Steve Badger‘s recent article regarding hail damage claims, The Emerged Hail Risk: What the Hail is Still Going on and Getting Worse, is a bit of a rant. He had one nice thing to say about me being "a well-known and respected policyholder attorney," but he laid into problems caused or supported by other lawyers, public adjusters, consultants and contractors. While he did not mention it in the article, he also filed a class action lawsuit detailing many of the problems about which he is complaining.

Badger outlines a number of problems which I will highlight as the following:

  1. Door to door pressure solicitation by non-licensed public adjusters.
  2. False promises in door to door solicitation.
  3. Chicanery to avoid prohibitions against paying for deductibles.
  4. Lawyers using runners.
  5. Lawyers filing lawsuits without notifying policyholder clients.
  6. Roofing Contractors acting as public adjusters negotiating claims.
  7. Restoration companies intentionally inflating estimates of damage.
  8. Lawyers disguising payments for cases as "estimating fees."
  9. Roofers starting bogus public adjusting companies.
  10. "Claims consultants" promising to retain teams to handle claims.

Frankly, I have been hearing about all of this for some time, but the Texas Bar and police authorities seem to be doing nothing about it despite rumors that "something is coming down."

I had a discussion with one of our Houston based attorneys, Phillip Sanov, after he mentioned that a pubic adjuster sent us an invoice for doing an estimate. We refused to pay it and asked the public adjuster what he was doing. Public adjusters are supposed to do the estimate as part of their contingent service and not get paid extra or as a "case cost" from an attorney. I realize attorneys who tell public adjusters that such a practice is ethical and allowed are simply covering up their illegal and unethical payment for referrals. But Phillip claimed that the public adjuster told us several law firms by name that have paid him, and the public adjuster indicated this was accepted practice by many lawyers.

I have sent the issue to an ethics attorney and will let those "chips fall" as they may. But, the problem as I explained to Phillip is that if the Texas Bar and authorities do not do something, you run into a systemic problem where otherwise law abiding and ethical people rationalize illegal and unethical behavior as "everybody is doing it" and "I have to put food on the table."

My first impression was that Steve Badger’s article was a rant to help the insurance industry pass what it will call as "insurance reform." Yet, he makes a number of valid points because most of us in the property insurance business are observing isolated instances of what he is complaining about. Yet, I am in no position to know if it is isolated or involves hundreds or thousands of claims as Badger claims. If true, insurance company SIU departments should be filing hundreds of complaints with the Texas Bar and the authorities. I have no idea if this is happening.

Unlike some people who just talk or write about the problem, Badger is taking action by filing a class action lawsuit. While filing a lawsuit is very different than proving the allegations, I suggest reading the attachments to the action so you can get a flavor for the issues and how similar they appear to the ten items listed above.

Positive Thought For The Day

"Do the right thing. It will gratify some people and astonish the rest."
        —Mark Twain