By Ethen Kim Lieser
At the 2020 IRE in Dallas, Texas, Dmitry had a wonderful opportunity to sit down with Jim Hood (former Attorney General of Mississippi), Doug Quinn (APA Executive Director) and Heather Shapter (APA Membership Director) to discuss the controversial practices of insurance adjusters and the insurance industry as a whole.
People need a voice
Jim Hood, who was Mississippi’s Attorney General for 16 years, is supporting APA because he saw firsthand what homeowners had to endure after Hurricane Katrina in 2005. He became more involved when he found out that State Farm was committing fraud by changing engineering reports. As the state had a flood program that taxpayers paid for, the insurance companies had incentive to place blame on floodwaters, even though homeowners proved that much of the damage was caused by wind. Witnessing such injustice to homeowners and insurance companies continuing to reap profits from disasters, Hood embraced the role of giving people a voice and helping to balance the scales a bit.
Homeowners and taxpayers suffer
Hood told stories of other instances where insurance companies were telling their adjusters and engineers to flip the burden of proof, so they wouldn’t have to pay out the claims. Even when a suit was filed, the entire process took about four years, so many people just gave up and settled for what they could get. Hood added that he’s staying active in this area because he is sick of seeing companies dump the damage and costs to the hardworking taxpayers, which is just wrong on many fronts.
For Doug Quinn, he lived through what was discussed in 2012 during Hurricane Sandy. In the aftermath of his home being destroyed, Quinn witnessed firsthand how insurance companies hired engineers who spoke to causation in the rare instances in which the engineer on site actually agreed that it was storm damage. The report would then be sent back to the company for a peer review, and it was in that particular process that these companies were caught changing the data and information. In many instances, it ended up not being storm damage, thus not covered by their flood insurance.
Having faith in insurance
At that time, Quinn was a financial adviser who really believed in insurance and recommended tens of millions of dollars worth of insurance to his clients. He was adamant about the fact that APA is not anti-insurance, and that insurances are a great tool for the average American to protect him or herself. But from his experience after the devastating hurricane, Quinn had lost faith — these insurances weren’t working the way they had advertised them. With three to four feet of floodwater in his house, the home was completely destroyed. He lost everything he had owned. Quinn, though, mistakenly shrugged it off because he knew that he had insurance.
Pennies on the dollar
The huge surprise came when Quinn’s carrier offered him only 37 cents on the dollar. He was dumbfounded. An engineering company was sent out to examine his home, and after a thorough analysis, the company said that all the damage was there before the shifting of the supporting soils — what’s known as the earth movement exclusion. This, conveniently, was not covered under the insurance policy. Still, he didn’t lose hope, as he thought that he would just show them the pictures of his destroyed house and just explain what really had occurred. As he got further into the process, he began to realize that nothing would be changed. This is an actual strategy often employed by insurance companies, and Quinn knew that there was criminal fraud involved.
With the help of the government and organizations like APA, about 144,000 claims were reopened for people who said that they had been shorted on their insurance. Some estimates had that after Hurricane Katrina, about $220 million was paid out for the additional claims. In order to further increase protection, Hood believed that people need to be more vigilant when purchasing insurance, because he’s seen in many instances of homeowners not even reading through the actual policies. They could be unaware of pre-existing conditions.
Insurance companies want to delay
Hood said that homeowners should stop blindly trusting insurance adjusters. They shouldn’t be seen as trustees who always have the best interests of the homeowners. Yes, they may have a relationship with the person who actually sold you the insurance, but there are always two sides to the story. After enough time passes, insurance companies know that people just go away. Especially in cases where your home is completely destroyed, you just take what you can get. In fact, as Hood acknowledged, there was a motto for insurance companies after Hurricane Katrina: “Delay, delay, delay, we hope you will go away.” Quinn said he has spoken to somebody who works for a major carrier high up in the claims process, and he said that one study showed that the average consumer quits somewhere between 45 and 90 days. Shapter added that these homeowners don’t have the necessary skillsets to advocate for themselves.
Standing up to a billion-dollar industry
According to Quinn, very few people are able to hire an attorney or a public adjuster. In his experience, he’s seen only 1 to 2 percent actually hiring an attorney, and 5 percent seek the services of a public adjuster. Obviously, APA would love to see these numbers rise, but in reality, between 93 and 95 percent must navigate the complex process on their own. It’s really an uphill climb because these individuals are going up against professional adjusters, engineers and claims managers who do this type of work on a daily basis. Quinn said that he and APA are constantly on the lookout to challenge this billion-dollar industry. They no longer only sue these companies, but if there are indeed instances of criminal fraud, they work with attorney generals nationwide to have all criminal frauds criminally prosecuted.
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