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The Challenges of Catastrophic Claims Handling

Additional coverage includes Marshall Dennehey’s celebration of 60 years in the industry and the addition of three attorneys at Secrest Wardle.
  • John Czuba
  • November 2022

Brian Schneider, RPA, and the president of Schneider & Associates Claims Services, a multi-line, independent adjusting company founded in 1993, based in California and with offices in several states, spoke with John Czuba, managing editor of Best's Insurance Professional Resources, about catastrophic claims handling. Following is an edited transcript of the interview.

Brian Schneider

Brian Schneider

What do you consider the greatest challenge as it pertains to the successful adjusting of catastrophic claims from the perspective of an independent, catastrophic adjusting company?

It is ensuring that you have enough experienced adjusters who you're familiar with, and they've proven themselves during prior seasons. The best adjusters are going to be pinged by multiple other CAT firms in the lead-up to a storm. You're in open competition for a finite number of those folks. The best adjusters, from my perspective, are going to be attracted by three things. First, obviously, it's the fee schedule.

Now, most CAT adjusters are compensated based on a percentage of the fee. Firms will offer a higher percentage to attract the best talent, but percentages, they can often be misleading. Some IAs, in order to secure as many customers as possible, they'll agree to work for what I would consider fees that are too low.

A poor fee schedule will end up not attracting the type of adjusters who are going to produce the best work. What we try and do is work for companies that place an emphasis on the end product rather than the price, and who understand that the fee schedule has to be sufficient to support that end product. After compensation, it would be the process that you've put in place that the field adjusters have to work within. Even if the compensation looks excellent initially, if you burden your team with too much paperwork as a part of that, they find themselves spending way too much unproductive time dealing with the process and not turning claims.

What do you consider the greatest challenge for the insurers when dealing with a catastrophic claim?

It's very much the same as with adjusting firms. It's staffing, especially in the lead-up when the storm first hits. There's the calm before the storm, literally. Then, all of a sudden, everything breaks loose, and call volume can overwhelm any insurer. The State Farms of the world, they can handle a spike because they've got all kinds of people, but medium-sized insurers, smaller insurers, boutique insurers trying to manage a tenfold increase in call volume, that's very difficult.

What a lot of insurers are going to do is they're going to partner with firms that can take first loss reports, and, importantly, know how to manage an insured's expectation. When the insured calls, they could be standing in a foot of water. It might be their first claim. They expect somebody at their house tomorrow, and that's not going to happen with a large event.

If you're an insurer that is adept at doing it yourself or can partner with a company that knows how to take these first losses and manage insured's expectations, it takes a lot of pressure off the insurer's claims team and they can focus on processing claims rather than fielding calls.

People forget that it's the telephone that takes up almost more time than being in the field. If you don't manage those calls in the beginning—that first wave of calls reporting claims—that is going to be dwarfed in a week or two by insureds calling, asking, “Hey, where's my adjuster? Why hasn't anyone come to see me?” Then, you're paralyzed. It's an avalanche. Setting your insured's expectations, and following through on those expectations and your promises is critical. If you don't, then that's a recipe for a completely different kind of disaster. Also, reserving is a huge issue for insurers for obvious reasons.

If you rely on a company that's going to be in the field for you, whether it's your own adjusters or it's an IA like us, accurate reserves are critical. Many insurers, they'll have preliminary reserves. They're set, but once you're in the field, communication with your field team to set updated reserves is very important.

Where a lot of companies fall down, on the company side and on the IA side, is this bottleneck. You've got adjusters out climbing up on roofs or wading through water in basements, and they're seeing 10, 15 risks a day. They see that for two weeks, and they don't transmit reserves to anybody. All of a sudden, so then you're getting reserves late. What we try to do to work around that is that our system—we have our adjusters send four overview photos and preliminary reserves by coverage to the desk adjuster before they even leave the loss location. That, at least, gets critical information to them in real time. What they do with it, that's up to them. Some companies are better than others. That's a very, very big challenge, is reserving.


Marshall Dennehey Marks 60 Years in Business

(Photo courtesy of Marshall Dennehey)

(Photo courtesy of Marshall Dennehey)

HERE'S TO 60 YEARS: Marshall Dennehey's Philadelphia office celebrates the firm's milestone anniversary. Front row, left to right: Gabrielle Simeone, senior payroll administrator; Christopher Santoro, shareholder; Butler Buchanan III, Philadelphia office managing attorney; Craig S. Hudson, executive committee member and director, professional liability department; G. Mark Thompson, president & CEO; and Howard P. Dwoskin, executive committee member, chairman, board of directors and director, casualty department. The civil defense litigation law firm has nearly 500 attorneys in 19 offices in seven states.


Secrest Wardle Signs on Three Attorneys

Andrew S. Gipe

Andrew S. Gipe

Meagan Hanna Stamell

Meagan Hanna Stamell

Kyle C. Walton

Kyle C. Walton

Secrest Wardle, a law firm specializing in defense litigation for insurance, municipal and commercial clients with headquarters in Troy, Michigan, and an additional office in Grand Rapids, recently announced the addition of three attorneys to its practice.

Andrew S. Gipe joined the firm's Troy location as an associate. Gipe is a member of the firm's Motor Vehicle Litigation and Premises Liability Practice Groups. Prior to joining Secrest Wardle, Gipe worked as an associate attorney for a small firm where his practice focused in areas of trucking and insurance defense litigation.

Meagan Hanna Stamell is now a partner in the Troy office. Stamell is a member of the firm's Motor Vehicle Litigation and Premises Liability Practice Groups. Stamell has a decade of experience handling cases through all phases of litigation, most recently with the Oakland County prosecutor's office. She has tried upward of 40 jury and bench trials to verdict. She is a retired member of the U.S. Coast Guard Auxiliary, where she served for 15 years. Stamell is an active member of the State Bar of Michigan and is a member of the Young Lawyers Section.

Kyle C. Walton joined the Troy office as an associate. He is a member of the firm's Motor Vehicle Litigation and Premises Liability Practice Groups. Walton previously practiced in Genesee County, where he assisted in the handling of more than 500 civil cases related to the Flint water crisis.


For information about these firms and Best's Insurance Professional Resources, visit www.claimsresource.ambest.com/search/DirectoryCenter.aspx

 



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