Author Archives: empirepa

Xactimate Controlled by the Insurance Industry

Xactimate Controlled by the Insurance Industry

Previously I discussed how Xactimate’s pricing is going down while national building material prices are going up. One theory I advanced was that insurance companies are the largest customers of Xactimate and therefore Xactware is simply giving its customers what they want.

However, the truth is much worse than simply that. Xactware is owned by the insurance industry. Xactware is a subsidiary of Verisk Analytics. Verisk was formed to be the parent company of the Insurance Services Office (ISO) which is an organization of which the readers of this blog should be well aware. If not, ISO is the company that has unified the insurance policy forms for the insurance industry and has slowly changed the forms to narrow coverages and increase exclusions. Verisk was a privately held company owned by insurance companies up until a 2009 initial public offering. While currently a publicly held company, Verisk’s main shareholders remain insurance carriers.

It is important for individual insureds to understand who is making the determinations on their claims. While the average insurance consumer understands that the insurance companies are making decisions concerning what needs to be repaired, they likely assume, incorrectly, that the prices included in the estimate are set by the market and not the insurance companies. In the end, check the prices in your estimates, if you are unsure about the prices, consult a public adjuster or attorney.

Why Does the Insurance Industry Consider its Customers Crooks?

Several years ago, I noted in a post, Are Insurance Fraud Statistics Fraudulent?, that some insurance companies seemed to have declared war on their own customers by calling them cheats and frauds:
A more skeptical person may assume these statistics are made up by the insurance industry and broadcast by their paid spokespeople to assuage anger over their exorbitantly high premiums. A highly respected claims expert…suggested to me that the insurance industry propagandists are engaged in a wrongful attempt to create a culture where society suspects all claims are fraudulently created or inflated. It does not take a genius to figure out why insurance companies would love to encourage this myth among the general populace.

Still, there is great danger in an insurance culture where the investigators and public view all claims as possibly fraudulent. It is sort of like saying otherwise patriotic citizens are no longer patriotic because they question a war or government decision. Yet, from what many of us see in the claims environment, some Special Investigative Units (the fraud department) treat their insurance customers as guilty crooks before analyzing any evidence. They have a ‘guilty until proven innocent’ mentality in their treatment of their own customers….
In Insurance Fraud Expert Admits Insurance Industry Makes Up Statistics, I cited that an insurance fraud expert, Barry Zalma, admitted that the insurance industry makes up statistics regarding the amount of fraud that goes on:
[T]he insurance industry…claims a significant number of all its customers are crooks. Zalma’s logic and that of the insurance industry is similar to the logic of McCarthyism prevalent in the 1940′s and 1950′s. Then, thousands of Americans were accused of being Communists or communist sympathizers. They became the subject of aggressive investigations and questioning before government or private-industry panels, committees and agencies. The suspicions were often given credence despite inconclusive or questionable evidence. Here, the insurance industry cites some specific examples of wrongdoing and then somehow extrapolates those very few examples to justify ridiculous statistics….Thus, the industry then makes up “suspicious” claims which others…cite to be actual fraud.
I am not saying that insurance fraud is right. It is wrong. I am not saying it is rare because it is not.  To be fair, the statistics the insurance industry cites include “medical buildup” claims and other types of insurance fraud not related to first party claims by its own customers. But, is there an epidemic of policyholders engaged in insurance fraud against their insurance carriers?

For example, State Farm advertises about its arson dog program and claims it does it to “help combat arson fraud and increase community awareness of the problem.” How many State Farm customers commit arson for the purpose of insurance fraud? Very, very few. While all arson is a problem, arson fraud is the least common of the six types of arson with the FBI statistics noting arson for profit (arson fraud) as 5%. So, why does State Farm advertise “arson fraud” as the problem when 95% of arson is caused for other reasons? Do you really think that State Farm’s book of business is loaded with stereotypical arson for fraud perpetrators? Why doesn’t State Farm advertise about trying to help stop the common causes of accidental and intentionally set fires, but instead focus publicity on one of the least likely causes of fire loss?

My late friend and colleague Eugene Anderson said that ‘if the insurance industry is right about its statistics of fraud, insurance is the most defective product ever invented by man because it makes otherwise innocent customers into crooks.’ Amen.

In California, Insurance Company Adjusters Can Be Sued for Negligent Misrepresentation

In California, Insurance Adjusters Can Be Sued for Negligent Misrepresentation

Recently, a California appellate court held that a policyholder can assert a negligent misrepresentation claim against an insurance adjuster.1

In the underlying bad faith suit, the homeowners (the Bocks) sued Travelers for low-balling their claim for property damage caused by a large tree limb crashing into the home and damaging among other things, the chimney, the windows and the home’s interior. As part of the lawsuit, the homeowners also sued the claims adjuster (Hansen) individually for negligent misrepresentation. At the initial pleadings stage, the lower court held that as a matter of law the claims adjuster could not be held liable for negligent misrepresentation. Consequently, the claims adjuster was able to obtain a dismissal. The appellate court said, not so fast. In reversing the judgment that was in favor of the claims adjuster, the appellate court found that when supported by appropriate facts, an insurance company’s agents and employees do have a duty to the policyholder and can be held personally liable for committing an independent tort in the course of handling a claim.

The misrepresentation at issue, at least as alleged by the homeowners, was the claims adjuster informing them that their policy did not cover the cost of the clean up when in fact it did. What I actually found more interesting was the other alleged conduct of the adjuster:

  • When the adjuster arrived at the home to inspect the loss, he told the homeowners that he only had minutes to review the damage, and in fact spent no more than ten to fifteen minutes at the home.
  • Before the adjuster took pictures of the damage, he pushed several branches out of the living room window. When the adjuster was asked why he had not taken the pictures first, he ignored the homeowner as told her to “clean up the mess” and demanded that she clean up the living room.
  • The adjuster also removed the tree limbs leaning against the chimney before taking any pictures.
  • In addition to telling the homeowners that cleanup was not covered under the policy and that they should contact “friends and family members with chainsaws” to clean up the limbs and the mess in the house and backyard.

Assuming that the above is what actually happened, does anyone think that this is a proper claims investigation?

Revisit Flood Insurance

Do You Need Flood Insurance?  Do you have Flood Insurance?

Many Floridians are finding out the hard way on the two questions above!

We would like to reach out to EVERYONE at this time to remind you to check your insurance policies and see if your coverage includes flood insurance. More often than not, separate flood insurance is an afterthought. Hurricane & Tropical Storm victims remain stunned to find out that they do not have flood insurance coverage. This kind of tragedy acts as a reminder for all property owners that they should know their insurance policies and ensure that their coverage is sufficient for them during an active hurricane season. Note that flood insurance is usually excluded from a typical homeowner’s and or Business Policy, and separate flood insurance must be purchased in order to be covered.  An All Risk Property Policy for the myriad of perils does NOT cover Flood or Earthquake.


Claims Questions or Help – Call A Professional – Empire Public Adjusters, Inc. Call:  866-214-7461