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									Adjuster Ethics 2010: The Ethics of Adjusting Property Claims
PLRB / LIRB 2010 Large Loss Conference – New Orleans, LA
November 15-17, 2010

                       Problem One – The Good Widow and the Bad Roof

       A 4,500 square foot Civil War-era residence suffers damage from a significant

windstorm.    The owner, a sweet grey-haired widow, is well known in the community for

providing a place to stay for families of out-of-town children undergoing medical treatment at a

nearby hospital. All of the wind damage is to the slate roof, and to bedrooms used by families.

       You are the independent adjuster hired by the Bayou Insurance Company (“BIC”).        You

will report to BIC’s claim manager, with copies to BIC’s CAT reinsurer. Having grown up in

the town, you know the owner and her charitable work. The damage to her property has received

sympathetic attention in the local press.

       The policy covers on an actual cash value basis. Your roof consultant sees some signs of

pre-storm decay. The owner claims minimal depreciation and insists that the roof was in top

condition. You record the “as claimed” amounts in the claim system, noting that the owner’s

estimate appears high by about $15,000.

       You meet with the owner for lunch at her son’s restaurant to go over the estimates. She

says that she wishes your roof person had come in with higher numbers. You offer to go through

the estimates with her. The owner says “never mind the estimates, I need cash. State aid has

dried up.” Through tears, she explains how $15,000 will fund a badly needed new furnace and

kitchen appliances and it is the only way to keep her charitable work going. She asks for your

help. As the lunch wraps up, she mentions that the meal is on her son.

       The next day you call the BIC claims manager. You diplomatically mention that the

owner sees her loss as $15,000 higher than your estimate. To your surprise, the BIC claims

manager says that the company is afraid of bad publicity. The manager urges you to meet with

your roof expert and to “do whatever you have to do” to write the claim up for the full amount

asked for by the owner.    What are the ethical issues? What will you do?
Rule School: The Ethics of Adjusting Property Claims
PLRB / LIRB 2010 Annual Conference - San Antonio, Texas
March 21 – 24, 2010

                              Problem Two – Vendors and Vintages

       A fire causes extensive damage to a high-end residence, including a wine cellar and its

collection of rare vintages. You are assigned to adjust the claim. You go to the site to meet with

the owner.    At the meeting, the owner asks if you can recommend a clean-up and repair

contractor. You know that the company encourages adjusters to suggest pre-approved vendors.

From the top of the list provided by the company you suggest SuperClean, which has a good

reputation and a nearby office. Concerned about proper restoration of his cellar, the owner asks

if he should check the vendors’ references. You tell him that the vendor is pre-approved by the


       As the meeting is breaking up, the owner asks you if he should hire a public adjuster. He

mentions PA Sam Slick. You tell the owner that it is up to him if he wants to spend his money

on a public adjuster, but if you were him you would wait or at least get someone better than Sam

Slick. As you are leaving, the owner offers you a fine vintage bottle of Pétrus, just to help you

“understand” his wine cellar loss. You graciously decline, but to avoid being rude you accept a

couple of bottles of smoke-exposed screw-top Ernest Gallo chardonnay.

       Ten days later you are on a golf vacation in San Diego hosted by the guys from

SuperClean. Your cell phone rings; Sam Slick is on the line and he is angry. Slick has a

relationship with the insurance agent that produced the policy. Slick has heard that you told the

owner not to hire him. Slick threatens to hire a lawyer to sue you for slander and to report you to

the Insurance Commissioner. You apologize. After he calms down a little, Slick reminds you

that you and he are still $25,000 apart on an old claim involving a different insured. Slick says if

you will split the difference on the old claim so everyone can close their files, he will give you a

pass on bad-mouthing him out of a job here.

       What are the ethical issues? What will you do?
Rule School: The Ethics of Adjusting Property Claims
PLRB / LIRB 2010 Annual Conference - San Antonio, Texas
March 21 – 24, 2010

                                   Problem Three – Bayou Bob

       A homeowner preparing his favorite gumbo recipe suffers a fire that originates when his

roux ignites. Damage is serious. The owner had a tenant. Both the owner and tenant must find

other living arrangements. The company hires you ten days after notice of the loss. As the home

is located in the back woods, and you were told that the insured has a place to live, you decide to

combine your inspection with a planned fishing trip a week later.

       When you arrive at the loss location you meet Bayou Bob, the 78 year old Cajun owner.

Communicating with Bob is difficult given the language barrier and his age. You try to explain

your role as an independent adjuster. You give Bob names for restoration contractors. You tell

Bob to submit his claim as soon as he can. Bob seems to grasp that his building and contents are

covered, but you can’t tell if he understands his lost rents and additional living expense coverage.

       Two weeks later you receive estimates in the mail from Bob for repair of the home and

contents replacement. They are reasonable. Each week you try several times to reach Bob by

telephone to go over his claim, but without success. Five weeks later, you fax the estimates to

the insurer with a note suggesting a $5,000 reserve for Bob’s living arrangements and lost rent.

       The insurance company’s claim manager Sue Strict e-mails you back. Strict is unhappy.

She informs you that it is not your job to prepare Bob’s claim. She wants you to pay the claim as

submitted. You write an offer to settle on Bob’s estimates but do not send it because you feel

bad about leaving out ALE and lost rents. Days later you retrieve a voicemail from Bob.

Although the message is not entirely clear, you think Bob is saying that he has been living with

in-laws and they have been fighting. You can tell he is upset and extremely anxious to get his

home repaired. You understand that Bob wants repairs to start now, and that he is eagerly asking

if you can get him payment in five days on the claim he submitted. What are the ethical issues?

What will you do?
Rule School: The Ethics of Adjusting Property Claims
PLRB / LIRB 2010 Annual Conference - San Antonio, Texas
March 21 – 24, 2010

                                      Problem Four – Rug Rats

       Heavy winds damage the roof of a $1 million dollar home. Wind driven rain enters the

home. Included in the damage are several large rugs that appear to be Persian.

       The property insurer assigns you to adjust the claim. You promptly schedule a site

inspection. You retain a rug consultant, Ralph the Rug Guy. The homeowner greets you at the

house. She explains that the carpets were handed down and she does not know their worth,

although she always assumed they were quite valuable. Ralph the Rug Guy is unavailable, so

Ralph Jr. inspects the carpets in his father’s absence. He explains that he thinks they are

machine made, worth very little, perhaps a total of two thousand dollars. The homeowner seems

resigned, although she says she may ask a local rug store to look at them. You set a reserve that

assigns a $2,000 value to the rugs, and diary the file ahead for 60 days.

       A few weeks later the homeowner faxes you a $95,000 estimate for the rugs along with a

report from Arthur T. Gregarious, a specialist in Persian rugs. You send the information to your

consultant Ralph, Jr. Ralph, Jr. immediately offers to write up his own estimate along with his

opinion they are worth $2,000. You tell him to go ahead. Ralph Jr. adds off-the-record that his

father has looked at the photos and thinks two of rugs might be hand made and valuable, but

Ralph Jr. assures you that he will stand behind his $2,000 figure.

       You mention the $95,000 claim increase to your claims manager. He reminds you that

your reserve for the rugs is $2,000. A change over $50,000 requires you to submit a reserve

adjustment memo to senior claim management and appear before the claim committee. You

assure him this won’t be necessary.

       What are the ethical issues? What will you do?

Rule School: The Ethics of Adjusting Property Claims
PLRB / LIRB 2010 Annual Conference - San Antonio, Texas
March 21 – 24, 2010



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