|  | | Author | Messages | |
Steve Beaumont
Founding Member
Adjuster
Homeless Gypsy's-Fulltime RV travelers
Posts:284
 | | 12/19/2007 6:34 PM |
| I don't know if many of you follow (or care about) some of the rulings that the courts are coming out with in reference to Katrina mess, but some of them will have some far reaching impact on claim handling for us in the future and also coverage’s that are provided by carriers in certain areas of the country. There is a case that in LA state court that is the Sher v Lafayette Insurance Co, etal case that has the potential of having the greatest impact of all the cases on appeal at this time. The plaintiff prevailed in the trial court level that in the nutshell ruled that flood was covered under the all risk policy since it didn’t specifically exclude “man made flooding”, overhead and profit at 20% was improper and awarded 45% (25% OH&P and 20% unknown contingencies), and that even though contents weren't covered on the policy the lower court awarded damages for these since they weren't specifically denied and plead so in the answer. Court didn’t seem to care for the fact they were never requested to be covered in the application nor was a premium paid or BPP endorsed onto the policy. Another part of the decision was the determining if the carrier was guilty of bad faith, and there were two areas that they found fault that tied back to the adjuster. The 1st was on the timeliness of the inspection. Carrier claimed loss turned in 10-5-05, assigned for inspection and the inspection was done in 11-1-05. The policy holder testified that he thought he turned in the claim sometime in the 1st 2 weeks of September (didn’t say if this was documented in any way), and the jury believed that, found the inspection didn’t take place in 30 days and found BF for that reason. They also found that the investigation was inadequate, and one of the main areas on this end was because the adjuster didn’t inspect and scope out the flood damages in the basement. It was a terrible decision, and on the 4th circuit appeal it was upheld by a 3 to 2 vote of the panel judges in the 4th circuit court of appeals. It has since been sent up to the state supreme court that will have the final say. Rumor has it that the supremes are going to make a decision on that case on an emergency basis, and expected to affirm the lower courts ruling.
That being said, the federal courts will have to abide by the decision in the state court so basically in LA there is some bad law that may hit pretty quickly. As I mentioned before, if something like this stands, we as adjusters will need to look at handling claims in that area differently and it bay be something that spreads to other areas. I would almost guarantee that carriers will change the language of the policies, and would not be surprised that in LA you won’t be able to find an all risk policy in a couple years except in the archives of an agent’s office. Plaintiff attorneys are getting more and more creative in finding ways to punch holes in the insurance contract language, which will probably ultimately cost insured’s more money on insurance costs, and/or also get them lesser and lesser coverage.
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| Tom Toll
Life Member
Moderator
Posts:916
| | 12/19/2007 7:04 PM |
| If that law does indeed come into place, there will be few adjusters that will work in La., at least seasoned adjusters. Hopefully the newby adjusters will be informed of that law so their tails will no be out to be shot at. That is completely ludicrous and non sensical that the courts would rule that way. Don't you just love attorneys. Perhaps that is why the industry now wants 10,000 adjusters to handle 50,000 claims. Work five losses then go home. Yeah right, you know a seasoned adjuster with knowledge is going to travel, sometimes thousands of miles, to work five losses, or 10 or 20. This industry is in trouble and that is statistical fact. We get fewer losses everytime we go out. Soon, it will not be economical to work claims. Who will ultimately suffer because of this, the insured. Of course, we will be the bad guys and get the blame for this preposterous situation. I really hate to see this happening, as I have loved this work for many years. What the heck is a man made flood? I thought that flood was as a result of torrents of rain or sea surge that breaches a man made structure. Can anyone apprise me of what a man made flood is. Instead of an act of god I guess now all catastrophes are an act of man/woman. | |
Success is not final, failure is not fatal: it is the courage to continue that counts. | |
| Wes Davis
Lighthouse Point Florida
Posts:53
| | 12/19/2007 7:09 PM |
| | So far it appears the insurance policy is pretty much buttoned up with t's crossed and i's dotted. I forsee the above mentioned rulings all being overturned just like all the other cases as they make their way up the courts. | | | |
| Ray Hall
Adjuster
Houston, TX
Posts:808
| | 12/19/2007 8:02 PM |
| I was working regular claims in Houston from 1999 to 2004 and this was the "mold gold" days and all the related problems that changed the whole state from of Homeowners from a HOB to an HOA. This is like a HO-3 to a HO-1. The insurance cost tripled and the coverage not nearly as broad. I can not see anything but the DP-2 for Louisana and Mississippi in the long run, just because of the cost factor to homeowners. I know a few HOB and HO-3 are still in Texas, but the local claims have been down ever year since 2002.5 as people are very reluctant to turn in water claims today, because of the clue reports , loss history and real estate values decline, if known. On another topic, the big 5 insurors will not write ANY new business with a laid over comp roof or a comp over a wood shingle deck. The property is inspected and these dwelling go to to the E & S brokers. | | | |
| Larry Regan
Posts:56
| | 12/19/2007 10:17 PM |
| Posted By Tom Toll on 12/19/2007 7:04 PM Perhaps that is why the industry now wants 10,000 adjusters to handle 50,000 claims. Work five losses then go home. Yeah right, you know a seasoned adjuster with knowledge is going to travel, sometimes thousands of miles, to work five losses, or 10 or 20. This industry is in trouble and that is statistical fact. We get fewer losses everytime we go out. Soon, it will not be economical to work claims. Who will ultimately suffer because of this, the insured. Of course, we will be the bad guys and get the blame for this preposterous situation. I really hate to see this happening, as I have loved this work for many years. What a difference a year makes in attitudes!!!!!!!!!!!! | | | |
| Bob Harvey
Gold Member
California, Central Coast
Posts:388
| | 12/19/2007 11:37 PM |
| ...Court didn’t seem to care for the fact they were never requested to be covered in the application nor was a premium paid or BPP endorsed onto the policy. Another part of the decision was the determining if the carrier was guilty of bad faith... Wow. How Ironic. I was in the Flood unit for State Farm for 5 months at Katrina, and they were as generous as they could be "within the NFIP guidelines". So we are being scrutinized not to allow more than the sub-limits for jewelry, fine art, etc., and here they are giving this guy off the street coverage he didn't even pay for. And spanking the carrier for not volunteering the gift sooner. Jeeeeez.
That smells like bad law that will just tax everyone with unaffordable insurance, like Ray said. That bites. At least you are working - and hopefully paid well to work those legal files. | | | |
| R .D. Hood
Founding Member
Adjuster
New Hope, Pennsylvania
Posts:210
| | Stephanie W
Dallas
Posts:30
| | 01/05/2008 3:27 AM |
| Posted By R .D. Hood on 12/21/2007 5:33 PM Big Red taking another appproach. http://www.insurancejournal.com/news/southeast/2007/12/20/85870.htm May last until who knows when, like Northridge............................................... I'm still shocked that they didn't throw Scrugg's entire team off of this. What is wrong with the idiot judges???? | | | |
| Steve Beaumont
Founding Member
Adjuster
Homeless Gypsy's-Fulltime RV travelers
Posts:284
| | 01/10/2008 11:29 AM |
| | You can count on the fact that if this approach is successful, every carrier that has a suit with the Katrina litigation Group (formally the Scrugs Katrina group) will file an exact motion, and the KLG will be out of business. If that happens, does that open up the door for an legal malpractice action by each client that was originally represented by the SKG/KLG? There could be an arguement that the actions of an attorney or group of them has prejudiced the value of their insurance lawsuit. Seems like the parties involved in these groups have a lot of assets and you would think some good insurance coverage behind them. Food for thought, but if I were one of the policyholders being represented by them it is something I would be thinking about. | | | |
| Steve Beaumont
Founding Member
Adjuster
Homeless Gypsy's-Fulltime RV travelers
Posts:284
| | 01/10/2008 11:43 AM |
| This was in the New Orleans paper a few days ago and has been hitting some of the national media also. Gives one some idea of the sheer greed that is associates with that mess called Katrina
NewsFlash Home | More Louisiana News
Katrina's victims measure storm in quadrillions of dollars
1/8/2008, 4:20 p.m. CST
By MICHAEL KUNZELMAN
The Associated Press
NEW ORLEANS (AP) — Hurricane Katrina's victims have put a price tag on their suffering: $3,014,170,389,176,410 and counting.
That quadrillion-dollar figure represents a fraction of the roughly 489,000 claims that residents and business owners filed against the federal government over damage from the failure of levees and flood walls following the Aug. 29, 2005, hurricane.
The U.S. Army Corps of Engineers says it has received 247 claims for at least $1 billion apiece, including one for an even $3 quadrillion.
"That's the mother of all high numbers," said Loren Scott, a Baton Rouge-based economist.
Someone in Baker, 93 miles northwest of New Orleans, filed the claim that inflated the total from the trillions into the quadrillions. Baker is far from the epicenter of Katrina's destruction, but the city hosts a trailer park where hundreds of evacuees have lived since the storm.
For the sake of perspective: a mere $1 quadrillion would dwarf the U.S. gross domestic product, which Scott said was $13.2 trillion in 2007, while a stack of one quadrillion pennies would reach Saturn.
Some residents may have grossly exaggerated their claims to send a message to the Corps, which has accepted blame for poorly designing the failed levees.
"I understand the anger," Scott said. "I also understand it's a negotiating tactic: Aim high and negotiate down."
Lawyers have advised clients not to skimp in estimating their losses from Katrina, because the amounts listed on their claims forms can limit how much they recover.
Daniel Becnel, Jr., a lawyer who said his clients have filed more than 60,000 claims, said measuring Katrina's devastation in dollars and cents is a nearly impossible task.
"There's no way on earth you can figure it out," he said. "The trauma these people have undergone is unlike anything that has occurred in the history of our country."
The Corps released zip codes, but no names, for the 247 claims of at least $1 billion. The list includes a $77 billion claim by the city of New Orleans. Fourteen involve a wrongful death claim. Fifteen were filed by businesses, including several insurance companies.
Katrina, which is blamed for more than 1,600 deaths in Louisiana and Mississippi, is considered the most destructive storm to ever hit the U.S. It caused at least $60 billion in insured losses and could cost Gulf Coast states up to $125 billion, according to the National Oceanic and Atmospheric Administration.
Most of the claims were filed before a deadline that coincided with Katrina's second anniversary, but the Corps is still receiving them — about 100 claims have arrived over the past three weeks — and is feeding them into a computer database.
The Corps says it isn't passing judgment on the merits of each claim. The federal courts are in charge of deciding if a claim is valid and how much compensation is warranted.
"It's important to the person who filed it, so we're taking every single claim seriously," Corps spokeswoman Amanda Jones said.
Plaintiffs attorney Joe Bruno said the claims process is a "joke," designed to help the government negotiate settlements.
"The government is using this to spit in our face one more time," he said. "The numbers are meaningless in terms of whether the government will ever pay and meaningless in regard to how much it owes."
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