Trying to Kill Supplements?


#1

Any comments or concerns about this bulletin? NTRCA mailed it out to members today. It seems like strict enforcement of this will prevent homeowners from receiving proper payouts on their claims, and proper repairs by a quality contractor who has insurance, trained crews, etc. “Negotiation” might be interpreted very broadly to include any discussion between a contractor and an insurance company regarding a supplement request or estimate for repairs.

**COMMISSIONER’S BULLETIN #B-0017-12
**
June 26, 2012

TO: ALL AGENTS, PUBLIC INSURANCE ADJUSTERS, AND ADJUSTERS, AND TO ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, COUNTY MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, AND OTHER INSURERS WRITING PROPERTY AND CASUALTY INSURANCE IN THE STATE OF TEXAS

RE: Adjusting claims by unlicensed individuals and entities

It has come to the attention of the Texas Department of Insurance that a number of contractors, roofing companies, and other individuals and entities not licensed by the department have been advertising or performing acts that would require them to hold a public insurance adjuster license. Additionally, the department has learned that the tactics used by these unlicensed individuals include visiting neighborhoods and areas of the state where languages other than English are commonly spoken. These unlicensed individuals often prey on unknowing consumers by promising to ‘work’ insurance claims to achieve a higher settlement.

All agents, adjusters, and insurers should be mindful that, pursuant to the Insurance Code Chapter 4102:

  1. A person who, for direct, indirect, or any other compensation, acts on behalf of an insured to negotiate or effect the settlement of an insurance claim is performing the acts of a public insurance adjuster.

  2. A person who advertises, solicits business, or holds himself or herself out to the public as an adjuster of claims for loss or damage under any policy of insurance covering real or personal property is also performing the acts of a public insurance adjuster.

With limited exceptions, a person performing the acts of a public insurance adjuster or holding himself or herself out as a public insurance adjuster in this state must be licensed under the Insurance Code Chapter 4102. Additionally, insurers cannot utilize roofers as de facto public insurance adjusters nor provide commissions to them in the form of direct or indirect payments or rebates that are in excess of amounts owed under the policy.

The department takes seriously the harm unlicensed individuals and entities can cause on the marketplace when they prey on unsuspecting consumers and the industry. I urge insurers, agents, adjusters, and consumers to help call attention to and halt attempts by unlicensed persons to negotiate insurance claims, and I encourage everyone to report these practices to the department and the TDI Fraud Unit (1-800-252-3439 - Report Fraud).

The Insurance Code provides for both civil and criminal penalties for violating this licensing requirement. The department will refer unlicensed persons performing the acts of a public insurance adjuster to the Texas Attorney General, pursue all remedies available under the Insurance Code, and highlight these practices to the Legislature so that it may consider further steps to regulate these persons and activities.

Eleanor Kitzman
Commissioner of Insurance

For more information contact:
ConsumerProtection@tdi.state.tx.us


#2

Not sure how that kills supplements. Two parts to this if not more. First, as a contractor, if you determine a line item that is absent from the scope of loss is required to make a repair, a supplement is required. That’s not negotiating, it is submitting the requirement. In the event the insurance company denies that line item, you then go to the HO, advise them of the need for the line item, ask them if they’d like for you to make the repairs without the line item or if they’d like to contact their insurance company to have it approved. Again, the contractor is not negotiating with the insurance company. If the insurance allows 34 squares for roof material and you know it is going to take 36, you can submit a supplement. If it is denied, again, you go to the HO and advise they will end up with 2 squares of open roof if you follow the insurance scope. Would they be okay with that, would they like to pay for the additional 2 squares or would they like to call their insurance company to demand they pay for a full roof replacement? The contractor cannot be accused of negotiating.

The problem with the Texas Department of Insurance is they have their head up their collective arses. The Insurance Companies are the ones most often negotiating. They made a deal, through the policy/contract they have with their Customer, to provide a certain level of coverage. When the time comes to pay a claim, they often omit necessary line items and under estimate quantities in order to under pay the claim. This is the first line of “negotiation” as they are negotiating to get the HO to accept less coverage than they were obliged to get and potentially to hire a under qualified contractor or come out of pocket to make the repair when their policy/contract allows them a contractor of their choice with the only out of pocket being their deductible.

The second negotiation comes when the wise HO contracts a quality, knowledgeable Contractor to make their repairs. The knowledgeable, competent Contractor sees all the omissions and shortages and subsequently provides the HO with a realistic estimate for making the needed repairs in a complete and quality manner. This is the “supplement”. The slightly inexperienced but knowledgeable, competent Contractor attempts to get this supplement approved without the HO’s support or involvement. Insurance Company uses all tools at their disposal and uses Russian Style negotiation tactics to brow beat the Contractor and avoid honoring their policy with the HO by properly paying the claim. Contractor then attempts to “negotiate” to find a reasonable middle ground where they can provide satisfactory repairs while doing it for a price the insurance agrees to and is still profitable. Real question here is, who actually initiated the negotiation? Cause and Effect.

Experienced Knowledgeable Contractor reviews their estimate with HO showing them how the insurance company omitted and under estimated items on their scope. They discuss the process for fixing this problem. They have the HO sign their estimate as the contract with the HO submitting the estimate to the insurance company. They set the HO’s expectations for what is to come. When the insurance field or desk adjuster calls the HO to tell them they need three bids, their contractor is gouging them and all the usual under handed unethical crap, the HO immediately tells them to pound sand, they have the right by the terms of their policy to a Contractor of their choosing, they’ve made that choice and the insurance company needs to approve their Contractor’s estimate ASAP to avoid a bad faith claim. Now when the insurance company calls the Contractor, it is absolutely clear who is attempting to negotiate. It should be equally clear no law has been violated by the Contractor.

The question HO’s should be asking is why a government entity such as TDI be working so hard to screw the citizens they were elected or appointed to serve? When enough Contractors and HO’s start following the correct process and taking the additional steps to report bad faith claims, crooked Adjusters and refused to be bullied by these big P&C Insurance companies, these stupid and unethical laws and rules will change to actually protect the people they’re supposed to.


#3

Well said AD.
I think you should sell what you wrote to every roofing contractor in Texas for at least $25.
Excellent rebuttal to the Ins Commissioner.
1600 roofing co.'s in Dallas alone.
Just got back from some extra training there.


#4

Nothing more than the same attempt being made in other states. Minnesota is the first state however, to defeat the no negotiating restrictions attempts being pushed around the country by the insurance lobbies.

At the MN hearing, because enough contractors educated themselves on the issue then got off their behinds and spoke up about how such bulletins, legislation, rule, etc. making would negatively affect millions of property owners (AKA voters and taxpayers), the bill sponsors rightly removed the no negotiating restriction language. Still, apparentnly oblivious to why the legislators removed the language, at the end of the hearing, Independent Insurance Federation of MN Pres Bob Johnson said he thought the issue would need to be revisited in the future. That says it all regarding who’s really behind it.

IMHO, it ultimately comes down to a Constitutionally protected property rights issue. What the dense politicians who buy into the P&C insurance lobby’s sales presentation re: no negotiating legislation don’t consider is the harm such nonsense will cause to any of the 85 million or so insured property owners across the country unfortunate enough to have to file a claim. Interestingly but not suprisingly, most of the bureaurcrats and politicians who put their support behind such bulletins, regs, legislation, rules, etc. are connected to the P&C ins industry. I believe that all of the legislators behind the GA bill were/are employed by P&C ins.

All in all, this is an easy one. It appears that SF is behind the push through ALEC who then proposes the template no negotiating legislation to lawmakers on a state by state basis at their annual get togethers. Texas appears to be the latest target with their P&C industry friendly insurance commissioner Eleanor Kitzman (another inept bureaucrat and attorney with no practical real world business experience) supporting “no negotiating” all the way.

The following article about Kitzman is very telling:

statesman.com/news/texas-pol … 48674.html

Protecting the citizenry? I don’t think so. Busy-body do-gooder bureaucrats causing more problems than they prevent, to be sure. One of my favorite writers, WSJ economist Stephen Moore had this to say about them in his article entitled “Atlas Shrugged”, From Fiction to Fact in 52 Years”:

“For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises – that in most cases they themselves created – by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.”

Scribes and Pharisees…

Then there’s multi billionaire Diane Hendricks of ABC supply who recently bought a P&C insurance company with the many millions of dollars she’s earned over the years selling building products to contractors across the country, many who do insurance restoration work which requires specialized skills in order to NEGOTIATE on behalf of insured’s so they get paid everything their P&C ins company promised.


#5

Larry, just thought I’d mention.Got off the phone this morning with State Farm.Last 4 Overhead and Profits approved TODAY, one even was an old claim.Had another O/P come in last week with State Farm.5 for 5 ain’t bad.Took the gloves off with Allstate this morning and sent in a RTA supplement.He WOULD NOT pay for chimney,or pipe jacks but his cohort sure did yesterday.Had to work this claim WAY toooo… much to just go away without O/P either.Sent a note to adjuster and cc to homeowner that I may have to get agent or any superiors involved if this keeps up.

Larry and 3RSTimax been very very good to me. :smiley:


#6

Larry, you have a pm.


#7

AD - Thanks for the detailed reply. Very useful info.


#8

I dont think the Texas bulletin has anything to do with trying to kill supplements. Supplements are a by-product of a bigger problem. The bulletin is trying to put an end to the widespread practice of storm chasers actually handling all aspects of claims, many of which are questionable, for building owners. The problem is rampant…“we will get you a free roof”, “we are insurance negotiation experts”, etc. They handle all aspects of the claim. The insurer never even sees or hears from its insured. Let’s be honest. Guy knocks on your door and says…“Sign this and I will get you a free roof from your insurance company. You dont have to do anything”…most building owners are going to sign it. Regardless of whether the roof actually has damage.

The problem in this situation is that the roofer’s incentive is to get jobs and maximize profits. Questionable claims are pursued. Estimates are high. Conversely, the building owner’s incentive is merely to fix his damage, if there is any, and be put back in the same place he was before the storm. This is also the insurer’s obligation under its policy. The involvement of the roofer, or any contractor, in the claims negotiation process changes the dynamics.

Claims handled by building owners themselves proceed very differently than claims handled entirely by roofing contractors on behalf of homeowners. The latter is the practice this bulletin seeks to end. If someone wants help with their claim, they can hire an attorney or public adjuster (both of which operate under highly regulated schemes).

Now with that said, in some claims the roofing contractor plays a valuable role in assisting the building owner and the insurer–there can be a productive dialogue. In those cases, the insurer turns a blind-eye and doesn’t complain about the contractor being involved in what could be called “negotiations”. Scope of repair and cost of repair is agreed to. The claim gets worked out.
The damage is repaired. And everyone is happy. This happens all the time doesn’t it? But when the roofer completely handles a claim where there is no real damage or (and) submits crazy inflated pricing, this bulletin and its underlying statute step in and allow the insurer to request that it negotiate only with its insured.


#9

[quote=“InsurerPerspective”] If someone wants help with their claim, they can hire an attorney or public adjuster (both of which operate under highly regulated schemes).

Or, if they wish, why don’t they have a right to utilize the skills of a competent Contractor who doesn’t charge them 33% or 10% of the claim? Who are you kidding dude, highly regulated schemes? Just like how the Insurance Industry is highly regulated, right? You did get the “scheme” part of the description correct though.

Now with that said, in some claims the roofing contractor plays a valuable role in assisting the building owner and the insurer–there can be a productive dialogue. In those cases, the insurer turns a blind-eye and doesn’t complain about the contractor being involved in what could be called “negotiations”. Scope of repair and cost of repair is agreed to. The claim gets worked out.

Blind eye? Now you’ve said a mouth full. You can’t imagine how many Customers we’ve worked with where the Adjuster who came to the property for the initial inspection turned a totally blind eye towards the damage. You need to take off those rose colored glasses and grasp reality, you clearly are so biased at this point you have no clue.

The damage is repaired. And everyone is happy. This happens all the time doesn’t it? But when the roofer completely handles a claim where there is no real damage or (and) submits crazy inflated pricing, this bulletin and its underlying statute step in and allow the insurer to request that it negotiate only with its insured.[/quote]


#10

[quote=“InsurerPerspective”]I dont think the Texas bulletin has anything to do with trying to kill supplements. Supplements are a by-product of a bigger problem. The bulletin is trying to put an end to the widespread practice of storm chasers actually handling all aspects of claims, many of which are questionable, for building owners. The problem is rampant…“we will get you a free roof”, “we are insurance negotiation experts”, etc. They handle all aspects of the claim. The insurer never even sees or hears from its insured. Let’s be honest. Guy knocks on your door and says…“Sign this and I will get you a free roof from your insurance company. You dont have to do anything”…most building owners are going to sign it. Regardless of whether the roof actually has damage.

The problem in this situation is that the roofer’s incentive is to get jobs and maximize profits. Questionable claims are pursued. Estimates are high. Conversely, the building owner’s incentive is merely to fix his damage, if there is any, and be put back in the same place he was before the storm. This is also the insurer’s obligation under its policy. The involvement of the roofer, or any contractor, in the claims negotiation process changes the dynamics.

Claims handled by building owners themselves proceed very differently than claims handled entirely by roofing contractors on behalf of homeowners. The latter is the practice this bulletin seeks to end. If someone wants help with their claim, they can hire an attorney or public adjuster (both of which operate under highly regulated schemes).

Now with that said, in some claims the roofing contractor plays a valuable role in assisting the building owner and the insurer–there can be a productive dialogue. In those cases, the insurer turns a blind-eye and doesn’t complain about the contractor being involved in what could be called “negotiations”. Scope of repair and cost of repair is agreed to. The claim gets worked out.
The damage is repaired. And everyone is happy. This happens all the time doesn’t it? But when the roofer completely handles a claim where there is no real damage or (and) submits crazy inflated pricing, this bulletin and its underlying statute step in and allow the insurer to request that it negotiate only with its insured.[/quote]

Geeeeeeeeeeeeeeeeeezzzzzz…


#11

Drove by a house again today.I 'd stopped by a while back to offer my services.Just introduced myself.Eventually our outfit was called and me being the ‘one’ that handles theses things I went over.Wouldn’t share the scope with me and said he was going to do the negotiating and get the O/P etc.I told him we have a process that we are good at and we do it the right way or not at all.I left him to figure things out for himself.He still doesn’t have the roof on and I doubt it is going smoothly for him.My philosophy is this.

ELF

Easy
Lucrative
Fun
If it doesn’t fit my criteria I can find one that will.


#12

InsurerPerspective - I think you may be correct about the focus of the Bulletin. The mention of predominantly non-English speaking neighborhoods indicates that it may be focused on “scams”, but I still don’t like the way it’s written.

If TDI really wanted to help improve things, they would focus on eliminating all the different forms of “covering deductibles”. If the homeowner had some skin in the game, the “Free Roof” crowd would have a lot harder time getting homeowners interested. We have called them and the TX Attorney General, and it’s hard to get a straight answer from them on what they are doing to enforce deductible rebates. We lose a lot of work to the deductible covering crowd, but it’s not the work that we are really bummed about missing.

AD - Public Adjusters - EXACTLY. Insurance companies thinking: Honestly, are you really going to take the time to take us to Appraisal every time we decide not to pay for a few pipe jacks and vents? I doubt it, so… we’re not paying.

Insurance companies are great at crunching numbers, and they know that they save money by only greasing the squeakiest wheels.


#13

Someone rear-ended my vehicle last year. The adjuster wrote out a check for $2500.
By the time the dealership had fixed my car and worked things out with the insurance company, they ended up paying $5,500.

I just assumed that the dealership - being in the business of repairing cars - had the requisite knowledge to work with the insurance company to restore my car to it’s previous condition.

Silly me. I should have hired an attorney - or a public adjuster - to negotiate with the insurance company. Oh well, I’ll know better next time. (By the way, anyone seen that TDI bulletin forbidding body shops from “negotiating” with insurance companies?"


#14

[quote=“InsurerPerspective”]I dont think

Perhaps we have reached the heart of the matter in your first three words.

the Texas bulletin has anything to do with trying to kill supplements. Supplements are a by-product of a bigger problem.

**You’re correct. Supplements are the by-product of a bigger problem. A supplement, as defined in Merriam-Webster’s Dictionary is as follows:

Sup-ple-ment (noun)

1 a: something that completes or makes an addition.

The online dictionary defines it as “something added to complete a thing.”

Now if supplements are a by-product of a bigger problem (of which I agree with you 100%) and a supplement is something that is added to complete a thing I think we can easily identify what the bigger problem is, can’t we? Just what exactly is a supplement supplementing? Does not a supplement actually “supplement” the original insurance adjuster’s scope of loss? I believe we have identified the “bigger problem.”**

The bulletin is trying to put an end to the widespread practice of storm chasers actually handling all aspects of claims, many of which are questionable, for building owners. The problem is rampant…“we will get you a free roof”, “we are insurance negotiation experts”, etc. They handle all aspects of the claim. The insurer never even sees or hears from its insured. Let’s be honest. Guy knocks on your door and says…“Sign this and I will get you a free roof from your insurance company. You dont have to do anything”…most building owners are going to sign it. Regardless of whether the roof actually has damage.

I’m not sure I understand why this is a problem from an insurer’s perspective. If there is no damage the adjuster will come out and deny the claim. By the same token, I have inspected many damaged properties where an insurance adjuster has already done his/her inspection and missed all kinds of damage. I have done hundreds of take offs and I can within a reasonable degree of certainty tell you that the % of properly scoped damage take offs coming from insurance adjusters is in the low single digits.

The problem in this situation is that the roofer’s incentive is to get jobs and maximize profits.

A roofer’s incentive is to get jobs and maximize profits and that is a problem in your eyes? So tell me, just why exactly do you think a roofer is in business if it’s not to get jobs and maximize profits? Isn’t this the reason any contractor is in business? Is it possible that an insurance company has the same incentive, to sell policies and maximize profits? Would you consider that a problem too?

Questionable claims are pursued.

By the same token unquestionable claims are denied or seriously lacking in proper scope.

Estimates are high.

By whose standards? Xactimate’s? The insurance companies? A contractor’s estimate is going to be high compared to yours because you have absolutely no clue what it takes to get the job done. You open up your Xactimate program, do your sketches and insert your boilerplate macro that is given to you and try to BS the homeowner into taking your lowball offer.

Conversely, the building owner’s incentive is merely to fix his damage, if there is any,

His incentive is also to have his damage fixed properly and by a contractor he trusts to do the work.

and be put back in the same place he was before the storm.

You better be careful here. Have you ever approved only half of a roof? Did not the building owner have shingles that were the same age, made by the same manufacturer and have the same color on his entire property before the storm?

This is also the insurer’s obligation under its policy.

If indeed the insurer’s obligation under its policy is to put the property owner back in the same place he was before the storm, then the homeowner should have shingles that are the same age, made by the same manufacturer and have the same color on his entire property as before the storm.

The involvement of the roofer, or any contractor, in the claims negotiation process changes the dynamics.

**Sure it does. It means the homeowner actually has an expert telling him what it is legitimately going to cost to get the repairs done. How many roofs have you installed? How many square feet of carpet or vinyl flooring have you installed? How many windows have you replaced? How much plumbing or electrical work have you done? How many flooded or fire/smoke damaged houses have you restored? Do you take the time to do a ventilation analysis for the homeowner? Do you tell them that the three box vents they have on their roof is inadequate and the local building code actually requires 8? Do you tell them that they have the ordinance or law endorsement, explain to them that with that endorsement their insurance policy will actually pay to have those extra vents installed on their roof even though they are not there now?

Your right. Having a contractor involved does change the dynamics. It means the homeowner is less likely to get screwed.**

Claims handled by building owners themselves proceed very differently than claims handled entirely by roofing contractors on behalf of homeowners.

**Building owners themselves are for the most part NOT experts on what it takes to get their property repaired and therefore are more susceptible to having another NON-EXPERT tell them they are paying them enough to get the job done.

I will add another comment here. I do not believe that any claim should be handled entirely by a contractor. It is the homeowner’s property and they are the ones who make the ultimate decisions about what gets done and who does it. **

The latter is the practice this bulletin seeks to end. If someone wants help with their claim, they can hire an attorney or public adjuster (both of which operate under highly regulated schemes).

Answer me one simple question here. How many times have you ever recommended to one of your policyholders that they hire an attorney or a public adjuster?

Now with that said, in some claims the roofing contractor plays a valuable role in assisting the building owner and the insurer–there can be a productive dialogue. In those cases, the insurer turns a blind-eye and doesn’t complain about the contractor being involved in what could be called “negotiations”. Scope of repair and cost of repair is agreed to. The claim gets worked out.
The damage is repaired. And everyone is happy. This happens all the time doesn’t it? But when the roofer completely handles a claim where there is no real damage or (and) submits crazy inflated pricing, this bulletin and its underlying statute step in and allow the insurer to request that it negotiate only with its insured.

Can you also cite the statute that steps in and helps out a homeowner when an insurer completely denies a claim where there is real damage or (and) submits crazy deflated pricing? Or perhaps it is at this point that you recommend to the homeowner that they hire an attorney or public adjuster?

[/quote]


#15

You’re kungfu is strong stew.

I’m so proud to be a member of this community.


#16

dstew, remind me to never get into a battle of words with you. LOL Very well said, it’s too bad I can only give you a thumbs up once. Something tells me insurerperspective will be inclined to let this one go, I think he got thoroughly worked over.


#17

Well said, dstew66! :smiley:


#18

Thoroughly worked over? Inclined to let this one go?

Hardly.

I appreciate the dialogue. I know you have your perspective. I understand it. I’ve heard it many times before. I stumbled across this site last week and thought I would give the insurer perspective on this issue–one that appears in a lot of threads on this board. You can bark, criticize, complain, etc. But its an issue all of us, on both sides of the issue, are going to have to continue dealing with.

Again, I appreciate the dialogue.


#19

It’s always interesting to gain a perspective from people who are totally out of touch with reality. Keep posting please.


#20

OK. I will play along.

Let me point out the reality that my position is supported by the bulletin from the Texas Department of Insurance. May I be so bold to note that those who refuse to accept the clear current state of the law are the ones totally out of touch with reality.

Or is my posting on this board one of those . . . a sane man appears insane in an insane society . . . situations?