“Parallax” is a fairly simple physics phenomenon brought to mind by an article in the Insurance Journal(IJ) titled: “Florida Lawsuit Charges United P&C With RICO Violations in Widespread Claims Denials.” (See NOTE #1 below)
Webster defines parallax as an apparent change in the position of an object resulting from a change in position of the viewer. In the rendering above, for example, if the viewer moves far enough to either the right or left he/she wouldn’t even be able to see the moon.
IJ’s article focuses on a suit filed by SFR (Southern Florida Restoration) a company that some in the industry believe is one of many roofers contributing to Florida’s solicitation problem. IJ’s article, however, relies solely on SFR’s complaint which alleges United P&C (UPC) could be part of an alleged problem that’s even worse.
SFR’s complaint accuses UPC of an “unlawful and unethical scheme designed to systematically deny and underpay…claims…of hurricane Irma…policies…no matter how badly people’s roofs were damaged.”
Specifically, “Instead of ensuring that field adjusters created honest, accurate reports to confirm that UPC’s insureds received an assessment that reflected their loss, [UPC] …instructed desk adjusters to modify the estimates created by field adjusters to decrease estimates in order to ultimately decrease the amount of money UPC pays to its insureds when claims are made under the insurance policies.”
SFR stated… “As this scheme has come to light, some field adjusters have stated under oath that UPC commanded them to add language to their reports which was inaccurate and outright false.”
As stated in IJ’s article SFR says one adjuster stated the UPC desk adjuster told him to add wording to his report, that no wind damage was observed when in fact it was observed. That adjuster said UPC employees changed his reports and applied his electronic signature. Another field adjuster said UPC told him to knock his roof estimate down – from $59,000 to about $3,300.
There are copies of text messages from UPC’s adjusting firm FKS, ostensibly sent by UPC to avoid estimating roof damages because the insurer would issue blanket denials. Allegedly those who played along got paid much more quickly. “SFR believes this fraud is widespread and impacting all of assignors’ insurance policies underwritten by UPC” the complaint reads.
There you have it, the essence of the complaint which is, unfortunately, the essence of IJ’s article. Nothing in the article states UPC’s side of the story and typical for an insurer, it appears unwilling to comment on pending litigation—at this writing I don’t have a copy of any response to SFR’s complaint, nor a response to my phone call asking for one…meaning we have only speculation to help us see the moon from a different vantage point.
Consider the following…
- Field adjusters are hired to prepare estimates of the cost to repair a damaged home in the event of a hurricane. They are often paid a percentage of the amount of damage. You could argue this gives them a financial incentive to inflate the claim.
- Field adjusters may also have a financial incentive to move quickly so they can make more money by doing as many estimates as they can in the shortest time possible. Those tendencies can be held in check by having a quality assurance department at the claims TPA (which many carriers do) and re-inspecting a small number of claims to monitor the accuracy of the original damage estimates (which many also do).
- This is also why determining the amount of the covered damage and the amount of the deductible and any limitations on coverage is often done by a different person – usually the desk adjuster.
- The complaint speaks of UPC and/or insurance companies being motivated by profit. I don’t think it’s a stretch to say that many roofers drink from that same well. And I would also ask what UPC’s motive might be since it’s hurricane losses are no doubt subject to reinsurance–after meeting its’ retention limit there’s presumably no direct out-of-pocket loss.
- Finally, to my knowledge to date there’s been no discovery, no depositions and thus no examinations under oath to determine the veracity or context of the witness’s claims and motivations.
The truth is, no one knows what the truth is. It’s a parallax with only one point of view. I’ve spoken to neither party on this matter and will save my opinion for final adjudication.
For now our truth depends on the viewers’ position. What will matter in the end is what position a judge or a jury takes after hearing the facts and applying the law.
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NOTE #1: You can read the full article at the Insurance Journal, here: https://www.insurancejournal.com/magazines/mag-features/2022/01/24/650213.htm or in the event it gets removed by going to my online library: https://johnsonstrategiesllc.com/wp-content/uploads/downloads/2022/03/IJ-SFR-sues-United.pdf
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