What Insurance Adjusters Should Know About Wildfire-Related Claims

Episode Notes

Transcript

Best Insurance Law Podcast

What Insurance Adjusters Should Know About Wildfire-Related Claims

03/03/2020

 

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Intro: This is the Insurance Law Podcast, brought to you by Best’s Recommended Insurance Attorneys.

 

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John Czuba: Welcome to Best’s Insurance Law Podcast, the broadcast about timely and important legal issues affecting the insurance industry.

 

I am John Czuba, Managing Editor of Best’s Insurance Professional Resources.

 

We’re pleased to have with us today Peter Schifrin from Schifrin, Gagnon & Dickey, Inc., with offices throughout California. For over 40 years, Schifrin, Gagnon & Dickey has provided high-quality claim adjustments, investigations and TPA claim administration services.

 

Peter is the President and CEO of SGD and also serves as a Licensed Adjuster and Private Investigator. Peter has extensive experience with a wide variety of claims including property casualty and many specialty lines. He is a past President of the California Association of Independent Insurance Adjusters, the Pacific Claims Executive Association, and of RPA. Peter is also the current Secretary Treasurer for the NAIIA.

 

Peter, thanks for joining us today.

 

Peter Schifrin: Oh, it’s my pleasure.

 

John Czuba: Today’s discussion is on wildfire claims, and Peter, for our first question, how have the California wildfires changed the landscape of claims adjusting in California?

 

Peter Schifrin: Well, I’ll tell you, we’ve always had fires out here in California, but typically they were not an every year occurrence and they didn’t occur in both northern and southern California at the same time. I think in my lifetime, this may be the first time when we really thought like a cat state versus a bay claim state where there weren’t these kind of adjusting challenges.

 

We have really changed in how we have to tackle these claims and our Insurance Commissioner has become very active in telling us how we have to do things. We’ve had quite a few changes in the last year or two and now claims are being handled and as an adjuster keeping up with all those new rules has become half the battle.

 

We have requirements on standard additional living expense payments and content advances and inventory forms and debris removal. There’s just a lot of things that have come down the pipe since these fires that have made our job a lot more challenging.

 

We have new insurance code sections, for example, for the first time ever if someone’s house burns down, they can combine their coverage A and coverage B if there’s money left and actually get more indemnity than they would have in the past and we even have a new insurance code section that requires a different valuation that when the house burns down.

 

So it’s pretty active out here. I would also mention that we have a bunch of different insurers out here, some admitted, some non-admitted, and they take different stances in how to handle these claims, and so if you’re an adjuster and you are working for more than one client, it’s not easy to figure out which Playbook you’re usually on which loss.

 

John Czuba: Peter, has there been any litigation than has arose from these claims?

 

Peter Schifrin: I haven’t seen a tremendous amount of litigation arise yet. I do believe that we will see more litigation about valuation. Little by little the burden of valuing the property is falling on the agent and the insurer more than on the customer. And every time we have one of these fires, people are underinsured and they want to blame that on the party that sold them the policy, either the agent or the insurer so I do think we’ll see more litigation.

 

We did have some litigation after the mudslides in Montecito that followed the fires as to the issue of cause. You guys might have followed this. There’s a big proximate cause argument on whether the fire caused the land to change which then led to the mudslides or whether those were simply mudslides from rainwater and we saw some litigation from that.

 

We also have a lot of smoke and ash claims out here where there’s question as to whether people were truly affected. Let’s say there are a few miles from the fire that they’re claiming smoke or ash damage to their property and those claims do get denied on occasion for various reasons and there have been lawsuits arising from that issue.

 

Those were probably the biggest things we have seen.

 

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John Czuba: And you mentioned the last two years being particularly challenging. What were some of the major challenges that the adjuster community faced?

 

Peter Schifrin: I think probably the biggest challenge is sufficient staffing. Every time, there’s a catastrophe, you never have enough people to jump right on the claims, you’re always having to find more adjusters. I know I’ll forget which fire it was but a couple years ago when we had, what was it, Irma in Florida and Harvey in Texas and those had already hit and then we had fires out here in California after those, and events and you already had all the cat adjusters deployed in Texas and Florida and now you’re trying to get cat adjusters to come to California and they’re just not available.

 

So staffing is always going to be the biggest challenge in any catastrophe. Access to the properties to commence the inspections is super-difficult and you may remember after the Paradise fires up north which were horrible, they kept us out of Paradise for weeks maybe even over a month I think it was because they were still dealing with quite sadly body retrieval and so we couldn’t get access, which will probably dovetail into some comment about technology.

 

Also finding experts to assist in the adjustment process is super-difficult and in some instances, you have clients that can’t get you money fast enough to make people happy, and I’ll tell you, the best way to deal with a policyholder after catastrophes do if at all possible to give them some money so they can buy some clothes and get in hotel and try to have some semblance of life after their properties burned out.

 

John Czuba: Now, how had the turnaround of claims been in general?

 

Peter Schifrin: I think for the most part these personalized carriers have figured out that they need to shine at the time of a catastrophe and the good claim service is really the best customer service they can provide and the best advertising for their company.

 

So, in general, I think carriers have gotten good at responding to these claims and making quick decisions, but of course, there’s always outliers where carriers make decisions and they slow down the process.

 

Obviously as an adjuster, our job is to get out there and get enough information for the carrier that they can confirm coverage and make initial indemnity payments, and so, if we don’t meet that promise then of course it’s all swept out.

 

John Czuba: Peter, based on the challenges, the wildfires and the mudslides you mentioned, is there anything you feel the industry would do differently or what they have learned from, from all this in the last few years?

 

Peter Schifrin: Well, I would joke that what they’ve learned is they don’t want to write business in California because they’ve had so many losses out here, so that’s not really learning. What I would say is that there’s a big push for as much as possible handling these claims remotely either to save expense or to identify damage and reserving and issue payments faster.

 

So we’re seeing satellite technology being deployed and drones being deployed and flyovers being deployed so that if I’m an insurer, I can as quickly as possible identify my losses and make payments without delay. The traditional model was to always send an adjuster to every loss site to either meet with the policyholder or at least verify the loss.

 

The technology is getting to the point now where you don’t necessarily need to send an adjuster out to bargain and say verify that a dwelling is burned down and it allows for a faster and I would say more economical adjustment of the claim. Technology has been a little slow to deploy in the adjuster arena, but I do think in this decade we’ll see a lot more push to use technology and use faster methods to get a loss assessment to push the adjustment through. So that’s the biggest thing I think we’ll see every time there’s a disaster, it’s more deployment of technology.

 

John Czuba: Peter, thank you so much for joining us today.

 

Peter Schifrin: I enjoyed it. Thank you.

 

John Czuba: You’ve just listened to Peter Schifrin from Schifrin, Gagnon & Dickey with offices throughout California, and special thanks to today’s producer, Frank Vowinkel.

 

And thank you all for joining us for Best’s Insurance Law Podcast. To subscribe to this audio program, go to our webpage www.ambest.com/claimsresource. If you have any suggestions for a future topic regarding an insurance law case or issue, please email us at [email protected].

 

I am John Czuba and now this message.

 

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Outro: Best’s Insurance Professional Resources features valuable insurance industry content, including searchable profiles of client-recommended insurance attorneys, adjusters and expert service providers, brought to you by AM Best, known worldwide as a respected source of insurance industry news and information. Visit ambest.com/claimsresource.

 

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