department of Financial Services (DFS) insurance consumer helpline (1-877-MY-FL-CFO)

The Monson Law Firm

** The Listener Call-In Line for your recorded questions and comments to air in future episodes is 850-388-8002 or you may send email to [email protected] **

The Florida Insurance Roundup from Lisa Miller & Associates, brings you the latest developments in Property & Casualty, Healthcare, Workers’ Compensation, and Surplus Lines insurance from around the Sunshine State.  Based in the state capital of Tallahassee, Lisa Miller & Associates provides its clients with focused, intelligent, and cost conscious solutions to their business development, government consulting, and public relations needs.  On the web at www.LisaMillerAssociates.com or call 850-222-1041.  Your questions, comments, and suggestions are welcome!  Date of Recording 6/1/2023. Email via [email protected]   Composer: www.TeleDirections.com  © Copyright 2017-2023 Lisa Miller & Associates, All Rights Reserved