Adjusting Southern California Wildfire Claims
Insurance Companies Can Save Countless Dollars On Indemnity and Expense Payments
With the numerous wildfires currently burning in Southern California, combined with those that have been contained or extinguished over the past few months, the impact on insurance companies is substantial.
Projecting the total reserves needed to address the anticipated cleaning and restoration costs expected for the countless number of smoke claims to be filed, can be daunting. These wildfires, although having occurred so late in 2017, will significantly impact 2018 claim budgets for most insurance carriers.
The Impact Of Public Adjusters
Unfortunately, these projected reserves will need to take into consideration the countless number of Public Adjusters inundating the neighborhoods of wildfire victims, which if successful, could significantly increase reasonable claim payouts as well as claim expenses. There is also the added concern that insurance companies’ insureds are at a high risk of being taken advantage of by contractors and contractor scams.
With Public Adjusters sending mailers, peddling door to door and posting fliers inviting homeowners to neighborhood and community meetings, it is likely they could potentially be successful in encouraging a large number of homeowners to retain their services. This will have a considerable increase on the costs for both indemnity and expense payments made. The involvement of Public Adjusters also directly impacts the amount of time both in-house staff adjusters and independent adjusters spend in adjusting claims, which could cause payroll and expense-related claim costs to escalate quickly.
Consistency In Claims Handling Is Key
When natural disasters such as wildfires occur, the media coverage and communication through social media channels can exploit any inconsistencies and allow Public Adjusters and Law Firms to use them to their advantage. Given the amount of frivolous lawsuits and the number of Bad Faith Cases filed every year in California, it is important for insurance companies to be consistent in their adjustment of claims and in their overall claims handling.
There are ways in which insurance companies can minimize the impact this past wildfire season has on their claims departments. Providing a cost allowance based on home square footage or flat rate pricing can help cut down on the overall amount of indemnity payments paid out per claim. Examples of allowances can include:
- per square foot pricing to pressure wash the roof and exterior of a home or structure, walkways, pool decks, driveways, etc.
- flat rate pricing for pool cleaning
- flat rate pricing based on estimated cubic foot for interior smoke deodorization
- flat rate allowance per room for general interior cleaning and windows
- replacement of attic insulation per square footage of home’s lower level
- flat rate pricing for contents cleaning per living space, bedrooms, bathrooms and kitchens
The detailed scope of cleaning often included in the contractor estimates submitted by Public Adjusters can total on average between $20,000 – $30,000. Insurance companies who set a precedent of fair and consistent claims handling, using a flat rice price structure, will likely save hundreds of thousands of dollars.
Set Up Streamlined Procedures
Gaining the trust of your insureds early on, when they first report their claim, is key. Warning them about Public Adjusters, the fee associated with their services, the impact their involvement has in extending the claim settlement time period can be helpful so they are informed before they are approached by P.A.’s.
With the anticipated increase in claims reported, there is the added expense for inspections, documenting, reporting and overall claims file management by staff adjusters, independent adjusters or a combination of both. Time can be saved and reporting requirements minimized in having prepared questions incorporated into your Loss Reporting Procedures.
Given that the cause of loss is known and the damages associated with wildfires are expected to be consistent, claim expense payments can be lowered by only requiring minimal written reporting and overall handling. Flat rate pricing will also minimize the amount of time it takes to adjusters to inspect losses, which can also allow for flat rate pricing for inspections by independent adjusters to be implemented as well.
Utilize Resources To Minimize Costs
Making use of social media, technology and on-line resources, combined with your insureds’ assistance in documenting their damages, may remove the need to inspect properties completely. This can also help lessen expenditures normally associated with the claims adjustment process.
There are other ways to lower expenses as well. In utilizing contractor programs like SOS Solutions’ Contractor Service Network, insurance companies benefit with SOS Solutions’ assisting in moving the claims adjustment process along and in managing contractor services for their insureds, which results in significant cost savings on both the claim indemnity and expense sides.
Fair adjustment of claims handling along with streamlined procedures will also curtail Public Adjuster involvement and save money in the long run.
JENEE' CHILD, CEO
SOS SOLUTIONS, INC.
Jenee’ Child has 30 years experience adjusting property claims for more than 25 different insurance companies and has personally adjusted hundreds of wildfire claims. Jenee’ is CEO of SOS Solutions, Inc., which offers claim adjusting training to insurance companies and free services to their insureds in scheduling and managing verified and vetted contractors. SOS Solutions goal is to cut down on contractor scams and to minimize the involvement of Public Adjusters.
To schedule a strategic claims meeting or for smoke and fire restoration contractor services, call SOS Solutions, Inc. at 1.888.589.1868 – For free resources available to your insureds, visit our website at www.TrustSOS.Solutions.