Claims Journal Magazine - Summer 2012

SPRING 2012 SUMMER 2012 | | VOL. VOL.1,1,NO. NO.23

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opening note

EDITORIAL

Data Opportunity

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he use of predictive modeling has forever changed the way insurance works. The revolutionary technology tool allows insurers to design ever-more-sophisticated models that tap ever-more-detailed data sets to refine precisely how much each customer should be charged.

Claudine Modlin, a senior consultant at Towers Watson, laid out how far predictive analytics has advanced insurance pricing in the past decade at a recent meeting of the Casualty Actuarial Society in Phoenix.

At the end of the 20th century, Modlin said, insurers were still bound to mainTechnology is changing frame computers and highly aggregated how the world operates. data sets. Rating plans were less sophisticated and it was easy for a company to understand its competitors’ plans. Also, rating plans were finalized based on the collective judgment of underwriters and actuaries, with little data-driven guidance on how and where to deviate from the expected costs.

Today, insurers use a variety of predictive analytic tools to hunt through gigabytes of data to find variables — sometimes non-intuitive ones — that offer clues to a customer’s riskiness and purchasing behavior. Generalized linear models (GLMs) have become the global industry standard for pricing segmentation.

The use of insurance credit scores has been one of the great new loss predictors over the last two decades and there is an ongoing search for the next great one. As insurers follow the information revolution, they are improving the quality and accessibility of their internal data, investigating third party data sources, and investing more computing power to harness the information.

In auto insurance, the revolution is moving even further, as insurers start to use telematics — gathering information about a customer’s driving behavior from a device attached to the vehicle. Information flows in virtually moment by moment, Modlin said.

But use of predictive models doesn’t have to end with ratemaking, said Steven Armstrong, a fellow of the Casualty Actuarial Society.

Claims departments “swim” in a vast, vast pool of data that only awaits discovery — claims diaries, records on attorney involvement, and information on service providers and adjusters, according to Armstrong.

Predictive models could answer questions such as: If a damaged auto gets to the body shop a day sooner, will it affect claim severity? What sorts of claims are driving costs higher? What sorts of claims should be reported to the special investigations unit for potential fraud? Can one pick out potential fraudsters during the underwriting process?

The list of areas where actuaries could help insurers Andrea Wells quantify and understand their operations seems limitless.

Editor-in-Chief awells@claimsjournal.com “Wherever there is data, there is opportunity,” Armstrong said.

Technology is changing how the world operates. This reality is especially evident in the insurance industry.

4 Claims Journal | Summer 2012

Editor-in-Chief Andrea Wells | awells@insurancejournal ClaimsJournal.com Editor Denise Johnson | djohnson@claimsjournal.com Vice President Content Andrew Simpson | asimpson@insurancejournal.com Insurance Journal East Editor Young Ha | yha@insurancejournal.com Insurance Journal Southeast Editor Michael Adams | madams@insurancejournal.com Insurance Journal South Central Editor/Midwest Editor Stephanie K. Jones | sjones@insurancejournal.com Insurance Journal West Editor Don Jergler | djergler@insurancejournal.com Insurance Journal International Editor Charles E. Boyle | cboyle@insurancejournal.com MyNewMarkets.com Associate Editor Amy O’Connor | aoconnor@mynewmarkets.com Columnists Burke Coleman, Steven Plitt Contributing Writers Dave Coons, Greg Gaughan, David Sandlin, Kenneth Walton, Lori Widmer

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V.P. Sales & Marketing Julie Tinney (800) 897-9965 x148 jtinney@insurancejournal.com Claims Journal/Southeast Howard Simkin (800) 897-9965 x162 hsimkin@insurancejournal.com West Dena Kaplan (800) 897-9965 x115 dkaplan@insurancejournal.com South Central Mindy Trammell (800) 897-9965 x149 mtrammell@insurancejournal.com Midwest Lauren Knapp (800) 897-9965 x161 lknapp@insurancejournal.com East Dave Molchan (800) 897-9965 x145 dmolchan@insurancejournal.com New Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classified Advertising (800) 897-9965 x125 classifieds@insurancejournal.com

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Vice President/Design Guy Boccia | gboccia@insurancejournal.com Vice President/Technology Joshua Carlson | jcarlson@insurancejournal.com Design and Marketing Executive Derence Walk | dwalk@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com

IJ ACADEMY OF INSURANCE

Director of Education Christopher J. Boggs | cboggs@ijacademy.com Online Training Coordinator Barbara Dooley | bdooley@ijacademy.com

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www.claimsjournal.com/subscribe Claims Journal, the National Property Casualty Claims Magazine is published quarterly by Wells Publishing, Inc. 3570 Camino del Rio North, Suite 200, San Diego, CA 92108. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. Subscription Rates: Free to qualified readers. Disclaimer: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2012 Wells Publishing, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Claims Journal is a publication of Wells Publishing, Inc. Postmaster: Send change of address form to Claims Journal, Adam Dunford, 3570 Camino del Rio North, Suite 200, San Diego, CA 92108.

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C0NTENTS

SUMMER 2012 | VOL. 1, NO. 3

CLAIMS REVIEW 6 Climate Change Will Alter Risks of Wildfire Worldwide, Study Says

6 Business Transaction Claims Cost More in Lawyers Professional Liability

8 High-Profile Fund Administrator Feinberg Discusses

Victim Compensation, Lessons Learned

10 Fraud Focus: Briefs in Review

On The Cover Good Job! 2012 Salary & Job Report

JOB

SPECIAL REPORT

14 Cyber Crime: Not Just Identity Theft

16 School of Thought for Adjuster Education

20 Next Generation of Claims Handling Technology

22 Good Job! Adjusters Like Their Jobs Despite Workload and Staffing Complaints

24 Glass Ceiling Alive and Well in Claims

25 The Next Generation Adjuster: Millennials

IDEA EXCHANGE

28 Zealous and Cost-Efficient Legal Defense in Insurance Matters

30 Burke’s Law: ‘Your Duties After Loss’ Provision

32 Essentials: Telephone Consumer Protection Act

34 2012 Guide to Property Restoration & Disaster Recovery

42 Final Offer: Strengthening Your Claims Talent Pipeline

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Claims Departments

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Opening Note 7 Dollars & Sense 12 People 18 Business Moves 33 Snapshot 40 Calendar of Events 41 Web Exchange

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Summer 2012 | Claims Journal 5

CLAIMS REVIEW | NEWS & TRENDS

Study: Climate Change Will Alter Risks of Wildfire Worldwide

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limate change is widely expected to disrupt future fire patterns around the world, with some regions such as the western United States seeing more frequent fires within the next 30 years, according to climate scientists at the University of California at Berkeley and Texas Tech University.

By the end of the century, almost all of North America and most of Europe are projected to see a jump in wildfire frequency, primarily because of increasing temperatures. At the same time, fire activity could decrease around equatorial regions because of increased rainfall, particularly among tropical rainforests.

“In the long run, we found what most fear — increasing fire activity across large parts of the planet,” said lead author Max Moritz, a fire specialist based at UC Berkeley’s College of Natural Resources. “But the speed and extent to which some of these changes may happen is surprising.”

Researchers used 16 climate change models to generate one of the most comprehensive projections of how climate change might affect global fire patterns.

The study was published in June in Ecosphere, a peer-reviewed journal of the Ecological Society of America.

The projections emphasize that it is important for experts in conservation and urban development to include fire in long-term planning and risk analysis, Moritz said.

Researchers combined more than a decade of satellite-based fire records with historical climate observations and model simulations of future change. The authors documented gradients between fire-prone and fire-free areas of Earth, and quantified the environmental factors responsible for the patterns. They then simulated how climate change would drive future fire activity.

The study saw the greatest disagreements among models regarding the next few decades, with uncertainty across

more than half the planet about whether fire activity will increase or decrease.

Yet climate models agreed that some regions such as the western United States should brace themselves for more fire.

The models focused on fire frequencies, so linking these to other models of fire intensity and vegetation change are important next steps, researchers said.

“Our ability to model fire activity is improving,” Moritz said. “A more basic challenge now is learning to coexist with fire itself.”

The Natural Sciences and Engineering Research Council of Canada, the U.S. Forest Service, the National Science Foundation and The Nature Conservancy helped support the study. CJ

Business Transaction Claims Cost More Than Other Areas in Lawyers Professional Liability

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new industry study reports that a business transactions practice presents greater professional liability risk for attorneys than many other areas of practice.

CNA’s Lawyers Professional Liability (LPL) Program risk control unit recently released a study, “Investigating the Hidden Risks of Business Transactions Practice,” that takes a look at lawyers and the practice of business transactions, an area that often involves drafting and negotiating agreements and contracts.

Many solo practitioners and small law firms perceive business transactions as a “safe” area of practice. However, the

6 Claims Journal | Summer 2012

study indicates that lawyers who report that business transactions represent only 5 percent or less of their annual revenues account for the majority of claims in this area. The study also reveals a significant correlation between an attorney’s level of experience in this practice area in relation to the frequency and related severity of such claims.

The study was based on an analysis of approximately 1,000 closed claims originating from business transactions from CNA’s LPL Program.

Additional findings include: •The leading cause of business transactions claims — the improper

preparation, filing and/or transmittal of documents — accounts for more than one-third of claim volume. Failure to provide appropriate legal advice represents about one-fourth of those claims.

•The cost to defend a business transaction claim is more than twice the cost of claims from other areas of practice.

•Attorneys who dedicate more than 25 percent of their practice to business transactions are less likely to have a claim asserted against them. Yet those claim losses are, on average, more expensive than those brought against attorneys who only dedicate 5 percent or less of their practice to this area of law. CJ

Dollars & Sense

3.3

%

The FBI’s preliminary 2011 crime statistics indicate a 3.3 percent drop in vehicle thefts from the 2010 number of 737,142. California still leads the nation in motor vehicle thefts, according to NICB’s most recent Hot Sports report.

Helmet Laws

According to a CDC analysis of fatal crash data from 2008 to 2010, a total of 14,283 motorcyclists were killed in crashes, among whom 6,057 (42 percent) were not wearing a helmet. In the 20 states with a universal helmet law, 739 (12 percent) fatally injured motorcyclists were not wearing a helmet, compared with 4,814 motorcyclists (64 percent) in the 27 states with partial helmet laws and 504 (79 percent) motorcyclists in the three states without a helmet law.

114

NCCI estimates that the combined ratio for private carriers for Accident Year 2011 is 114 — down 2 points from 116 in 2010.

Red Hot Spring

Federal records show the U.S. just finished its hottest spring on record. March, April and May in the Lower 48 states beat the oldest spring temperature record by a full 2 degrees. The three months averaged 57.1 degrees, more than 5 degrees above average. That’s the most above normal for any U.S. season on record.

62

%

Jewelry, electronics and tools account for 62 percent of all replacement cost value (RCV) claimed for theft versus 35 percent RCV for all other categories combined. Rings, watches and necklaces all maintained their ranking within the jewelry category as top loss-claim items, according to Enservio.

Hail

Among State Farm’s 25 highest claim payouts in history, eight involved significant damage caused by hail. The company’s fifth-largest payout for a single catastrophic event occurred in 1992 — about 68,000 claims totaling nearly $245 million resulting from a hailstorm in Fort Worth, Texas.

$2 Billion

Insured losses from the tornadoes, hail and high winds that struck in late February and early March may climb into the $1 billion to $2 billion range, according to catastrophe risk modeling firm EQECAT. It is estimated that more than 150 tornadoes touched down in two distinct systems between February 28 and March 3, with the majority occurring in Alabama, Kentucky, Illinois, Indiana and Tennessee, according to EQECAT. At least 13 states were affected by the storms.

Child Drownings

An annual average of 390 pool or spa-related drownings for children younger than 15 occurred from 2007 to 2009; about 75 percent (293) of the reported fatalities involved children younger than five. An estimated annual average of 5,200 pool or spa-related emergency department-treated submersion injuries for children younger than 15, from 2009 to 2011; children younger than 5 represented 79 percent, or 4,108, of these injuries.

Summer 2012 | Claims Journal 7

CLAIMS REVIEW | NEWS & TRENDS

High-Profile Fund Administrator Feinberg Discusses Victim Compensation, Lessons Learned

By Denise Johnson

H

aving administered several highprofile compensation funds over the course of 30 years, Kenneth Feinberg is no stranger to controversy.

In an interview with Claims Journal, the attorney, author and adjunct law professor at several prominent East Coast universities, detailed the careful navigation required when administering victim compensation funds as outlined in his new book, “Who Gets What: Fair Compensation after Tragedy and Financial Upheaval.”

Feinberg has managed the Gulf Coast Claims Facility after the 2010 Gulf oil spill, the 9/11 Victim Compensation Fund, the executive compensation fund after the 2008 financial crisis, the Hokie Spirit Memorial Fund after the Virginia Tech shootings in 2007 and successfully mediated the Agent Orange settlement hours before trial was to begin in 1984.

According to Feinberg, prior to the 2010 oil spill, all of the victim compensation funds he administered were funded by the government. The 9/11 Victim Compensation Fund was unique in that it was put into place just 11 days after the terrorist attack.

8 Claims Journal | Summer 2012

“Congress passed a law … anybody who wants to give up their right to sue can instead, voluntarily, come into a no-fault compensation program funded entirely by the taxpayers, public money,” Feinberg explained.

Although 9/11 victims were not required to file a claim through the fund, it provided an alternative to allow them to immediately obtain money. According to Feinberg, a little more than 7,000 claims were processed by the fund.

The BP oil spill fund, on the other hand, resulted from a handshake between President Obama and BP executives in which they voluntarily agreed to put up $20 million upfront, he said.

“Compensation was paid to … over 200,000 people who gave up their right to sue in order to be compensated now,” said Feinberg, who described the fund as a very generous alternative to traditional litigation.

According to the experienced fund administrator, more than 1 million claims from 50 states and 35 foreign countries were filed through the Gulf Coast Claims Facility.

While all of the funds he’s administered provided special compensation for special people, Feinberg said the volume

was much more problematic in the BP situation than in 9/11. Another huge difference — all but BP were funded by public money.

There was no way the airline industry could have provided the 9/11 fund, Feinberg said. “Congress was very concerned that the airline industry couldn’t survive the 9/11 attacks, and so Congress was looking to alleviate the financial pressure that would otherwise be on the airlines.”

Congress established the 9/11 fund to recognize the importance of demonstrating solidarity of the American people behind the victims, Feinberg said. “[The fund] served the purpose of aligning the American people with the victims of 9/11,” he said.

BP Fund Scrutiny When Feinberg, an alternative dispute resolution specialist, became administrator of the BP fund, he inherited the

On the Web: To listen to the full podcast interview with Kenneth Feinberg, visit: http://www.insurance journal.tv/videos/7442/.

already operational Gulf Coast Claims Facility and an already developed claims process. As a result, he met with dissatisfaction almost immediately.

Acknowledging the mistake, he eventually hired “credible claims processors” from Mississippi and New Orleans with no ties to the prior independent adjusting firm initially hired to administer the fund.

Feinberg said the decision was based on the already negative view of the company, as well as recognition that Gulf Coast residents would respond positively to local residents adjusting their claims.

“It became apparent to me in the course of designing and administering the BP situation that the more I could put local people in the field to assist individual claimants who happened to be their neighbors, rather than some sort of bureaucratic claims adjusting process, that would inure to the benefit of the program; giving local claimants the feeling that they were being treated fairly by local people who understood their plight,” Feinberg said.

Although news articles suggested Feinberg was removed from administering the BP fund, he said he was replaced following the successful completion of phase one of the program, after 18 months of handling under his leadership. During that time, the fund distributed approximately $6.5 billion dollars and processed 220,000 litigation releases, he said.

“It was a perfect time to pass the baton to phase two of the claims process, overseen by the U.S. District Court,” he said.

Despite Feinberg’s contention that the BP fund administration was transparent, he doesn’t think new attempts to make it more transparent will be effective. That’s because it is difficult to satisfy claimants who are in desperate straits, he said.

“It’s a natural human condition not to be satisfied with compensation, which many times, as you know, is a pretty poor surrogate for life as it used to be,” he said.

“I’ve learned over the years in all of these compensation programs, satisfaction, at least 100 percent satisfaction, is rarely achieved.”

Political Interference Although Feinberg witnessed negative backlash and political interference, both on the national and local level, during his

handling of the BP Fund, he said he understood the reasoning for the criticism.

“I understand the desire of our elected officials to vigorously represent their local constituents, so I wasn’t too surprised by it,” he said.

Confronting the criticism is the only way to respond, he said. “You have to respond forcefully, quickly and effectively to the criticism. You cannot bury your head in the sand,” he said, maintaining it’s important to admit a mistake if one was made or defend the program when appropriate.

Having clerked for Federal District Judge Weinstein after law school, Feinberg was influenced by the judge’s legal knowledge and involvement in politics, a factor that likely prepared him to deal with the politics that surrounded the BP fund.

Another Fund?

Despite extensive media scrutiny and the extensive obligation of designing and managing compensation funds, Feinberg did not hesitate when asked if he would accept another high-profile assignment like the BP case.

“What I do in designing and administering programs that are designed to compensate victims of tragedies, I think there are many, many Americans who would step up and do exactly what I’m doing in the public interest. And if asked to do it again, I’ll do it again,” he said.

In his book, Feinberg explained that growing up during the Kennedy presidency influenced him a great deal. The call to help out fellow Americans in times of distress by serving the public interest was what he considered good government.

Feinberg admits one of the mistakes he made during the administration of the BP fund was overpromising when it came to providing a timeline for processing claims.

Careful analysis of the funds he’s overseen can provide important lessons to the insurance industry, he said.

“The most important thing the insurance industry learns from all of these funds … is the need to efficiently, effectively, quickly deliver compensation. All the talk in the world is a poor substitute

for money flowing to victims,” he said.

In addition, insurers should seek creative alternatives to traditional litigation when it comes to paying claims. “There’s a natural proclivity for the insurance industry to hold onto its money and litigate, paying claims only down the road, after sometimes years of protracted, unsuccessful litigation,” Feinberg said.

Although he’s met with a number of 9/11 victims and BP claimants during private meetings, which he found beneficial to reducing related litigation, he doesn’t think the idea would translate to insurance because of the number of claims.

“It becomes very inefficient and very time-consuming and delay-ridden to expect to have a representative of the insurer meet with every single insured,” he said.

Despite issues that arose with the independent adjusting firm in place prior to Feinberg taking over administration of the Gulf Coast Claims Facility, he gives insurance adjusters high marks.

“The insurance adjuster expertise in this country is quite high,” he said.

And while some insurers might balk, Feinberg is equally complimentary of public adjusters. “Public adjusters fill an important role here … the fact of the matter is that in many, many of these mass cases involving mass disasters, public adjusters are essential. There simply weren’t enough private adjusters in BP; there weren’t enough private adjusters after Hurricane Katrina. So, in those volume cases involving thousands of claims, I think the public adjusters fill an important void just to deal with that volume,” he said.

Empathy, Competence and Creativity In the end, Feinberg thinks empathy, competence and creativity are keys to successful claims negotiations. “Put yourselves in the shoes of the insured. Make sure that you understand exactly what the policy says, what the exclusions are, what the deductibles are, so that you can sit and explain in an empathetic way exactly what the insurer can do and cannot do,” he said.

Feinberg’s book, “Who Gets What: Fair Compensation after Tragedy and Financial Upheaval,” was released on June 26. CJ Summer 2012 | Claims Journal 9

CLAIMS REVIEW | Fraud Focus

8 Indicted on Fraud Charges from Joplin Tornado

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ight people have been indicted on federal fraud charges over alleged false requests for aid following the deadly May 2011 tornado, the U.S. Attorney’s Office in Springfield recently announced.

Each of the defendants, indicted separately by a grand jury, is accused of falsely claiming damage to their homes or property in Federal Emergency Management Agency applications for disaster benefits.

Those charged are Karen Marie Parks; Ronald Martell Irby; Amber Nicole Peters; Scott Bradley Olsen; Wanda Gail McBride and Pamala Ann Shafer, of Joplin; and Valerie Ann Jay, a former Joplin resident who now lives in Borger, Texas. The eighth defendant is Shane D. Ellis of Lebanon. CJ

Los Angeles Firefighter Charged With Insurance Fraud

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Pennsylvania Man Sentenced for Staging Crashes

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n Erie, Pa., has been sentenced for heading a fraud ring that staged auto accidents to collect about $37,000 from insurance companies.

The Erie Times-News reports 38-year-old Edgar Rodriguez, sentenced to six to 23 months in jail, was immediately paroled because he’s been jailed since his arrest.

Erie county investigators became suspicious because of how frequently Rodriguez was involved in accidents and how many of them involved similar damage and vehicles, including a 2003 Dodge Grand Caravan.

Rodriguez was charged with staging 15 separate accidents from June 2010 until his arrest in October, including three in which he acted alone and 12 others in which co-defendants allegedly helped him. CJ

rosecutors say a Los Angeles city firefighter and mixed martial arts fighter has been charged with insurance fraud for allegedly filing false workers’ compensation claims.

The district attorney’s office says 35-year-old Raphael Davis, charged with four felony counts, was arrested at his Lomita home without incident. He is being held on $30,000 bail.

Investigators say while Davis allegedly filed false claims, he was participating in mixed martial arts fights as “The Noodle.”

Davis faces up to five years in county jail if convicted. CJ

Georgia Mom Pretended to be Dead Son for Insurance Money

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ulton County prosecutors say a woman has admitted to collecting more than $151,000 on a fraudulent insurance policy she took out in her dead son’s name.

Donna Ellis Gibbs was sentenced to 20 years’ probation in the case after pleading guilty.

She faced five counts of insurance fraud and one count of theft by taking.

Prosecutors say Gibbs pretended to be her deceased son and applied for an accidental death policy two months after his death in a December 2002 car crash. She later submitted a claim and collected the full policy amount.

Gibbs’ ex-husband, the son’s father, uncovered the plot in March 2007.

The Fulton County District Attorney’s Office says Gibbs’ sentence can be terminated after five years if she successfully completes the terms of her plea agreement. CJ

10 Claims Journal | Summer 2012

New Mexico Busts Interstate Driver’s License Fraud Ring

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ew Mexico authorities announced the bust of a sophisticated ring that specialized in helping illegal immigrants obtain fraudulent driver’s licenses. District Attorney Matt Chandler says fraudulent documents were used as proof of residency to obtain licenses in at least 54 cases. Authorities believe hundreds of licenses have been fraudulently obtained through the ring over the last couple of years for illegal immigrants living outside of New Mexico. New Mexico and Washington are the only states that allow illegal immigrants to obtain the same driver’s license as a U.S. citizen. CJ

Mississippi Man Charged With Insurance Fraud

Claims Professionals.

It’s Good to Have Options.

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31-year-old Jones County, Miss., man has been jailed on an insurance fraud charge.

Terrell McAndrews has been indicted and arrested on one count of insurance fraud following indictment by a Jones County grand jury.

McAndrews is accused of defrauding State Farm Insurance Co. by filing a false claim reporting his 2006 Nissan Sentra had been stolen.

He faces up to three years in prison and a $5,000 fine if convicted of insurance fraud. CJ

New York Doctor Convicted for Fraud

A

Claims Education for Your Unique Needs We know the claims function can be challenging, even on the good days. That’s why The Institutes offer a range of professional development options (including the multi-tracked Associate in Claims designation) to help claims professionals be more efficient and effective no matter where they are on their career roads. © 2012 American Institute For Chartered Property Casualty Underwriters

Brooklyn, N.Y., board-certified colorectal surgeon, who owned and operated a New York medical clinic, was convicted for his role in a fraud scheme that billed Medicare and numerous private insurance companies for surgeries and other complex medical procedures that were never performed, the Department of Justice, FBI and Department of Health and Human Services announced.

On June 13, 2012, after a two-week trial in federal court in Brooklyn, a jury found Boris Sachakov, M.D., 43, guilty of one count of healthcare fraud and five counts of healthcare false statements.

The trial evidence showed that from January 2008 to January 2010, Sachakov, who owned and operated a clinic called Colon and Rectal Care of New York P.C., defrauded Medicare and private insurance companies by billing for surgeries and medical services that he never provided.

Several private insurance companies began investigating Sachakov after receiving complaints from patients.

The indictment alleged that Sachakov submitted and caused the submission of over $22.6 million in false and fraudulent claims to Medicare and private insurance companies, and received more than $9 million on those claims.

At sentencing, scheduled for Sept. 24, Sachakov faces a maximum penalty of 35 years in prison and an $18 million fine. CJ

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DEPARTMENTS

people Andrew McBride

Peter Murray

Mauricio Alonso

James Early

Elizabeth Quigley

The ACE Group appointed Andrew McBride executive vice president, claims, for its international businesses.

McBride succeeds Roger Day, who will retire from the company at the end of 2012.

McBride will be responsible for the company’s claims operations supporting its property and casualty and accident and health insurance businesses in 50 countries in the Asia Pacific and Japan; Latin America; and Europe, Middle East and Africa (EMEA) regions. He will be based in New York.

McBride’s claims industry experience spans nearly 25 years. He joins ACE from QBE, where he served as claims director, European Operations, since 2005. Prior to that, he was director, head of claims management, at Aon from 2002 to 2005, and held a range of senior claims and operations positions with the AXA and Guardian Royal Exchange Groups, where he began his insurance career in 1987.

In addition, Peter Murray, who leads the claims organization for ACE’s EMEA region, will assume the additional role of casualty claims executive for the company’s international operations. Murray will work with regional claims management to create and oversee strategies to handle major casualty, professional lines and other third-party liability claims.

He will continue to be based in London and will report to McBride.

With 35 years of claims experience in London, Murray has served as claims director for ACE’s EMEA operations and senior vice president, Claims, for ACE’s international operations. Prior to joining ACE in 1999, he held several technical and management claims roles over a 22-year career with Lloyd’s.

Murray is a Chartered Insurance Practitioner.

Crawford & Co. promoted Mauricio Alonso to CEO of the company’s Latin American and Caribbean operations.

Alonso was appointed senior vice president and regional managing director of Latin America and the Caribbean in March 2005. He has more than 20 years of experience in the insurance industry. Before joining Crawford, he was vice president of the Latin America Claims Division for AIG. He also served as claims manager, AIG Mexico; claims manager, AIG Brazil; regional director, AIG Mexico; and regional claims supervisor for Geico.

Ringler Associates Inc., a national structured settlement company, appointed James M. Early to the newly created position of executive vice presi-

12 Claims Journal | Summer 2012

dent and national sales director.

Early, who has more than 27 years in the structured settlement business, was a regional director at Ringler Associates in Bedford, N.H. He joined Ringler Associates in 2002, serving on the board of directors beginning in 2006 before being appointed to senior vice president in 2010.

Early will be in charge of sales operations at the company’s 70 offices nationwide.

Safety National Casualty Corp., an excess workers’ compensation and writer of multi-line large casualty business across the United States named Elizabeth Quigley as large casualty underwriting manager. She will focus on servicing and underwriting national accounts involving Safety National’s large casualty product offering, which includes workers’ compensation, commercial auto and general liability lines of coverage.

With more than 30 years of industry experience at various national carriers, Quigley brings a strong large casualty background to Safety National.

She previously served as underwriting director at Discover Re/Travelers, responsible for underwriting and business development in the captive large casualty marketplace.

Quigley will be based in Safety National’s corporate office in St. Louis, Mo. Mutual Boiler Re promoted James J Callahan III to assistant vice president of claims, where he will focus on staff development and claims operations. He is also tasked with the execution of fulfilling the claims strategy regarding quality management and regulation.

Callahan joined Mutual Boiler Re, an operation of FM Global, in 2007 as a claims examiner and brings more than 12 years of claims experience to the company’s management team.

St. Petersburg, Fla.-based United Insurance Holdings Corp., a property and casualty insurance holding company that writes and services property and casualty insurance in Florida, South Carolina, Massachusetts and Rhode Island, appointed John Forney to CEO. Forney, who joined the company on June 14, 2012, also serves as a director on the company’s board.

His experience includes a mix of public finance investment banking and private sector executive leadership positions with a focus on the insurance market. He most recently served as managing direc-

tor in Raymond James’ Public Finance Department.

Rick Hoagland was named vice president of GEICO’s claims home office. He succeeds Nancy Pierce, who was recently named regional vice president in GEICO’s Fredericksburg, Va. office.

Hoagland began his career with the company in 1994 in telephone claims. He was later selected to join the company’s executive assistant program and was elected assistant vice president of claims of the Midwest regional operations in 2009. Hoagland was named assistant vice president of underwriting in 2010.

In a separate announcement, Teresa M. Spina was named assistant vice president and will head GEICO’s staff counsel operations west of the Mississippi. She will work out of the company’s Dallas regional office.

Spina started with GEICO as a liability attorney and went on to lead a group of three attorneys handling personal injury protection (PIP) cases. Her office has since expanded to 219 associates, including 92 attorneys.

W. R. Berkley Corp. named Michael G. Connor president of Iowa-based Continental Western Group LLC effective immediately.

He succeeds Bradley S. Kuster, who will oversee other activities within the W. R. Berkley Corp. group of companies.

Connor has more than 25 years of experience in the property and casualty insurance industry and served most recently as senior vice president, commercial markets, Northeast division at another property and casualty insurer.

Selective Insurance Group Inc.

promoted John Guerra to assistant vice president, Northeast claims manager.

Guerra joined Selective in 1984 as a claims trainee holding claims management positions throughout the organization.

Sams & Associates Inc., an independent insurance adjusting firm serving the western United States, named Lizzy Adkins as the new regional manager and multiline adjuster in Seattle, Wash., Portland, Ore., and surrounding areas.

Adkins, who joined Sams & Associates in 2012, has more than 20 years’ experience in the industry. Adkins has worked as a claims specialist for American States Insurance, Safeco, Grange Insurance and Country Financial.

She is also past president of the Puget Sound Adjusters Association and has served on the advisory board for the past 12 years. CJ

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Summer 2012 | Claims Journal 13

SPECIAL REPORT | CYBER RISK

Cyber Crime: Not Just Identity Theft

By David W. Sandlin

C

onsumers receive regular warnings about personal identity theft, software piracy and illegal downloads, but business and industry face even greater financial exposure from cybercrime — criminal activity carried out through the use of a computer.

Cyber attacks involving the theft of intellectual property (IP), confiscation of online bank accounts, the distribution of viruses or malicious code, and the compromise of a nation’s critical infrastructure information accounted for more than $388 billion dollars in losses worldwide between 2010 and 2011, according to the Norton by Symantec “Cybercrime Report 2011.”

IP theft by current or former employees can be devastating to businesses.

The connected world we live in allows access to innumerable methods for moving IP out of an organization. Cloud services and online backup purveyors provide secure locations to move IP for later access elsewhere. Portable devices such as flash drives and external hard drives can hold thousands of pages of IP and are easily loaded and transported. Mobile devices such as BlackBerrys, iPhones and other PDA’s can store IP similar to a

14 Claims Journal | Summer 2012

flash drive and typically house a camera perfect for discreetly taking and storing photographs and videos. Email also can be used to transfer IP. All this movement of IP can go unnoticed, especially when executed by a trusted employee. Foreign businesses have become more aggressive in their attempts to compete with U.S. companies, and criminal organizations seek to add to their portfolio of available information for sale on the black market.

Once theft is detected, a prompt and thorough investigation of computer systems, electronic storage devices and electronic data is necessary to determine how the crime was committed.

Unfortunately, detection usually occurs after the IP has already been transferred — often to the new employer of the individual who took the IP. Only a thorough investigation and analysis of computer systems and data can determine the specifics of the theft.

What to Do After a Theft Several steps need to be followed to preserve evidence when an internal IP theft is detected to prevent tampering and destruction.

First, the necessary parties, including legal, security, human resources and IT

must be notified of the theft.

Second, access to the IP must be controlled to prevent more breaches.

This can be done through electronic and physical controls.

Third, all computers, electronic storage devices and portable devices that are or were being used by the person or persons suspected of taking the IP must be collected and locked away, and a chain-of-custody created for each item.

Finally, data from each of the devices should be preserved in preparation for investigation and analysis.

A competent computer and digital forensics expert will have the knowledge, experience and tools to properly protect, collect and preserve the evidence to execute the investigation and analysis to determine the IP theft’s specifics. Additionally, a forensic professional will be able to develop a report and testify about the methods used to preserve evidence and the findings of the investigation.

Certain considerations should be made when hiring a computer and digital forensics expert for an investigation.

Many states require a private investigator license to perform computer and digital forensics work. Also, the selected expert should have knowledge in proper handling of evidence, use of computer

forensic analysis software and hardware, and operating systems that are part of the analysis. Knowledge of how devices and applications work together enhances the ability to determine what happened.

The expert also should have experience providing testimony. Written and verbal communication skills should be considered, as they may be required to develop an expert report and testify in the case.

Poor communication skills can derail an excellent investigation, if the findings are not effectively conveyed.

Computer forensics certifications are available, but because there are no industry standards in computer forensics, certifications do not necessarily confer competence.

Case Study An interesting case study in the use of computer and digital forensics in an IP theft case involves a senior engineer of an oilfield services company.

The engineer was working on advanced technology for the company and development of new products that would give the organization a competitive advantage. The

engineer was provided a laptop as well the former employee had accessed. as other computers by the company, and Forensic analysis of the hard drives was allowed to copy his work to a portable was performed using industry recognized hard drive. He took the hard drive home software, EnCase and Forensic Toolkit. and worked on his personal computer.

The results showed the engineer copied Without notice, the engineer went to substantial information to the portable work for one of his employer’s competihard drive the day before he resigned. It tors. There was suspicion the engineer also showed the same files had been copied took IP to his new to his personal computers and employer. The company’s Intellectual property the computer he used at his human resource and cor- theft is not always new company. porate legal departments stolen by an external As a result, the engineer was were notified, and a barred by the court from worklawsuit was filed against party hacking into ing on this type of technology the former employee and computer systems. for a period of time. Regular his new employer. third-party inspections of his A computer forensics expert was current employer’s computer systems were retained to determine if the IP was taken required to ensure the previous employer’s and if it was residing within the digital IP was not accessible to anyone. systems of the engineer’s new company.

Intellectual property theft is a signifiThe expert was provided all computers cant part of cyber crime. It is not always used by the engineer, including personal taken by an external party hacking into computers and the computer used at computer systems. The use of computer his new employer. The expert was also and digital forensics is invaluable in resolvprovided the portable hard drive he used ing cases of internal IP theft. CJ to copy his work. Forensically verifiable images were made of the hard drive, as Sandlin is a digital forensics division manager for Rimkus well as hard drives from all the computers Consulting Group Inc.

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Summer 2012 | Claims Journal 15

SPECIAL REPORT | CAREER GUIDANCE & TRAINING

School of Thought for adjuster education

Undergraduate programs aren’t the only educational choices available to claims adjusters. Colleges are beginning to respond to the need for additional skill sets.

By Lori Widmer

“

P

eople don’t go to law school to go into insurance — they fall into it.”

So says Peter Kochenburger, executive director of University of Connecticut’s Insurance Law Center. Kochenburger, who is also associate clinical professor of law, says that the students who attend the school’s LLM (Masters of Law) in Insurance Law courses already have their juris doctorate degree. For them, he says, insurance is a specialization.

Still, insurance claims executives who currently hold law degrees are attending the LLM courses with more frequency to give them a foundation of knowledge that spans the claim lifecycle.

Some of the individual courses that are offered in either of the two LLM in Insurance Law programs could be helpful to insurance adjusters wanting to enhance their skill set, according to Lisa Sewell DeMoss, associate professor and director of LLM in Insurance Law at Thomas M. Cooley Law School, Lansing, Mich.

Both Kochenburger and DeMoss are part of the only two LLM in Insurance Law programs in the country. DeMoss heads the Cooley program, which offers courses in partner-

16 Claims Journal | Summer 2012

ship with Olivet College, and Kochenburger is director of UConn’s Graduate Programs. While the programs at both schools are beyond what many claims adjusters may intend for their careers, some adjusters are taking advantage of the additional coursework, and a few adjusters with juris doctorate degrees are completing the programs.

DeMoss says the courses in insurance law are available on a guest basis for adjusters without a juris doctorate, Adjusters should not but the better opportunity wait for companies lies in certification classes, such as CPCU, where she and states to suggest says adjusters will get a or require education “broader understanding of the business and operaand training. tional considerations that impact the business.”

While both Cooley and UConn are providing degrees and programs that are possibly useful to adjusters — degrees such as Masters in risk management or Masters in risk and insurance — there is, to most experts’ minds, no adjusterspecific offering that can help adjusters gain a comprehensive skill set in claims management.

What’s Available The lack of specific educational opportunities for adjusters could be the result of how insurance adjusters happen upon their careers. Many start out at agencies and eventually decide to take a serious look at the adjuster position. Because the requirements in most states are relatively low, a career in adjusting is an easy choice to make.

What isn’t easy is knowing when and more importantly where one can go to improve on skills and gain an educational advantage. According to Stephen Figlin, senior professional public adjuster with Young Adjustment Co., Blue Bell, Pa., there are no Bachelor-level programs specific to insurance adjusting. Generally, the courses would be in insurance and risk management, but Figlin says they’re not offered in the adjustment of property claims or in adjustment as a specialty. As he says, the skills you need can be learned while you do the work, and each insurer will require a different type of skills.

He gives the example of his own background in commercial and industrial adjusting. He says his experience is not indicative of what all adjusters need. On the contrary, Figlin says most adjusters can get up and running with “rudimentary” skills.

The challenge begins when adjusters in the job a number of years want to up their game. Many adjusters and their employers seem content with the training that states require and that companies provide. Most national carriers and a few of the larger third-party administrator (TPA) firms have training for adjusters, says Richard Meyers, chairman and CEO of Richard Meyers & Associates Inc., Warren, N.J. Meyers’ firm places insurance and risk management professionals, and he sees the need for more formalized educational opportunities for adjusters. He outlines skills that he believes will give adjusters career progression, such as expense management, operational change, loss reserving and forecasting, and technology that will differentiate adjusters from what Meyers calls the typical claims person.

“It is the kiss of death if you do not have any real understanding of technology, particularly when you’re dealing with the collection and aggregation of data,” Meyers says.

Yet courses and training in technolcontinued on page 18

Continuing Education Requirements by State Information compiled via each state’s division of insurance website. Does not include CE requirements for non-residents. Requirements are for each renewal period.

Alabama Alaska Arizona Arkansas

California Colorado Connecticut Delaware District of Columbia Florida

Georgia

Hawaii Idaho Illinois Indiana Iowa Kansas

Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire

New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma

Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

24 hours of CE 24 hours CE 40 hours CE 24 hours CE (3 in ethics) Approved adjuster courses (No producer course substitutions) 24 hours of CE No CE required No CE required 9 general and 3 ethics hours required No CE required 24 hours CE required (2 ethics, 10 law, 12 optional) Less than 20 years service: 15 hours (3 ethics) More than 20 years service: 10 (3 ethics) Newly licensed: Pre-licensing course accepted for first year’s CE credit.

No CE required 24 hours of CE (3 ethics) 24 hours CE required (3 ethics) 24 hours CE required 24 CE credits (2 ethics) 12 hours P/C credit (1 ethics; no more than 3 hours in insurance agency management) 24 hours CE required (3 ethics) 24 hours CE required 24 hours CE required (3 ethics) No CE required No CE required No CE required 24 hours CE required (3 ethics) 12 hours CE required No CE required 24 hours CE required No CE required No CE required 20 hours CE required (10 in workers’ comp law 15 hours program/seminar CE hours) 15 hours CE required 15 hours CE required (1 hour in ethics) No CE required 24 ICEC credits (1 in ethics, 3 in NFIP) No CE required No CE required 24 hours CE required (3 in ethics, 2 in legislative updates) No CE required No CE required No CE required No CE required No CE required No CE required 30 hours CE required 12 hours CE required (3 ethics) No CE required No CE required 24 hours CE required (3 ethics) No CE required No CE required 24 hours CE required (3 ethics) Summer 2012 | Claims Journal 17

SPECIAL REPORT | CAREER GUIDANCE & TRAINING School of Thought, continued from page 17

ogy, in Meyers’ estimation, is limited to whatever the adjuster’s company is offering. He believes adjusters should become proactive in their own education and training, and not wait for companies and states to suggest or require various training. Too often, Meyers adds, adjusters don’t take the initiative to make themselves more attractive to employers.

For example, Meyers is currently recruiting for a regional workers’ compensation claims manager position. The job pays up to $100,000 with a $25,000 bonus. He was surprised that most of the candidates for the job have no claims adjusting education.

“One individual was a claims manager with a larger insurer and had no college experience.” When he asked her why she had not sought more training, she responded that it wasn’t important to her job. “Of course it’s important,” Meyers says. But he believes because it wasn’t required, the adjuster didn’t bother.

What’s Required Even so, requirements for continuing education run the gamut from state to state. A majority of the states do require some type of continuing education (see chart). However, adjusters should not be content to accept that continuing education as the limits of their potential, Meyers says. He is a strong proponent of adjusters voluntarily advancing their education and training.

“It gets them beyond the point where they’re being looked upon as a clerk or processor,” Meyers says. Also, he says it will empower adjusters to get into the things that matter most in claims management — cost control and cost containment.

Licensure itself is a mixed bag of requirements, if any exist at all in the state. Most states have no undergraduate/graduate education requirement for licensure as a public adjuster. The exceptions: Washington requires an associate in claims program completion; Alabama, Kentucky, and Wyoming require applicants to be graduates of a recognized law school. Still, most states require an exam, and some require an educational component. Some states require nothing 18 Claims Journal | Summer 2012

Adjusters should focus educational energies on: operational change, communication, technology, data analytics, loss reserving, forecasting and financial skills. more than a passing grade on a licensing exam.

No matter what the requirement or lack thereof, Figlin says that education is ongoing. Figlin, who is a member of the National Association of Public Insurance Adjusters (NAPIA), on several of its committees, and as past president, says that much of the post-licensure training is required by most states.

What’s Recommended What isn’t required, Figlin says, is earning a designation with organizations such as NAPIA, where he says adjusters can get “Masters-level” training that’s rigorous and thorough. He recommends adjusters look into the Certified Professional Public Adjuster (CPPA) certification. Yet there are requirements to meet before being accepted into the program — adjusters must have at least five years of full-time experience in adjusting just to sit for the CPPA exam. Also, applicants must have a college degree or its equivalent in education, experience or knowledge.

Figlin says the certification process is tough, but gives adjusters a more comprehensive knowledge base and skill set than any refresher licensing requirements might.

For adjusters with 10 years of experience, Figlin recommends the Senior Professional Public Adjuster (SCPPA) designation. Each examination is administered by The American Institutes for Chartered Property Casualty Underwriters (The Institutes).

For independent adjusters, Figlin says there are educational programs available from Property Loss Research Bureau (PLRB), Loss Executive Association (LEA), and Risk & Insurance Manage-

ment Society (RIMS). PLRB offers continuing education (CE) and mandatory attorney continuing legal education (CLE) credit. LEA offers continuing education credits. RIMS offers various workshops, courses and online education options, as well as in-company training.

Meyers finds the lack of advanced training for adjusters a “sad commentary” on how companies have cut back on costs at the expense of the knowledge. “There was such quick decisionmaking [during the recession] on where to cut without the foresight of trying to look through the crystal ball,” he says.

“Do we really want to cut the very skills that enable employees to service our clients?”

Meyers recommends adjusters focus their educational energies on the following areas: operational change, communication, technology, data analytics, loss reserving/forecasting, and financial skills. Savvy employers, in his opinion, will invest in adjusters like they would any other business area. “The operative word is not only new product, but also retention.”

Retention is something DeMoss believes is critical to the industry. She cites studies indicating a turning over of talent and knowledge as highly skilled, long-term employees leave the insurance industry. Development of programs that attract and effectively train new talent will help. “The industry needs to reinvent itself to appear much more attractive to those best and brightest coming out of school,” she says. CJ Widmer is a Philadelphia-area freelance writer and editor who writes frequently about risk management and insurance topics.

DEPARTMENTS

Business Moves

Rimkus Consulting Group Rimkus Consulting Group, a national forensic engineering consulting firm, opened new offices in Alabama, Kansas and Kentucky.

The Birmingham and Mobile, Ala., offices will be led by District Managers Peter Townsend and J. Phil Wilbourn.

The Kansas City office will be led by Regional Manager Robert Anderson, while the Louisville, Ky., office will be led by District Manager James Jordan.

The offices will provide a full complement of forensic engineering and professional consulting services.

Assurant Inc. Assurant Specialty Property, a provider of specialty insurance and insurance-related products and services, plans to hire up to 100 new employees at its customer service centers in Gwinnett County, Ga. The company is hiring part-time and full-time customer service representatives, as well as managers, at its two service centers. Previous customer service experience is required, and call center experience is preferred.

Applicants can get information and apply online at jobs.assurant.com/ duluth-jobs. The company is not accepting phone calls.

Copart Inc. Copart Inc., an online salvage vehicle auction company, announced the acquisition of Diamond Auto Bids and Disposals, a privately held automotive auction with locations in Calgary and Edmonton, Alberta, Canada.

The acquisition provides Copart its first locations in Western Canada to accommodate its expanding Canadian customer base. The company y operates 154 facilities in the United States, Canada and the United Kingdom.

PerformanceClaims PerformanceClaims changed its name to PerformanceGateway. The new name is intended to better match the company’s focus and product offerings. This change coincides with plans to transition users to a new upgraded platform scheduled for the second half of 2012.

The company will begin using the PerformanceGateway name immediately for marketing and communication. Clients will begin transitioning in phases to the new platform later this year.

Independent Adjustment Co. New York-based Independent Adjustment Co. (IAC) expanded its operations with the recent opening of a branch office in Little Falls, N.J.

The office will allow prompt response to area claims and service to the Northern and Western areas of New Jersey. Luis Otero will be the supervising new office’s adjuster.

Donan Engineering Co. Donan Engineering Co. Inc. opened a new Baton Rouge, La., office.

With the addition of the new Louisiana office, Donan Engineering has 43 offices located throughout 26 states.

Donan Engineering offers an array of services falling under the main categories of structural engineering investigations, fire and explosion origin and cause investigations, roofing investigations and component testing.

Crawford & Co. Crawford & Co. an independent provider of claims management services and products, is introducing a new selfservice application for mobile devices that can offer customers a better experience with post-lease vehicle inspections.

The application (My VCI) was released for iPhone and iPad mobile devices.

A browser-based version and applications for other digital devices will follow, as will one for commercial truck inspections. CJ Summer 2012 | Claims Journal 19

SPECIAL REPORT | TECHNOLOGY

Next Generation of Claims Adjusters Needs Next Generation Claims Handling Technology

P

roperty/casualty insurers need to replenish their claims-adjusting ranks, as age and attrition take their toll. While searching for top candidates, carriers also need to look for processes and technologies that will enable this next generation to come up to speed quickly, ensuring efficient, effective and service-sensitive claims handling.

As insurers set the stage for a new generation of medical injury claims professionals, they should think about technology and the impact of medical costs on the adjusting process.

Insurers face challenges recruiting and training a new generation of adjusters, given

By Greg Gaughan the number of professionals leaving the ranks. Yet there’s an opportunity to leverage technology to empower medical injury claims adjusters to process claims more effectively, positively impacting policyholders and insurers.

Inexorably Rising Medical Costs What really should be on insurers’ minds as they build their claims profes20 Claims Journal | Summer 2012

sional ranks is the unrelenting rise of medical costs. As the key component of injury claim settlement values, medical costs have to be tackled to effectively manage the costs of medical care related to the handling of injury claims. Empowering claims handlers to manage medical costs in an automated and efficient manner is key to surviving and thriving, given the claims environment.

Consider the rise in medical inflation: From January 2002 to January 2012, overall inflation increased 28 percent, while during this same period medical cost inflation increased by 46 percent.

It’s clear adjusters should be tasked with mitigating the impact of continuously rising medical costs, while ensuring the injured party receives prompt, appropriate and high-quality care.

The challenge, therefore, goes beyond just training a new generation of medical injury claims adjusters; it is one of supplying these adjusters with the tools, technologies and techniques for a brave new world of medical cost management.

All claims professionals balance large caseloads of claims with multiple moving parts. Medical injury claims professionals, in particular, encounter

compliance requirements, timing considerations, the need to determine exposure and establish timely and accurate reserves, and settlement strategies/negotiations. Automating these components of the claims handling process allows adjusters to apply their people skills where they make the most difference — interacting with the injured party, treating doctors, attorneys, employers and others involved in the medical claim ecosystem — to create settlement outcomes amenable to all.

Captured Benefits The trend toward core claims management solution replacement is well-established, and most insurers are benefitting from their new claims software solutions.

Modern IT infrastructures and programming languages, system flexibility and modification speed capabilities, and ease-ofuse provide advantages to claims handling teams, rookies and seasoned adjusters alike.

But have carriers truly captured all the benefits that software can provide their claims handling communities?

There is a breed of system that, when integrated with carriers’ claims solutions, can bring even more value

All Items and Medical Cost Inflation Annual Percent Increase January 2002 - January 2012

to claims handling accuracy, consistency, efficiency and service levels provided to customers.

Enter the era of the claims expert point solution, specifically envisioned to bring the new generation of claims adjusters into the modern age. Embedded into the claims handling process, these solutions deliver decision support tools that empower claims adjusters to automate and streamline key parts of medical injury claims handling, containing costs wherever possible while ensuring the insured receives the best care possible.

Expert Point Solutions as a Guide The goal of expert point solutions is to achieve consistency and fair outcomes by putting the best adjusters’ expert guidance at key points in the claims handling processes. The critical areas of claims handling — coverage evaluation, investigation, liability evaluation, recovery evaluation, settlement evaluation and negotiation and settlement — need to be part of a consistent claims evaluation process.

All steps in the claims process can be automated in a consistent claim evaluation framework that empowers effective and productive claim settlement results.

The first step in effectively handling any claim is clearly understanding and evaluating the jurisdictionally appropriate coverage that applies to the occurrence, and then consistently executing key claim investigative activities. Liability determina-

tion, recovery evaluation and settlement evaluation require clear and accurate documentation, appropriate detailing, and accounting of special and general damages for negotiations to proceed smoothly in a timely and logical manner. Sharing data and workflow seamlessly among all these steps leads to more appropriate loss and loss adjustment expense, improved claims cycle time and better customer service.

Analytics and Business Intelligence The application of advanced analytics and business intelligence is another example of using technology to better understand the actual drivers of injury claims handling effectiveness, as well as healthcare delivery efficiencies.

Analytics can be employed to help improve adjuster performance and, therefore, settlement outcomes. Analytics can provide the adjuster with greater insight into the claim context, the claimant and providers, as well as be used to automate certain routine business rules — such as when to forward claims for independent medical exams or to special investigative units — accelerating the claims process.

Predicting which claims would benefit most from early intervention is key to molding the next generation of adjusters.

Predictive analytics aids in improved frontline decisions that make the most of scarce resources by triaging high-cost claims before they escalate. Insurers know that a small number of high-cost claims drive the

majority of loss dollars. These costs can be better controlled by effectively managing claims from the onset — a better use of adjusters’ time and expertise.

Integrating New Provider Networks Claims data and analysis also help with the most expensive claims. Once again, medical costs — as well as fraud and abuse — are driving claims analytics usage.

Medical management partners, expanded Preferred Provider Organization networks along with new network configurations, such as Voluntary Provider Networks (VPNs), and Out-of-Network (OON) service-providers are starting to hit stride.

Adjuster decision support technologies are being closely integrated with out-ofnetwork provider and payment services.

The benefit to insurers is that they are able to leverage the estimated 70 percent of medical charges generated by providers not part of a provider network. By automating and integrating provider network tiering and out-of-network negotiation services into adjuster technologies, medical costs are addressed at the start of the claims settlement process.

Since time is of the essence in handling the most expensive medical claims, full integration with medical bill adjudication software and the service-provider is essential to success.

Medical bills eligible for out-of-network negotiation services must be seamlessly selected and transmitted to negotiation services partners without any need for intervention from claims professionals or re-keying of information. VPNs and OONs can help make the most of adjuster claims handling expertise by automating and incorporating a cost containment component into the claims workflow.

Adjusters can deploy claims handling technology to become efficient, and with control over decision-making, when they have the systems to guide them through the claims process, and with full access to claim information and medical bills. Rising medical costs will not likely change, but claims adjusters, armed with the best technology, can mitigate them within the adjustment and settlement process. CJ Gaughan is vice president and general manager for Mitchell NHQ Negotiation Services.

Summer 2012 | Claims Journal 21

SPECIAL REPORT | SALARY & JOB REPORT

JOB Adjusters Like Their Jobs Despite Workload and Staffing Complaints

By Denise Johnson

D

espite low staffing and high workload and changing legal and regulatory environments, claims adjusters like their jobs.

They are also less worried about losing their jobs than other professionals.

According to the Claims Journal 2012 Job & Salary Survey — a whopping majority say they enjoy working for their employer. According to the exclusive

22 Claims Journal | Summer 2012

survey, 88 percent of independent adjusters and 84 percent of insurance company adjusters reported that they like working for their employer, while 91 percent of company management say they like working in the industry.

Even though job satisfaction ranks high, common concerns emerged when it comes to the claims industry.

“Based on comments, reduced staff

and increased work are top complaints,” said Paul Osborne, senior consultant for Demotech Inc., who analyzed the results.

According to adjusters from 22 states who responded to the survey, claims department staffing in 2011 remained level with little increase or decrease in staff size.

While workload concerns were high,

Employee Job Satisfaction: Who Likes Their Job

Independent Adjuster/Staff

the average number of hours No 12% worked per week hasn’t changed in five years.

Thirty-eight percent of adjustYes 88% ers reported working between 41 to 45 hours while 53 percent indicated this number has stayed the same during the past five Insurance Company Adjuster/Staff years. This data is on track with No results from the latest American 16% Time Use Survey, conducted by the Bureau of Labor Statistics Yes (BLS), which found that in 2010 84% the average American worked about 8.39 hours per day.

Despite constant media Insurance Company Management reports highlighting a dire job outlook, more than 75 percent of No 9% adjusters surveyed said they are not worried about losing their Yes jobs in 2012. While 67 percent of 91% respondents did not expect their claims departments to add staff in 2012, a recent labor study conducted by The Jacobson Group, an executive search and staffing firm for are key areas of expected job growth. the insurance industry, suggests these pro- Coons said that’s because there’s pent-up fessionals might be underestimating the demand for talent. potential. The 2012 Insurance Labor Study “…These areas were some of the most conducted by The Jacobson Group revealed heavily affected by the downturn in the that more than 50 percent of all companies economy. They experienced some of the say they will increase staff over the next 12 most significant reductions in force to months. begin with, leaving fewer employees to “That’s the greatest percentage increase handle increasing workloads,” said Coons. in the history of this study,” said Dave It’s also significant that the insurance Coons, senior vice president of The Jacobindustry unemployment rate is very low son Group. compared to the national average, Coons The increased need for staffing is the said. result of business growth and volume, he Just this year, Progressive Insurance said.

Co. announced 1,100 new jobs. Katie Koch, Another strong indicator that the recruiting director at Progressive, said that economy and the industry are improving is added growth spurred the hiring. Progresthat 60 percent of small carriers also plan sive currently employs 25,000 employees to add staff over the next 12 months. handling more than 12,000 in claims alone.

“When you start to see small businesses having a more positive outlook on busiChallenges Facing Claims Teams ness growth and planning to add staff as a While the job outlook for claims appears result — that’s a very positive sign that the to be improving, adjusters remain coneconomy is, in fact, improving,” Coons said. cerned about workload. Many feel their Technology, underwriting and claims departments are understaffed to handle

a growing workload and that companies have been reactive rather than proactive in filling those positions. According to adjusters, other issues including a lack in clerical help, over-management, regulatory and technology changes also affect their workload.

As one adjuster put it, “We are always two to three people short of what we need to handle the workload.”

Some feel the increased workload is having negative effects. An Illinois company adjuster stated, “The quantity of work is impacting the quality.”

Adjusters say that in addition to concerns over reduced staffing and increased workload, they worry about losing and recruiting talented claims staff to their teams.

“Staffing a new position with a quality staff member is more difficult each year.

College graduates are not interested in sitting in a cubicle everyday putting out fires.

[The] industry has become so ‘procedure driven’ — we are producing claims processors and not adjusters…In 10-15 years who will be manning the claims desk?” asked one adjuster.

Adjusters aren’t just concerned about attrition; they also fear their counterparts might leave the company or field entirely.

“Management doesn’t understand the complexity of our work… There is definite leakage of talent to other carriers…

We are starting to see a breaking point. All the fat has been trimmed and we continue to be stretched to the point that many, many talented adjusters across the country are looking to go elsewhere or pursue difcontinued on page 24 Summer 2012 | Claims Journal 23

SPECIAL REPORT | SALARY & JOB REPORT

Love My Job, continued from page 23

ferent career paths,” said one concerned adjuster.

Aging Claims Workforce “The aging workforce and the onset of high volume retirement is certainly contributing to a shrinking talent pool,” said Coons.

Fifty-three percent of survey respondents were adjusters between the ages of 51 to 60 with the next closest group, ages 41 to 50, at 30 percent.

Also, 39 percent of respondents have in excess of 21 years of claims experience — experience not easy to replicate.

How can the insurance industry

handle a mass exit of claims department employees who are closing in on retirement?

One answer is by continuing to employ older workers, according to research conducted by the Sloan Center on Aging & Work at Boston College. The Generations of Talent Study, released late last year, found that employees aged 40 years and older are the most engaged and demonstrate the highest level of organizational commitment, while employees aged 50 and older are the most satisfied with their jobs.

Keeping aging employees on the books may not be as difficult as it might seem. That’s because older workers are continuing to postpone retirement,

according to research by the Employee Benefit Research Institute provided by the Health and Retirement Study.

According to a 2012 analysis of census data by BLS, the share of the labor force that is 55 and older will increase to 25.2 percent in 2020.

Performance Appraisal Conundrum Of the 95 percent of survey respondents that reported receiving an annual performance appraisal, 60 percent say these were made up of a combination of employee and management input.

Samuel Culbert, a professor at the UCLA Anderson School of Management and author of the book “Get Rid of the continued on page 26

Glass Ceiling Alive and Well in Claims According to salary data provided by Payscale, an online compensation data website, female college graduates’ salaries plateau at age 39, while their male counterparts continue to enjoy wage increases until age 48.

Despite BLS statistics indicating 57.4 percent of the 282,000 workers that make up the claims profession are female and femalefocused advancement programs abound in the insurance industry, it seems female claims staffers still lag behind their male counterparts when it comes to salary. “[The] glass ceiling seems alive and well in the claims industry,” according to Demotech

Inc. Senior Consultant Paul Osborne’s analysis of the responses to the Claims Journal survey.

But females who hold high positions in claims departments are seemingly unaware of the difference.

“I think there are challenges that everybody faces…I actually think we are in a place that is pretty gender neutral,” said Carol Weber, a senior vice president and worldwide general liability claims manager for Chubb, in an earlier interview on the subject of gender within company claim departments.

Weber’s advice for female adjusters wanting to get ahead:

Average Salary by Gender

Independent Adjuster/Staff Female $76,405 Male $96,072

Insurance Company Adjuster/Staff Female $63,212 Male $71,283 Insurance Company Management Female $92,983 Male $109,943

24 Claims Journal | Summer 2012

1 2

3

4

5

6 7 8

Be excellent at your job.

Constantly look for ways to improve your skills.

Look for opportunities to participate in projects at the branch or department level, not just within your job focus.

Look for opportunities to participate in home office sponsored-projects.

Join a resource group or local branch charitable events.

Don’t be afraid to take a lateral move.

Find a mentor or join a mentoring program.

Always talk to your manager and make your goals known.

The Next Generation Adjuster: Millennials

By Stephanie Jones

A

lthough the birth date range for millennials, sometimes called Generation Y or Gen Y, varies, a Deloitte Consulting LLP report puts the range between 1982 and 1993.

Despite the recent economic downturn, industries across the board are looking at this generation, now mostly in their 20s, as the source for new blood and new ideas to replace workers who are beginning to age-out of the workforce in droves.

In its Gen Y report, Deloitte found that when it comes to employment, millennials differ significantly from Generation X in that Gen Y values “long-term career development within a single organization.” The older generation, on the other hand, is generally noted for its “employer infidelity.” Deloitte added that in return for such loyalty to an employer, “Gen Y demands variety in experience and learning opportunity.”

What Millenials Want Two organizations headquartered in the Midwest, The Griffith Insurance Education Foundation and the Ohio Insurance Institute (OII), have undertaken projects to both identify what millennials want and create awareness of and an interest in the many opportunities offered within the insurance industry.

The Griffith Insurance Education Foundation has published a study on how to recruit millennials into the insurance industry. In terms of what this generation is looking for in a work environment, Griffith’s “Report on Existing Millennial Research,” a whitepaper published in November 2011, found that among other things: • Millennials want meaningful, satisfying and challenging work they will enjoy.

• Millennials appreciate collaborative work environments.

• Millennials seek employers who demonstrate social responsibility through workplace efforts.

Not surprisingly, Griffith found that this generation excels at multi-tasking. As

the Griffith report put it: Millennials are “extremely comfortable with technology and have the ability to use multiple devices simultaneously.” They also use “media as a primary forum for communication and informational purposes.”

Acknowledging millennial employees’ comfort level with technology, Halogen Software Inc. created Feedback Central, a new feature within its performance appraisal software that allows for crowd sourcing feedback. The program is icondriven — something that appeals to this new generation of workers used to social media. According to Donna Ronayne, vice president of marketing and business development, it’s a way to create an environment of immediate feedback to recognize and reward employees.

Griffith discovered one surprising gem of information that runs contrary to the general assumption that most people have a negative view of the insurance industry.

“Gen Y basically doesn’t have an opinion yet at all,” said Jason Terrell, director of Insurance Education Institutes for the Griffith Foundation. “So there’s an opportunity to influence what they think. Once we can expose them to the industry, get them beyond that it’s just sales and realize that it’s a much larger industry, then we can see that needle starting to move.”

Dave Coons, senior vice president of The Jacobson Group, an executive search and staffing firm for the insurance industry agrees. “Young emerging talent needs to be educated as to what the career opportunities are in claims.”

What Motivates Millenials Terrell also said Griffith’s research shows that the primary motivating factors for millennials are “the same things that everybody else is looking for, such as stability, salary, being able to provide for their family.”

Mitch Wilson, vice president of information and education at the OII, said his organization also has found through feedback from nearly 1,400 Ohio teachers who offer some form of insurance education or financial literacy instruction that salary is definitely a motivating factor for young

people, but not the only one. Flexibility in the workplace, as well as the feeling that they are being appreciated for their contributions, also comes into play.

“They also, many of them, want to know that what they’re doing … is making a difference. They want to make sure that they are part of the picture of just really making things better,” Wilson said.

Good Outlook Wilson said that outlook meshes well with the property/casualty insurance industry which is all about helping individuals put their lives back together after a loss. “Something horrible has happened and you’re helping them. We feel that that can be a good fit with our industry,” he said.

A study by McKinsey & Co. and The Risk Foundation found that despite challenges — such as a poor reputation among the general public and lack of awareness among young people about careers in insurance — the industry has several things going for it.

The report, “Building a Talent Magnet: How the Property and Casualty Industry Can Solve Its People Needs,” noted several causes for optimism. One is that “the industry’s risk management jobs have the qualities — stability, a good work/life balance, intellectual challenge, strong professional development possibilities, and the chance to make a difference — that young jobseekers want.”

The industry also is poised to take advantage of layoffs in other financial services organizations such as banks and positioned to access “a pool of talent more receptive to learning what a career in insurance has to offer,” the McKinsey report stated.

In addition, the insurance industry has scale: it employs more than one million people in the United States.

“Finally, in the battle for talent, the industry has a hidden resource: a strong network of schools of risk management and professional associations that can provide a platform for launching an effort to re-make its image,” according to the McKinsey report. CJ Summer 2012 | Claims Journal 25

SPECIAL REPORT | SALARY & JOB REPORT Love My Job, continued from page 24

Performance Review: How Companies Can Stop Intimidating, Start Managing and Focus on the Results that Really Matter,” said performance reviews are indicative of bad management.

“At their heart, they are intimidating, guaranteeing that the subordinate will keep the truth from the person who’s going to be reviewing them,” said Culbert. “It’s only human. Who wants to say something that the boss won’t agree with, only to have the boss turn around and use it against him or her six months later? Nobody, that’s who.”

According to the UCLA professor, it doesn’t matter how an employee is reviewed — by the boss only, by the boss and employee, or by the boss, employee and coworkers.

“No, they all stink. They all lead to dysfunctional behavior. Each one has a different nuance. Take the situation where the employee is supposed to review himself or herself first. The employee’s really in a jam. ‘I know what my boss thinks is my fault. I think the boss

is wrong, completely ignorant of how I compensate for my so-called weakness.

Now, do I have to mention this, even though I think it’s nonsense? Because if I don’t mention it, I may be graded down for self-candor.’ It just leads to games,” Culbert said.

Employees aren’t the only ones who lose out on performance reviews. So do companies, Culbert said, because the reviews are rarely objective.

“It’s not objective. You want a different review? Change bosses. That’s easy.

Because that’s what the studies show.

The studies show that the best way to get improvement is to change your boss,” the professor said.

The problem isn’t in performance appraisals as a whole, but rather in how an individual company conducts the evaluation, according to Donna Ronayne, vice president of marketing and business development for Halogen Software Inc. “Unfortunately, performance ap-

praisals in many organizations...are still very much a one way conversation,” said Ronayne.

The software company’s customers include Safe Auto, PEMCO, Employers Insurance Co. of Nevada and the Injured Workers’ Insurance Fund.

Performance reviews should do more than rate an employee, Ronayne said.

“It (Halogen’s performance appraisal software) also was meant to do more than just rate and rank an employee. It was meant to help develop an employee,” said Ronayne, who likened a performance appraisal to coaching tips.

The company’s system can be set up to allow for journaling capabilities, allowing year round feedback; a feature that may address Prof. Culbert’s recommendation of performance previews versus once a year reviews.

Ronayne said performance reviews aren’t going anywhere and companies should consider an employee’s performance as the hub of the organization. CJ

Average Salaries by Region

Independent Adjuster/Staff East $107,221 Midwest $97,111 South Central $90,933 Southeast $95,781 West $72,600 Outside the U.S. $80,167

Insurance Company Adjuster/Staff East $74,894 Midwest $62,874 South Central $68,500 Southeast $100,567 West $66,821 Outside the U.S. $56,000 Insurance Company Management East $115,830 Midwest $105,527 South Central $93,603 Southeast $100,567 West $104,110 Outside the U.S. $88,200

26 Claims Journal | Summer 2012

National Average Salaries

Average Independent Adjuster/Staff $93,270 Independent Management $76,050 Insurance Company Adjuster/Staff $67,014 Insurance Company Management $104,271

Average Salaries by Years of Experience

Independent Adjuster/Staff 0-5 years $81,250 6-10 years $79,325 11-15 years $88,300 16-20 years $83,722 21 plus years $95,620

Insurance Company Adjuster/Staff 0-5 years $54,032 6-10 years $60,068

11-15 years $68,438 16-20 years $69,892 21 plus years $75,095 Insurance Company Management 0-5 years $69,700 6-10 years $86,312 11-15 years $93,959 16-20 years $102,219 21 plus years $112,352

Average Total Compensation Increase

Average Increase Independent Adjuster/Staff 13.55% Insurance Company Adjuster/Staff 4.09% Insurance Company Management 5.26%

Industry Staff Sizes

Independent Adjuster/Staff Decreased Staff Size Increased Staff Size Same Size in 2011 as in 2010

Worried About Losing Job

14% 34% 51%

Insurance Company Adjuster/Staff Decreased Staff Size 27% Increased Staff Size 29% Same Size in 2011 as in 2010 44% TOTAL Decreased Staff Size Increased Staff Size Same Size in 2011 as in 2010

Independent Adjuster/Staff No 82% Yes 18%

Insurance Company Adjuster/Staff No 75% Yes 25% Insurance Company Management No 78% Yes 22%

23% 31% 46%

Summer 2012 | Claims Journal 27

IDEA EXCHANGE | BEST PRACTICES

Zealous and Cost-Efficient Legal Defense in Insurance Matters

T

he economy has been stalled for years, and every business, including insurance, is looking to cut costs and provide services timely and cost-efficiently. Meanwhile, a 2009 litigation trends survey of corporate counsel in the United States found that there is an expectation of increased litigation in the coming year because of, but not limited to: 1) the increased costs involved with e-discovery and other discovery devices; and 2) cost-recovery efforts against businesses in

By Kenneth B. an effort to make-up Walton for bad business deals.

The prospect of increased litigation focuses the payor on more cost-efficient legal services in an attempt to balance the goals of zealous and cost-efficient legal representation.

The model for this analysis is wellknown in the insurance industry. Businesses purchase liability policies from insurance companies. When a claimant asserts a claim, the insured submits the claim to the insurer, which may retain an outside law firm to defend the insured in the lawsuit or other legal proceeding.

Defending a lawsuit for an insured can be a lengthy, frustrating and expensive process. The insured’s business may be disrupted because principals need to spend time assisting defense counsel.

This assistance typically includes 1) providing factual and documentary support to defend the claim, and 2) attending meetings, depositions, mediation

28 Claims Journal | Summer 2012

and other important events related to the suit. The insured also may become frustrated with the time and expense required to resolve a lawsuit, particularly if the insured has a large retention or deductible obligation that must be satisfied before the insurer becomes responsible for defense and/or indemnity obligations under the insurance policy.

The insurer must establish a reserve for all claims early in the process that takes into account the: 1) substantive strength or weakness of the claim; 2) cost to defend the claim; and 3) potential indemnity payments by the insurer upon settlement or jury/judge award after a trial. The insurer and insured may be disappointed if defense counsel’s projections about the outcome and defense cost are inaccurate and the cost to the insurer exceeds original estimates.

cannot make informed judgments about whether to defend or resolve a claim at an early stage, before substantial legal fees and costs have been incurred by defense counsel. Budgets vary, so each budget must reflect the reality of the case and must explain why it is larger (or smaller) than similar cases.

Prompt and Efficient Resolution In cases that are not dismissed at summary judgment, and in which a decision is made by the insurer and insured to settle the case short of trial, defense counsel’s role is to: provide the insurer and insured with a durable case budget; efficient management of associates and experts; and early notification of the insured’s potential exposure and the risks, costs and benefits of trying to resolve the case or proceeding to trial.

Partners and Support Staff Another consideration in completing a case budget is the division of time between partners, associates and paralegals/clerks. Many activities should only be handled by partners and senior level associates: trials, mediations, important court appearances, defense of client depositions and preparation of exposure assessment reports. Other activities should be delegated to associates: document privilege review, attendance at non-critical fact witness depositions, preparation of draft pleadings and other motion papers (subject to partner review) and attendance at minor court appearances.

A balance needs to be struck between these activities and the partner in charge is responsible for the result.

Partners are also in charge of the timely submission of a litigation budget to the insurer. Partners should be prepared to commit to staying within a budget unless unexpected circumstances dictate that the budget be modified.

Budgets Reliable litigation budgets provided shortly after receipt of defense counsel assignment are necessary for the insurer.

Without a reliable budget, the insurer

Third-Party Vendors Management of expert witnesses is another important duty of defense counsel. Defense counsel must provide experts with a clear scope of services and

all information necessary to complete their evaluation thoroughly and costefficiently. In exchange, the expert must commit to and comply with a notto-exceed budget.

After the scope has been provided by defense counsel and the expert has been given two to four hours to review the case, the expert should be asked to commit to a not-to-exceed budget (expert budget). The proposed scope and expert budget should be sent to the insurer for review and approval before the expert proceeds with services. Defense counsel also should provide the insurer with rationale as to why an expert is necessary at that stage of the proceedings.

Summary Judgment Motions Motions for summary judgment are

a great litigation device. A successful summary judgment motion will lead to a lawsuit’s dismissal and termination. In most cases, especially when the grounds for summary judgment are strong, no steps should be undertaken to try to settle the case until the summary judgment motion has been decided by the court. In some cases, an effective strategy can be to file a motion for summary judgment and then mediate or make other efforts to settle the case before the motion is decided.

Mediation Mediation should be considered in almost every case that cannot be resolved via motion for summary judgment (unless a decision has been made to try the case).

Mediations allow parties to consider the possibility of resolving cases before trial in a confidential setting. The process is nonbinding and allows parties to evaluate the strengths and weaknesses of their cases with an experienced, neutral third-party.

Mediation also allows an insurer to evaluate the presentation of claimant’s counsel and witnesses. Even if the mediation is unsuccessful, defense counsel can ascertain information that can be used in the insured’s defense. It is the rare case that does not call for a mediation process.

In tough economic times, insurers are looking for new ideas to reach prompt and cost-efficient resolutions. However, absent an early comprehensive investigation, substantive case budget and litigation plan, the insurer will not have enough information to make an informed judgment on how to proceed. The defense counsel’s role is to ensure that a zealous and costefficient legal defense is pursued. Defense counsel tools and techniques will assist insurers in making informed and timely economic decisions in every case. CJ Walton is a founding partner of Boston-based Donovan Hatem LLP. He has experience defending employer general liability matters and insurers in coverage disputes.

IICF Week of Giving October 13 – 20, 2012

VOLUNTEER. GIVE. MAKE AN IMPACT.

IICF Week of Giving taps the talent and energy of insurance employees and employers to stimulate volunteerism and philanthropy in local communities.

Week of Giving builds on the tradition of Volunteer Week, the annual event to rally industry volunteers across the United States. Support your community — sign up your volunteer team at IICF.org/volunteer.

New for 2012: A giving campaign supporting recognized nonprofit organizations. Text INSURANCE to 50555 to donate $5 or donate at IICF.org.

The Insurance Industry Charitable Foundation is a registered not-for-profit organization under section 501(c)(3) of the IRS code. Federal Tax ID #20-1240972.

IICF15959.indd 1

Summer 2012 | Claims Journal 29 7/5/12 10:49 AM

IDEA EXCHANGE | COVERAGE CORNER

Burke’s Law:

Seventh Circuit Confirms Strict Application of ‘Your Duties After Loss’ Provision

A

fter a loss, insurers and insureds turn to the policy provisions to understand their rights, obligations and duties. Standard insurance policies require the insured to cooperate with the insurer’s investigation of the claim. However, these “cooperation clauses” are generally read in favor of the insured and do not require strict compliance. Insurers may only escape their duties under the policy if they show that they were materially prejudiced by the insured’s lack of compliance.

The Seventh Circuit Court of Appeals recently held that a

By Burke “Your Duties After Coleman Loss” provision, requiring the insured to submit to examinations under oath and produce requested documents, was not a cooperation clause, and therefore an insured was required to strictly comply with the insurer’s requests.

Insured homeowners were found to have breached a policy where they produced requested documents within their possession, but failed to acquire additional requested documents not within their possession.

In the case, Foster v. State Farm Fire 30 Claims Journal | Summer 2012

and Casualty Co., 674 F.3d 663 (7th Cir. 2012), homeowners submitted a claim to their insurer, State Farm, after a fire damaged their Indiana home. As part of its investigation, State Farm requested numerous documents from the homeowners and pointed to the policy’s “Your Duties After Loss” provision, which obligated the policyholders to provide records and documents “as often as [State Farm] reasonably require[s].”

The homeowners complied with a portion of State Farm’s requests, producing all of the requested documents within their possession, but many of the requested documents remained outstanding.

Despite repeated requests by State Farm for additional records and indications from the homeowners that they would be acquired and produced, the homeowners eventually informed State Farm that they were unable to produce the remaining documents. The homeowners then filed a claim against State Farm for breach of contract and bad faith.

Although the court was presented with a number of issues, the primary question was whether the homeowners had satisfied the terms and conditions of the “Your Duties After Loss” provision by submitting all of the requested

documents within their possession but by not acquiring additional requested documents.

Nature of the Provision The court first addressed the nature of the “Your Duties After Loss” provision.

The homeowners argued the provision was a cooperation clause that did not require strict compliance. The majority of courts, including courts in Indiana whose law controlled this case, have held that an insurer cannot invoke a cooperation clause to escape its duties under the policy unless the insured does not substantially comply with the provision and the insurer demonstrates that it was materially prejudiced by the lack of compliance. See Indiana Ins. Co. v.

Williams, 463 N.E.2d 257 (Ind. 1984); see also e.g. Talley v. State Farm Fire and Cas. Co., 223 F.3d 323 (6th Cir. 2000); Rodriguez v. Southern Fidelity Ins. Co., 2011 U.S. Dist. Lexis 17529 (E.D. La. 2011); Union Ins. Co. of Providence v. Williams, 261 F.Supp.

2d 1150 (E.D. Mo. 2003). But the Seventh Circuit, applying Indiana law, refused to interpret the “Your Duties After Loss” provision as a cooperation clause.

Although most states have interpreted “Your Duties After Loss” provisions as cooperation clauses, Indiana has expressly rejected this interpretation.

owners] emphasize that they produced for State Farm everything they possessed. We assume they did. But the [homeowners] misunderstand their duty under the contract as construed by Morris: Their duty was not (only) to give State Farm documents they happened to possess physically but to acquire and deliver requested documents…” Foster at 668.

Policyholders’ Concerns At first blush, the decision has worrisome implications for policyholders. The homeowners See e.g. Nichols v. Aetna Life and Cas. Co., articulated these concerns in their brief to 1995 U.S. Dist. Lexis 2738 (S.D.N.Y. 1995); the court, asserting that a ruling in favor Hoekstra v. Farm Bureau Mut. Ins. Co., 382 of State Farm would give insurers the N.W.2d 100 (Iowa 1986); Hamilton v. State unchecked ability to impose unreasonable Farm Fire and Cas. Co., 2012 U.S. App. Lexis and onerous requests on insureds to force 8744 (5th Cir. 2012). them into noncompliance. The court large In Morris v. Economy Fire and Casualty ly ignored this concern and the potential Co., 848 N.E.2d 663 problems stemming (Ind. 2006), the Indifrom a strict appliWhen an insurer ana Supreme Court cation of the “Your held that “Your Duties requests documents, Duties After Loss” After Loss” provisions but instead an insured has a duty provision, are not cooperation consistently reasserted not only to produce clauses, but rather that the plain terms of distinct conditions policy mandated those documents in its the within the policy with strict compliance. possession, but which the insured The court explained must strictly comthat the reasonableto acquire every ply. Relying on this ness requirement in requested document. decision, the Seventh the provision attached Circuit summarily only to how often the rejected the homeinsurer could request owners’ argument, noting that “compliance documents and could not be read into is not optional or subject to a trial court other aspects of the provision. “The policy determination of reasonableness.” Foster at contract does not itself impose an explicit 667. general ‘reasonableness’ requirement on The homeowners argued in the alterna- the insurer regarding what documentative that, even outside the context of the tion the insurer might demand … [and] leniently applied cooperation clause, they an insured cannot impose a reasonablehad complied with State Farm’s requests ness limit on ‘the nature and extent of the by producing all documents within their information or statement sought.” Foster at possession. The court was unsympathetic 667-668. to the homeowners, stating: “The [home Despite the court’s harsh tone, elements

of its opinion suggest that limitations remain on an insurer’s ability to request documents and impose other demands on its policyholders.

First, the court attempted to soften its strict application of the provision by cautioning: “Our conclusion should not be overread … we do not understand Morris to license badgering and irrelevant demands for documents and information or endless EUOs.” Foster at 671.

In addition, the court appears to have penalized the homeowners for initially indicating their intention to acquire and produce all of the requested documents.

The court noted that “having unambiguously agreed to produce documents … the [homeowners] have left themselves no room to argue that State Farm’s requests were so numerous or frequent that they violated the insurance contract …” Foster at 668. The inference can be drawn that the homeowners may have been in a better position, and that the court may have considered the reasonableness of the document requests, had the homeowners objected to State Farm’s requests. The court ultimately enforced a strict application of the policy conditions, and while disclaiming any external considerations, it certainly factored the reasonableness of the requests into its decision.

The Foster decision confirms Indiana’s strict application of “Your Duties After Loss” provisions. It also demonstrates the extent to which this position can be applied. When an insurer requests documents, an insured has a duty not only to produce those documents in its possession, but to acquire every requested document to comply with the “Your Duties After Loss” provision. And, despite a contrary tone and demeanor, the court’s decision remains grounded in reasonableness.

While insureds generally receive favorable treatment under a cooperation clause, this is not the case with a “Your Duties After Loss” provision, at least not in Indiana. CJ Coleman is the legal counsel and compliance manager for Demotech Inc., Insurance Journal’s official research partner. This article is for informational purposes only, is not intended as legal advice, and is not a substitute for independent legal analysis and advice on a particular issue.

Email: bcoleman@demotech.com.

Summer 2012 | Claims Journal 31

IDEA EXCHANGE | COVERAGE CORNER

Essentials: Telephone Consumer Protection Act and Violations of Seclusion

T

he Telephone Consumer Protection Act (TCPA), 472 U.S.C.A. § 227 (2000), restricts the use of automated telephone equipment as a means of advertising. The TCPA prohibits the “use [of] any telephone, facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine.”

The TCPA prohibits what has come to be known as “fax blasting.” Fax blasting is the mass sending of unsolicited advertisements via a fax machine. Are these type of claims covered as an advertising injury under a general liability policy?

TCPA claims are typically not included as an enumerated offense in the policy unless the parties agree to include the claim as an offense.

Yet some jurisdictions have held that fax blasting is covered

By Steven Plitt as an advertising injury because TCPA claims constitute an invasion of privacy.

These courts focus on one variation of an invasion of privacy that involves the intrusion upon a person’s seclusion or solitude or into a person’s private affairs.

Courts have found that privacy means both secrecy and seclusion, and therefore, a violation of the TCPA constitutes an invasion of privacy. See, e.g., Park University Enterprises Inc. v. American Casualty Co. of Reading, PA, (10th Cir. 2006).

Where courts conclude that a violation of the TCPA constitutes an advertising injury, courts have had to address whether faxing ads constitutes an “oral or written publication.” See, generally, Valley Forge Ins. Co. v. Swiderski Electronics Inc., (2006). “Publication” is generally considered to mean publishing offending material to the public at large, and not to a narrow or limited subset of society.

Hameid v. National Fire Ins. of Hartford (2003). Courts that have found coverage for TCPA claims have concluded that the scope of publication required for an advertising injury is not limited to 32 Claims Journal | Summer 2012

offending material sent to a third party.

See, Western Rim Inv. Advisors, Inc. v. Gulf Ins. Co. (5th Cir. 2004). These courts conclude that a violation of the right of privacy under the policy is triggered because unsolicited advertising is an “offensive intrusion into the recipient’s solitude.” TIG Ins. Co. v. Dallas Basketball Ltd. (Tex. Ct. App.–Dallas 2004).

Jurisdictions that have held that fax blasting is not covered as an advertising injury focus either on the specific policy language or what constitutes an invasion of privacy. The definition varies depending on the policy form used by the insurance company. Where the policy form defines advertising injury as “making known to any person or organization covered material that violates a person’s right to privacy,” the courts have found that the phrase “making known” implies a disclosure to a third-party or the divulging of a secret. See, e.g., ACS Systems, Inc. v. St. Paul Fire and Marine Ins. Co. (2nd Dist. 2007); Resource Bankshares v. St. Paul Mercury Ins. Co. (4th Cir. 2005).

Faced with this language, courts have found that TCPA claims do not constitute an offense within the scope of “advertising injury” coverage because a TCPA violation does not typically involve violations of secrecy rights. A disclosure to a third-party due to a fax receipt does not typically occur in a fax blast situation. The recipient of the fax receives the ad, not a third-party. Additionally, the fax blast typically does not include private information about the recipient, and therefore there has been no secrets divulged in the process. The information that is faxed typically involves the advertiser’s goods/services.

Where a court focuses upon the definition of privacy, those courts often conclude that a TCPA violation does not constitute an advertising injury due to a narrow construction of the definition of invasion of privacy. These courts generally acknowledge that the “right of privacy” encompasses the right to secrecy and seclusion. However, the courts

conclude that when the phrase “right of privacy” is read with the “making known” language and the other enumerated offenses contained within the advertising injury clause, that the policy only covers offenses where the content of material violated secrecy rights. See, State Farm Fire & Casualty Co. v. Compupa, Inc., (Fla. Dist. Ct. App., 3rd Dist., 1995).

Other jurisdictions have concluded that a TCPA violation does not constitute advertising injury when viewed in the context of the other enumerated offenses contained in the definition of advertising injury like slander and libel. These courts A TCPA claim involves a concluded seclusion interest and that the disparaging not a secrecy interest. of those offenses involve a secrecy interest and not a seclusion interest. See, e.g., St. Paul Fire & Marine Ins. Co. v. Brother Int’l Corp., (D. N.J. Aug. 31, 2007), judgment aff’d 319 Fed.Appx. 121 (3rd Cir. 2009). These courts reasoned that a violation of the TCPA does not constitute advertising injury because a TCPA claim involves a seclusion interest and not a secrecy interest. CJ Plitt is a nationally recognized expert in insurance law.

Email: SP@kunzlegal.com.

CLAIMS REVIEW | Snapshot

Before and After: Stuffed Animal Value: Priceless An insurance company employee called CRDN of North Central Ohio, distraught that her son’s home had been destroyed by Hurricane Katrina.

The son was able to locate a few personal items that he brought to his parents’ home in Ohio. The items included a sentimental toy from the son’s childhood, this stuffed animal that was found buried in muddy debris. CRDN carefully handcleaned it to remove the mud, then put it into an ozone-injected washer to mitigate any biohazard bacteria commonly found in these types of disasters. It was air-dried and fluffed by hand with a hair dryer, resulting in 100 percent success. CJ

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Summer 2012 | Claims Journal 33

IDEA EXCHANGE | PROPERTY RESTORATION & DISASTER RECOVERY GUIDE

2012 CLAIMS JOURNAL GUIDE TO

PROPERTY RESTORATION DISASTER RECOVERY

+ C

laims Journal is pleased to publish the 2012 Guide to Property Restoration and Disaster Recovery.

This exclusive directory resource has been designed to help claims professionals find partners and services to enhance their ability to respond to disasters and better assist their clients.

Property restoration and disaster recovery companies specializing in aerial imagery, carpet cleaning, contracting, emergency mitigation, fire damage, mold removal, storm damage, temporary housing, and/or water damage submitted their information directly to Claims Journal for inclusion in this directory. Providers were allowed to list up to three categories.

While this directory is only a snapshot of the vast array of restoration and recovery services available to the claims industry, we hope you find it helpful. We look forward to expanding and enhancing this directory in the future and welcome your feedback on how we might improve it. Please send comments or suggestions to editorial@claimsjournal.com.

Sponsored by

34 Claims Journal | Summer 2012

IDEA EXCHANGE | PROPERTY RESTORATION & DISASTER RECOVERY GUIDE

PROPERTY RESTORATION & DISASTER RECOVERY GUIDE 2012 C

laims Journal is pleased to publish the 2012 Guide to Property Restoration and Disaster Recovery. This exclusive directory resource has been designed to help claims professionals find partners and services to enhance their ability to respond to disasters and better assist their clients. We look forward to expanding and enhancing this directory in the future and welcome your feedback on how we might improve it. Please send comments or suggestions to editorial@claimsjournal.com.

Aerial AerialImagery Imagery EagleView Technologies, Inc. www.eagleview.com InsuranceSales@eagleview.com (866) 659-8439 Service Area: Nationwide EagleView Technologies invented the concept of 3D aerial roof measurements with proprietary patented software providing detailed, accurate roof measurement reports substantially reducing claim cycle time. EagleView continues to provide a means to increase productivity while minimizing claim discrepancies with the most accurate guaranteed roofing reports.

Carpet Cleaning//Upholstery Upholstery Carpet Cleaning / / Household Goods Household Goods Esporta Wash Systems www.esporta.ca sales@esporta.ca (800) 881-7781 Service Area: Nationwide

J.S.B.K, Inc. dba ServiceMaster by Robinson www.sm2restore.com servicemasterbyrobinson@hotmail.com (954) 749-9544 Service Area: Florida

OHM Garment Restoration www.ohmgarmentrestoration.com (734) 207-7614 Service Area: Michigan, Ohio

Rainbow International Restoration and Cleaning www.rainbowintl.com (800) 583-9100 Service Area: Nationwide

36 Claims Journal | Summer 2012

ServiceMaster by ARTec

Clean Environments, Inc.

www.svmartec.com info@svmartec.com (610) 626-9002 Service Area: Delaware, Pennsylvania

www.cleanenvironments.com gregs@cleanenvironments.com (210) 349-7242 Service Area: Alabama, Florida, Georgia, Louisiana, Mississippi, New Mexico, South Carolina, Texas

Urban Valet Dry Cleaners www.myurbanvalet.com Jackie@myurbanvalet.com (716) 885-4351 Service Area: New York, Pennsylvania

Custom Restoration, Inc.

Contractors Contractors

Drywall & Painting Services

911 Restoration of Tampa www.911Restoration.com Chris@911Restoration.com (813) 305-2686 Service Area: Florida

American Fire & Water Restoration www.americanfire-water.com wmaier@americanfire-water.com (513) 779-4357 Service Area: Indiana, Kentucky, Ohio

American Technologies, Inc. www.ATIrestoration.com jeff.moore@amer-tech.com (800) 400-9353 Service Area: Nationwide

Bay Metro Corporation www.baymetrocorp.com (415) 626-4067 Service Area: California

Best Restoration Services

www.customrestore.com info@customrestore.com (707) 428-1232 Service Area: California www.yourdrywall.com jjeffmolnar@yahoo.com (419) 874-8119 Service Area: Ohio

Efficient Energy Corporation EfficientEnergyInc@yahoo.com (909) 723-6945 Service Area: Arizona, California, Nevada

Irons Brothers Construction, Inc. www.ironsbc.com (206) 306-7767 Service Area: Washington

JDi Data Corporation www.jdidata.com james.derosa@jdidata.com (954) 938-9100 Service Area: Nationwide

Omini Homes Contractors & Repairs, LLC www.ominihomes.com ominihomes@hotmail.com (504) 920-0424 Service Area: Louisiana

www.bestrestoration.com sales@bestrestoartion.com (310) 676-2167 Service Area: California

Reynolds Restoration Services

Bright Pro Cleaning & Paint

ServiceMaster by ARTec

mauricebright@yahoo.com (321) 946-1694 Service Area: Florida, Georgia

www.reynoldsrestoration.com (888) 277-8280 Service Area: Pennsylvania www.svmartec.com info@svmartec.com (610) 626-9002 Service Area: Delaware, Pennsylvania

Emergency Mitigation, Fire, Water, Water, Disaster Disaster//Catastrophe Catastrophe 911 Restoration of Tampa www.911Restoration.com Chris@911Restoration.com (813) 305-2686 Service Area: Florida

Able Water Damage Restoration (512) 671-8800 Service Area: Texas

AirSpec, Inc. www.AirSpecIAQ.com info@airspeciaq.com (321) 251-6656 Service Area: Florida

Alliance Disaster Kleenup www.alliancedk.com info@alliancedk.com (847) 205-2100 Service Area: Nationwide (Focus in Florida, Illinois, Wisconsin)

American Fire & Water Restoration www.americanfire-water.com wmaier@americanfire-water.com (513) 779-4357 Service Area: Indiana, Kentucky, Ohio

American Technologies, Inc. www.ATIrestoration.com jeff.moore@amer-tech.com (800) 400-9353 Service Area: Nationwide

A Q Environmental www.hazwaste.com rz@earthlink.net (800) 606-8077 Service Area: California, Nevada

BELFOR Property Restoration www.belfor.com (800) 853-3333 Service Area: Nationwide

CRDN-Certified Restoration Drycleaning Network www.crdn.com contactus@crdn.com (248) 246-7878 Service Area: Nationwide

Cousino Harris Disaster Kleenup www.cousinoharris.com (419) 874-9420 Service Area: Michigan, Ohio

Custom Restoration, Inc. www.customrestore.com info@customrestore.com (707) 428-1232 Service Area: California

Disaster Kleenup International

Rainbow International Restoration and Cleaning

www.disasterkleenup.com info@disasterkleenup.com (630) 350-3000 Service Area: Nationwide

www.rainbowintl.com (800) 583-9100 Service Area: Nationwide

DKI is the largest disaster restoration contracting organization in North America. The restoration services that DKI provides to insurance, commercial and residential clients include: emergency response, water damage mitigation, fire and contents cleaning, mold remediation, complete reconstruction and much more, 24 hours a day, 365 days a year.

www.the-restorers.com admin@the-restorers.com (855) 733-9111 Service Area: Idaho

DryMaster Restoration www.drymaster.us (323) 522-6691 Service Area: California

FRSTeam, Inc. www.FRSTeam.com info@FRSTeam.com (510) 723-1000 Service Area: Nationwide

Flood Masters www.flood-masters.com info@flood-masters.com (619) 234-2500 Service Area: California

Horticultural Asset Management, Inc. www.hmiadvantage.com contactHMI@HMIadvantage.com (919) 460-5445 Service Area: Nationwide

JDi Data Corporation www.jdidata.com james.derosa@jdidata.com (954) 938-9100 Service Area: Nationwide

J.S.B.K, Inc. dba ServiceMaster by Robinson www.sm2restore.com servicemasterbyrobinson@hotmail.com (954) 749-9544 Service Area: Florida

National Catastrophe Partners www.ncp-claims.com claims@ncp-claims.com (877) 576-0061 Service Area: Nationwide

R.A. West Associates, Inc. www.rawestassociates.com rawest@rawestassociates.com (215) 860-5026 Service Area: Nationwide

REE-Construction

RestoreCore www.restorecore.com (800) 231-1281 Service Area: Delaware, Maryland, New Jersey, Pennsylvania

ServiceMaster by ARTec www.svmartec.com info@svmartec.com (610) 626-9002 Service Area: Delaware, Pennsylvania

Servpro Industries, Inc. www.servpro.com kfarley@servpronet.com (615) 451-0200 Service Area: Nationwide

The New Crystal Restoration Enterprises, Inc. www.crystalrestoration.com rosemary@crystalrestoration.com (914) 937-0500 Service Area: Connecticut, New Jersey, New York

Fire Damage

Fire Damage AAA Flood Drying www.aaaflooddrying.com aaaflood@comcast.net (978) 392-1895 Service Area: Massachusetts, New Hampshire

Alliance Disaster Kleenup www.alliancedk.com info@alliancedk.com (847) 205-2100 Service Area: Nationwide (Focus in Florida, Illinois, Wisconsin)

Bay Metro Corporation www.baymetrocorp.com (415) 626-4067 Service Area: California

Best Restoration Services www.bestrestoration.com sales@bestrestoartion.com (310) 676-2167 Service Area: California

Summer 2012 | Claims Journal 37

IDEA EXCHANGE | PROPERTY RESTORATION & DISASTER RECOVERY GUIDE Cousino Harris Disaster Kleenup

American Technologies, Inc.

www.cousinoharris.com (419) 874-9420 Service Area: Michigan, Ohio

www.ATIrestoration.com jeff.moore@amer-tech.com (800) 400-9353 Service Area: Nationwide

CRDN-Certified Restoration Drycleaning Network www.crdn.com contactus@crdn.com (248) 246-7878 | Service Area: Nationwide

Disaster Kleenup International www.disasterkleenup.com info@disasterkleenup.com (630) 350-3000 Service Area: Nationwide

Efficient Energy Corporation EfficientEnergyInc@yahoo.com (909) 723-6945 Service Area: Arizona, California, Nevada

FRSTeam Inc. www.FRSTeam.com info@FRSTeam.com (510) 723-1000 Service Area: Nationwide

National Restorations, LLC www.nationalrestore.com info@nationalrestore.com (877) 884-9446 Service Area: Nationwide

REE-Construction www.the-restorers.com admin@the-restorers.com (855) 733-9111 Service Area: Idaho

R.A. West Associates, Inc. www.rawestassociates.com rawest@rawestassociates.com (215) 860-5026 Service Area: Nationwide

Urban Valet Dry Cleaners www.myurbanvalet.com Jackie@myurbanvalet.com (716) 885-4351 Service Area: New York, Pennsylvania

Mold MoldRemoval Removal 911 Restoration of Tampa www.911Restoration.com Chris@911Restoration.com (813) 305-2686 Service Area: Florida

AAA Flood Drying www.aaaflooddrying.com aaaflood@comcast.net (978) 392-1895 Service Area: Massachusetts, New Hampshire 38 Claims Journal | Summer 2012

A Q Environmental www.hazwaste.com rz@earthlink.net (800) 606-8077 Service Area: California, Nevada

Custom Restoration, Inc. www.customrestore.com info@customrestore.com (707) 428-1232 Service Area: California

DryMaster Restoration www.drymaster.us (323) 522-6691 Service Area: California

Elite Consulting Services www.EliteSvcs.com akeen@elitesvcs.com (317) 769-7999 Service Area: Nationwide

Esporta Wash Systems www.esporta.ca sales@esporta.ca (800) 881-7781 Service Area: Nationwide

Flood Masters www.flood-masters.com info@flood-masters.com (619) 234-2500 Service Area: California

J.S.B.K, Inc. dba ServiceMaster by Robinson www.sm2restore.com servicemasterbyrobinson@hotmail.com (954) 749-9544 | Service Area: Florida

RestoreCore www.restorecore.com (800) 231-1281 | Service Area: Delaware, Maryland, New Jersey, Pennsylvania

Rainbow International Restoration and Cleaning www.rainbowintl.com (800) 583-9100 | Service Area: Nationwide

R.A. West Associates, Inc. www.rawestassociates.com rawest@rawestassociates.com (215) 860-5026 Service Area: Nationwide

The New Crystal Restoration Enterprises, Inc. www.crystalrestoration.com rosemary@crystalrestoration.com (914) 937-0500 | Service Area: CT, NJ, NY

Storm StormDamage Damage AirSpec, Inc www.AirSpecIAQ.com info@airspeciaq.com (321) 251-6656 Service Area: Florida

BELFOR Property Restoration www.belfor.com (800) 853-3333 Service Area: Nationwide

National Catastrophe Partners www.ncp-claims.com claims@ncp-claims.com (877) 576-0061 Service Area: Nationwide

National Restorations, LLC www.nationalrestore.com info@nationalrestore.com (877) 884-9446 Service Area: Nationwide

Omini Homes Contractors & Repairs, LLC www.ominihomes.com ominihomes@hotmail.com (504) 920-0424 Service Area: Louisiana

Reynolds Restoration Services www.reynoldsrestoration.com (888) 277-8280 Service Area: Pennsylvania

Temporary Housing Service

Temporary Housing Service Assured Relocation www.assuredrelocation.com (888) 670-9700 Service Area: Nationwide

Bridgeway Temporary Housing, Inc. bridgewayhousing.com webmaster@ bridgewayhousing.com (866) 387-8586 Service Area: Nationwide Bridgeway Temporary Housing provides the insurance industry and corporations a convenient and cost effective way to service their policyholder’s and employee’s housing needs.

Since 2005, Bridgeway has placed thousands of contractors, CAT teams, and policyholders, nationwide, in response to the largest natural and man-made disasters in history.

Corporate Living Solutions, LLC

Alliance Disaster Kleenup

Esporta Wash Systems

www.corporatelivingsolutions.com sales@corporatelivingsolutions.com (804) 264-8350 Service Area: Nationwide

www.alliancedk.com info@alliancedk.com (847) 205-2100 Service Area: Nationwide (Focus in Florida, Illinois, Wisconsin)

www.esporta.ca sales@esporta.ca (800) 881-7781 Service Area: Nationwide

American Fire & Water Restoration

www.FRSTeam.com info@FRSTeam.com (510) 723-1000 Service Area: Nationwide

CRS Temporary Housing www.crstemphousing.com smoore@crstemphousing.com (800) 968-0848 Service Area: Nationwide

Key Housing Connections, Inc. www.keyhousing.com info@keyhousing.com (800) 989-0410 Service Area: California

National Insurance Housing www.nationalinsurancehousing.com wecare@nationalinsurancehousing.com (866) 846-9370 Service Area: Nationwide

Temporary Accommodations www.temporaryaccommodations.net info@temporaryaccommodations.net (800) 548-5196 Service Area: Nationwide

Temporary Housing Directory

www.americanfire-water.com wmaier@americanfire-water.com (513) 779-4357 Service Area: Indiana, Kentucky, Ohio

A Q Environmental www.hazwaste.com rz@earthlink.net (800) 606-8077 Service Area: California, Nevada

Best Restoration Services www.bestrestoration.com sales@bestrestoartion.com (310) 676-2167 Service Area: California

BELFOR Property Restoration www.belfor.com (800) 853-3333 Service Area: Nationwide

www.temporaryhousingdirectory.com request@thdmail.net (800) 817-3220 Service Area: Nationwide

Cousino Harris Disaster Kleenup

ViP Insurance Housing Options, Inc.

CRDN-Certified Restoration Drycleaning Network

www.vip-insurancehousing.com relocation@vip-insurancehousing.com (888) 468-0419 Service Area: Nationwide

Water Damage

Water Damage

AAA Flood Drying www.aaaflooddrying.com aaaflood@comcast.net (978) 392-1895 Service Area: Massachusetts, New Hampshire

Able Water Damage Restoration (512) 671-8800 Service Area: Texas

AirSpec, Inc. www.AirSpecIAQ.com info@airspeciaq.com (321) 251-6656 Service Area: Florida

www.cousinoharris.com (419) 874-9420 Service Area: Michigan, Ohio

www.crdn.com contactus@crdn.com (248) 246-7878 Service Area: Nationwide

Disaster Kleenup International www.disasterkleenup.com info@disasterkleenup.com (630) 350-3000 Service Area: Nationwide

DryMaster Restoration www.drymaster.us (323) 522-6691 Service Area: California

Efficient Energy Corporation EfficientEnergyInc@yahoo.com (909) 723-6945 Service Area: Arizona, California, Nevada

FRSTeam Inc.

Flood Masters www.flood-masters.com info@flood-masters.com (619) 234-2500 Service Area: California

JDi Data Corporation www.jdidata.com james.derosa@jdidata.com (954) 938-9100 Service Area: Nationwide

National Restorations, LLC www.nationalrestore.com info@nationalrestore.com (877) 884-9446 Service Area: Nationwide

REE-Construction www.the-restorers.com admin@the-restorers.com (855) 733-9111 Service Area: Idaho

RestoreCore www.restorecore.com (800) 231-1281 Service Area: Delaware, Maryland, New Jersey, Pennsylvania

Reynolds Restoration Services www.reynoldsrestoration.com (888) 277-8280 Service Area: Pennsylvania

The New Crystal Restoration Enterprises, Inc. www.crystalrestoration.com rosemary@crystalrestoration.com (914) 937-0500 Service Area: Connecticut, New Jersey, New York

Urban Valet Dry Cleaners www.myurbanvalet.com Jackie@myurbanvalet.com (716) 885-4351 Service Area: New York, Pennsylvania

Elite Consulting Services www.EliteSvcs.com akeen@elitesvcs.com (317) 769-7999 Service Area: Nationwide

Questions? Comments? Suggestions?

Email us at editorial@claimsjournal.com CJ

Summer 2012 | Claims Journal 39

DEPARTMENTS

event calendar

July 2012

ACIC General Counsel Seminar Association of California Insurance Companies’ annual seminar provides informative discussions by industry speakers from the legal, insurance and regulatory communities. It offers timely information on issues important to insurers and insurance professionals doing business in California.

July 25-27 Las Vegas, NV Contact: Sue Makimoto, 916-449-1370

August 2012

19th Annual Claims Conference of Northern California 2012 Two-day educational conference tailored to meet the needs of carrier adjusters, self-insureds, insurance pool personnel, risk managers, independent adjusters and third-party administrators. Session topics include advanced structural drying, advanced negotiations and settlement, coverage issues on foreclosed properties and best practices for preserving electronic evidence.

August 15-17 Sacramento, CA Contact: Jack Corry, attendee/exhibitor services, e-mail: jcorry@ puroclean.com

September 2012

PLRB Central Regional Adjusters Conference One of a series of regional claims adjuster conferences held in the United States. Network with peers while taking part in educational sessions designed to improve knowledge of core claims issues. (Detailed information on sessions unavailable at press time) September 5-6 Schaumberg, IL Contact: Alissha Watley, Meetings Manager, email: awatley@plrb.org or call 630-724-2228 40 Claims Journal | Summer 2012

International Association of Special Investigation Units 27th Annual Seminar & Expo on Insurance Fraud IASIU’s annual insurance fraud conference seminar provides training for new investigators and seasoned professionals.

Workshops on arson, auto and property theft, bodily injury scams and workers’ compensation fraud offers students in-depth discussion and training on the latest issues and technologies confronting fraud investigators.

September 9-12 Palm Desert, CA Contact: For more information, email: IASIU@managementAlliance. com NAMIC’s 2012 Annual Convention Annual members’ conference sponsored by the national property/casualty insurance trade and political advocacy association, the National Association of Mutual Insurance Cos. (Detailed information on sessions and tracks unavailable at press time) September 16-19 Grapevine, TX Contact: For more information, email: rstone@namic.org or call 317875-5250 ext. 1032

October 2012

PLRB/LIRB 2012 Large Loss Conference Educational and networking conference designed for senior claims adjusters and managers, and technical adjusting staff.

Topics relate to large and complex property/casualty subjects and are organized into tracks. (Detailed information on sessions and tracks unavailable at press time) October 29-31 Washington, DC Contact: Valerie Berka, Meetings Manager, email: vberka@plrb.org or call 630-724-2227 CJ

DEPARTMENTS

web exchange Video Highlights Vehicle Arson Trends http://www.insurancejournal.tv/videos/7005/ Dave Smith, a retired Phoenix police insurance fraud investigator and certified vehicle fire investigator with Andler & Associates, discusses vehicle fires and arson trends during the company’s annual live burn training seminar.

Annual Live Training Burn Educates Adjusters http://www.insurancejournal.tv/videos/7009/ Pat Andler, a certified fire investigator and owner of Andler & Associates, discusses the burn training he hosts each year to support fire investigation education and the Arizona Burn Foundation.

Podcast Highlights

dent reconstruction in May’s Forensic Guide podcast. Besides a driver’s hours of service, speed, type of load, braking system, and size and weight of a commercial vehicle play a role in an accident.

In a Reader’s View Suits Says Hebrew National’s Products Not Kosher The maker of Hebrew National, ConAgra Foods Inc., is standing by the kosher status of its hot dogs and other meats, saying a lawsuit that claims aren’t really kosher is without merit..

For example, the suit says that employees at a third-party kosher certifier for ConAgra complained of witnessing non-kosher procedures at meat plants, but nothing was done to correct the problems..

The suit, which seeks class action status, was filed by law firm Blackwell Burke on behalf of 11 consumers.

The Associated Press story generated a number of comments among readers. Read one of those comments below:

Lessons Learned From BP Claims Fund Little Frog says: http://www.insurancejournal.tv/videos/7442/ I’m properly offended that the charges here may be true Attorney Kenneth Feinberg discusses his role as the initial and that people have been fired to cover up a fraudulent act. administrator of While I am not Jewish, I prefer this product because of the the BP Fund followquality that being Kosher requires. If true, I hope the truth is ing the 2010 Gulf of revealed for full public view and not buried in a confidential Mexico spill, and how settlement. CJ insurers and adjusters play

an imporShould states that offer personal injury protection (PIP) continue to do so? tant role in compensating claimants. He also shares three keys to successful negotiations.

ClaimsJournal.com Reader Poll

Commercial Vehicle Accident Reconstruction http://www.insurancejournal.tv/videos/7264/ Dirk Smith, senior vice president of the Forensic Division at Rimkus Consulting Group, discusses commercial vehicle acci-

34.3 % Yes, but with strict limitations and oversight

16.7 % Yes, states should leave PIP coverage in place without changes

43.5 % 5.6 % No, states should no longer offer PIP coverage due to increased fraud

Not sure

Total Votes: 557 Summer 2012 | Claims Journal 41

IDEA EXCHANGE | FINAL OFFER

Strengthening Your Claims Talent Pipeline

T

he problematic shortage of skilled workers has been top-of-mind this year as our industry demographic shifts. With 20 percent of the insurance workforce at 55 and older, according to the Bureau of Labor Statistics, a significant portion of the industry is preparing for retirement.

As industry employment crawls out of its nearly five-year downward trend, incumbent talent is sparse.

Yet the industry is ready to hire again.

According to the “2012 Insurance Labor

By Dave Coons Outlook Study” conducted by The Jacobson Group and Ward Group, 51 percent of insurance companies intend to increase staff this year. This speaks to market conditions and the optimism in the industry. However, it presents a challenging and competitive recruiting environment. Survey respondents listed claims as the second-highest in-demand role, while also naming claims positions as moderately difficult to fill. For companies to strengthen their claims talent pipeline, now is the time to recruit, train and retain.

Recruit Attracting the next generation of recruits means it’s time to get creative. Consider alternative solutions such as temporary staffing or nontraditional backgrounds. Look outside the box; sometimes inherent skills trump experience when looking for a long-term hire. A sizeable amount of the entrylevel candidate pool has likely never even considered a claims position. How can you reach this untapped talent?

Open up your channels of communication to reach potential candidates. Social media presents an excellent opportunity to tap into large networks of job seekers. The benefits from social networking platforms are two-fold: you can seek out potential candidates, and they can find you.

Employer branding is extremely important to today’s job seekers. What message are you sending? Make your value as an employer known. Your corporate culture should be discernible throughout your recruiting messages. This will attract the right talent and can lower your rate of unsuccessful hires. Find long-term hires that are looking to grow with the company. Ensuring continued loyalty requires maintenance long after the offer is accepted.

Train One of the unfortunate implications of the economic

42 Claims Journal | Summer 2012

downturn was that training fell to the wayside as companies looked for places to cut budgets. Only 21 percent of employees received employer-provided training in the past five years, according to the “Accenture Skills Gap Study 2011.”

Make sure new hires receive appropriate training and absorb the knowledge of tenured staff before it is too late.

Accelerated leadership tracks are becoming commonplace, as employers prepare for succession gaps caused by Baby Boomer retirement.

Organization-wide career development programs are important for cultivating your staff. Understand employees’ 51% of insurance individual career plans, and companies intend to involve each employee in the career planning process. Make increase staff this year. sure each employee has the tools needed to be successful. Defined goals will ensure that the career development program is on track.

Retain The job market is heating up and so is the competition.

Make sure the time and money you’ve invested in hiring and training is not lost. The cost of turnover is too high.

The engagement retention paradigm deserves your attention. Ensure that your employees are engaged by devoting time and consideration to employee morale. Empower your employees! Celebrate and value your corporate culture.

Remember to show recognition. Reinforce the right behavior.

Pass company culture down the ranks by cultivating mentorships.

Take advantage of the current labor market and look at it as an opportunity. Recruit, train and retain to build your talent pipeline and get a leg-up on the competition. Emerge from the talent shortage ahead of the game. CJ Coons is senior vice president of The Jacobson Group, a nationwide provider of talent to the insurance industry. Phone: 800-466-1578. Email: dcoons@jacobsononline.com.

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