Monkey See! Monkey Do.
The Collapse of aHurricane Claim Webcast
Proper Preparation Precedes Powerful PerformanceClowning around with America's largest monkey farm.
And guess who slipped on the banana peels?
DUTIES OF THE INSURED IN EVENT OFLOSSGeneral Conditions Claims Activated ObligationsYour Duties in Event of Loss:As often as we (the carrier) reasonably requireItem c:Show us the damaged property; Provide us with the records and documents we request and permit us to make copies; andSubmit to examinations under oath while not in the presence of any other named insureds and sign the same. Item d: Send to us, within sixty (60) days after our request, your signed, sworn proof of loss (a legal document typically unknown to most insureds) which sets forth, to the best of your knowledge and belief:The time and cause of loss;Your interest and that of all others in the Covered Property involved, and all liens on the Covered Property;Other insurance which may cover the loss;Changes in title or occupancy of the Covered Property during the term of the policy;Specifications of damaged buildings and detailed repair estimates;The inventory of damaged and undamaged personal property described in policy
AGENT NO SHOW!
CAN YOU IMAGINE NOT SEEING OR MEETING WITH YOUR AGENT AT RENEWAL?
FOR NINE CONSECUTIVE YEARS!!
Agent's adequate analysis of insured?Insured's honest and reasonable state of mind?Does the insured have a clue of what the claim process will bring?
DISCOVERY POLICY PEEL Adjusting discovers faulty property schedule design = Agent
Adjusting uncovers underwriting errors / vacancies = Agent
Adjusting unveils lack of professional competence = Agent
Adjusting may expose you to professional liability = Agent
Imagine the underwriting black hole on this policy
Displaying the inept fiduciary conduct of insured
Comprehend the vast agent liability there could be
And then the claim hits and everyone scatters?
Shaking the tree
The claim investigation begins.
WHERE WAS THIS POLICY PRODUCED?Role of your Agent / BrokerRole of your UnderwriterRole of your Executive Review accuracy, updates, values
WHO PRODUCED THIS MANUSCRIPT?Does it square with your notes and coverage needs?Who is documenting Best Practices of this risk placement?Do you have backup communications (emails, boards notes, phone calls) made to agent / broker to validate policy designs?
GIVE ME ALL YOUR BANANASAdjuster discovers coverage defects in policy construction
Adjuster enlightens insured to erroneous property valuations
Adjuster appraises coinsurance calculations / penalties
Adjuster relays new relevant risk info to carrier exposes fraud
Adjuster does not answer to the agent just claims department
DESIGN x DETAILS = SUCCESSDIGITAL DOCUMENTATION OF BUILDING CONDITIONS PRE-HURRICANE SEASON CRITICAL FOR CLAIMS.
MATCHING BUILDING VALUES AND LOCATIONS.
COINSURANCE PERCENTAGE AND PENALTIES.
DIGITAL STORAGE OFF-SITE OF NEEDED RECORDS WITH AGENTS, CONTRACTORS, LEGAL TEAM.
MARSHALL & SWIFT REPLACEMENT COST VALUATIONS.
WHAT DEDUCTIBLE PLAN DID YOU BUY?
COINSURANCE PENALTY EXPLAINEDF. Additional Conditions The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions.CoinsuranceIf a Coinsurance percentage is shown in the Declarations, the following condition applies.a. We will not pay the full amount of any loss if the value of Covered Property at the time of loss times the Coinsurance percentage shown for it in the Declarations is greater than the Limit of Insurance for the property. Instead, we will determine the most we will pay using the following steps:Multiply the value of Covered Property at the time of loss by the Coinsurance percentage;Divide the Limit of Insurance of the property by the figure determined in Step (1);Multiply the total amount of loss, before the application of any deductible, by the figure determined in Step (2); andSubtract the deductible from the figure determined in Step (3).
Calculus or Algebraic formulas do not apply ONLY correct policy design and building valuations.
Copyright, Insurance Services Office, Inc.
AND THIS IS HOW THE FINE PRINT COULD WORK OUT Example No. 1 (Underinsurance):When: Value of Property is$ 250,000 Coinsurance is 80% Purchased Limit is$ 100,000 The Deductible is 250 The amount of loss is$ 40,000Step (1): $250,000 x 80% = $200,000 (this is the minimum amount of insurance limit required by contract to meet your Coinsurance requirements)Step (2): $100,000 / $200,000 = .50Step (3): $ 40,000 x .50 = $ 20,000Step (4): $ 20,000 - $250 = $ 19,750 We will pay no more than $ 19,750. The remaining $ 20,250 is not covered.
Example No. 2 (Adequate Insurance):When: Value of Property is$ 250,000 Coinsurance is 80% Purchased Limit is$ 200,000 The Deductible is 250 The amount of loss is $ 40,000
The minimum amount of insurance to meet your Coinsurance requirement is $200,000 ($250,000 x 80%). Therefore, the Limit of Insurance in this Example is adequate and no penalty applies. We will pay no more than $ 39,750 ($40,000 amount of loss minus the deductible of $250).
Copyright, Insurance Services Office, Inc.
The Monkey Claim Died
Insured was not prepared and perishedInsureds documents not ready for claimsInsureds directors & officers not in controlErroneous building schedule / multiple deductibles appliedFiduciary exposure is expandedInsured had no idea of what resources and strategies the carrier would bring to the loss investigation but they had warning!
The Monkey Farm FamilyDirectors & Officers?
What Assets Used for Claim?
Who and What were they?
Inadequate experience for this event and its demands you bet!
Insurance Agent is tainted.With each issue there may be corresponding liability exposures that increase with each error or omission.
With each attempt to react to the large loss claim a fiduciary event no one was prepared for - a successful claims settlement derails.
Liabilities expand and peak.
Duties of the Insured
Examination Under Oath (EUO)
Proof of Loss a requirement
Appraisal Coverages & Damages
Are you as an agent capable of helping the insured prepare to navigate these time sensitive zones in the claims process?
A Snapshot of How They PrepareP I L RProperty Insurance Loss Register
What is it?
How is it used?
How does the carrier use this against your claim?
Plan for RecoveryThis Policy May be Your Biggest Asset.A large loss claim event may be the biggest corporate viability challenge you have faced.Know the strategies and tools of the carriers claims adjusting process know how they come to play.Equip your professional advisors ahead of time no reactive magic has been found.Courts Response Your failure to plan does not make for their emergency!
Coverage Rewardsor Regrets?Florida Property Insurance Reform 2011Senate Bill 408ACV depreciated settlement amount paid first (hopefully within 90-days undisputed)RCV remaining difference of total loss settlement paid when work to restore or replace is actually completed.
Unauthorized Entities Updated Verbiage:An entity that is required to be licensed or registered with the Florida Office of Insurance Regulation but is operating without the proper authorization is identified as an unauthorized insurer. All persons have the responsibility of conducting reasonable research to ensure they are not writing policies or placing business with an unauthorized insurer. Any person who, directly or indirectly, aid or represent an unauthorized insurer can lose their licenses or face other disciplinary sanctions. Please see section 626.901, Florida Statutes, to read the laws. Lack of careful screening can result in significant financial loss to Florida consumers due to unpaid claims and/or theft of premiums. Under Florida law, a person can be charged with a third-degree felony and also held liable for any unpaid claims and refund of premiums when representing an unauthorized insurer. It is the persons responsibility to give fair and accurate information regarding the companies they represent.