Connecticut Court Holds No Cause Of Action Against Independent Adjuster For Negligence

Dick Bennett | Property Insurance Law Observer | November 30, 2015

The states are divided over whether an independent adjuster can be sued for negligence by the insured, and no Connecticut appellate court has ever addressed that issue.  Last Tuesday, however, one of the state’s federal courts predicted that the Connecticut Supreme Court would hold that the adjuster owes no duty to the policyholder in Danielsen v. USAA Cas. Ins. Co., et al., 2015 U.S. Dist. LEXIS 158387, 2015 WL 7458513 (Nov. 24, 2015, D. Conn.), and it dismissed the complaint’s negligence count against the adjuster.

shutterstock_259947686The insured owned a home in Madison that suffered water damage from a malfunctioning dishwasher, and he brought suit against the carrier and its independent adjuster, alleging that they had underpaid the loss.  The allegations included negligence; the policyholder contended, inter alia, that the adjuster had prepared a negligent estimate and neglected to include damage to the homeowner’s personal property in his scope of loss.  The adjuster moved to dismiss the negligence count, and Judge Victor Bolden granted the motion on November 24th.

The opinion began by noting that there was a split among state jurisdictions in this country over whether a cause of action for such negligence would lie against an independent adjuster.  The majority rule was that it would not.  Judge Bolden then predicted that the Connecticut Supreme Court would side with the majority for three reasons.

First, “[t]he relationship between the adjuster and insured is sufficiently attenuated by the insurer’s control over the adjuster to be an important factor that militates against imposing a further duty on the adjuster to the insured . . . The law of agency requires a duty of absolute loyalty of the adjuster to its employer, the insurer . . . Creating a separate duty from the adjuster to the insured would trust the adjuster into what could be an irreconcilable conflict between such duty than the adjuster’s contractual duty to follow the instructions of its client, the insurer.”

Second, the insured was not left without a remedy by such a rule because he or she could still bring a bad faith claim against the insurer as a source of recovery.  In such a lawsuit, the acts of the adjuster could be imputed to the carrier.

Finally,…

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The Changing Face of Independent Claims

Adam Gardiner | AdjusterPro® Blog | October 2, 2015

First in a seven-part series on the evolving state of the claims industry.

The independent claims industry is a bit like the Wild West: unpredictable, with few rules only erratically enforced and where only the strong survive.

It’s tough. It requires grit.  But often enough, you get to be the good guy wearing the white Stetson.

Yes, for the right cowboy (or cowgirl), independent adjusting is a rewarding career.  But you should know something.  While it’s still rough and tumble, the West is slowly being tamed.

Changes are afoot and those that best anticipate and adapt will win out in the new dispensation.

But before we understand how the West is being tamed and what it means, we need to look at how it was born.

AN INDUSTRY GETS ITS SPURS

Independent claims adjusting arose in the early 70’s from a simple need: to buffer spikes in claims volume.  Insurance carriers began to outsource “overflow” claims to independent adjusters.  Because these adjusters served as independent contractors, carriers saved money by not directly employing a massive army of adjusters – which they would otherwise need in the event of a major catastrophe.

Otherwise, a permanent Hurricane Katrina-sized workforce would largely sit idle.

To insurance carriers, the use of independent adjusters ceased to be a luxury decades ago — becoming instead an economical necessity.  And a billion dollar independent claims industry got its spurs.

THE WILD WEST OF CAT ADJUSTING

Until recently, independent adjusting was been virtually synonymous with catastrophe adjusting.  And, since mobilizing thousands of adjusters in a matter of days in response to a catastrophe is expensive and messy, there were consequences.  Industry regulation was spotty, career paths unclear, training was all over the map, and safety rules were only randomly applied.  Things got tense and untidy.

Independent adjusting firms and adjusters tough enough to survive were paid handsomely.

Carriers, it turned out, were willing to pay millions to clean up claim spikes quickly enough to keep them out of trouble with regulators and skirt the wrath of the public.

And the industry still prefers the open range: low regulation, high expectation, unpredictability, and the chance of a big pay-day.  It’s a maverick industry, from the family-owned firms to the adjusters riding solitary in the field.

But industries evolve, and the claims industry is in an important evolutionary stage right now.

INDEPENDENT ADJUSTING IS THE FUTURE

Rather than outsourcing as an economic necessity, carriers increasingly see a real strategic advantage in the use of independent adjusters – in particular, a long-term advantage.

They’re transferring the expense, hassle and liability of employees onto independent adjusting firms.

In effect, the independent industry is becoming a human resource solution: ‘leasing’ employees rather than hiring; outsourcing an entire “department” of an industry.  And, as they lean ever more heavily on independents as a long-term solution, carriers gradually tame the Wild West.

CARRIERS TAKE A RISK

Outsourcing claims as a department is a bold move.  It means relinquishing full control of customer satisfaction for a growing percentage of non-catastrophe claims.

On the other hand, outsourcing grants carriers some enticing advantages.

One advantage is flexibility.  Cumbersome employee rights make it onerous to fire or lay off salaried employees, but independent adjusters are easily hired or let go in direct proportion to fluctuating claims volume.

Another advantage is financial. Using leased employees evades the burden of costly employee benefits.  This adds up to millions of dollars saved — a massive competitive advantage for the carriers and their shareholders.

CHANGE MEANS PAIN…AND OPPORTUNITY

Predictions are that the culture and the nature of the independent industry will continue to change until it is…

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Florida’s Definition of “Independent Adjuster” Can Be Misconstrued

Shaun Marker | Property Insurance Coverage Law Blog | July 13, 2015

Those that work in the insurance claims process regularly are familiar with the term “independent adjuster.” It is one that many of us know and understand, and some readers of this blog may even be independent adjusters. To those outside the insurance industry, a review of the term “independent adjuster” can give a misconception as defined by Florida law. Why is it a misconception you may ask? Let’s look at the definition. Here is the statutory definition for “independent adjuster” in Florida:

An ‘independent adjuster’ means a person licensed as an all-lines adjuster who is self-appointed or appointed and employed by an independent adjusting firm or other independent adjuster, and who undertakes on behalf of an insurer to ascertain and determine the amount of any claim, loss, or damage payable under an insurance contract or undertakes to effect settlement of such claim, loss, or damage. F.S.A. §626.855. (Emphasis added).

Someone who is truly “independent” would not be undertaking on behalf of an insurer to determine the amount of loss for a claim. I had an “independent adjuster” just last week tell me during a deposition that his understanding in Florida of the term “independent adjuster” meant that he was trying to determine the amount of loss for everyone involved—the policyholder as well as the insurance carrier. Well that understanding certainly seems contrary to the Florida law definition of “independent adjuster” which says they undertake on behalf of the insurer to determine the amount of loss.

I imagine a public adjuster could as easily say they are determining the amount of loss for damages in a claim for all involved when they write an estimate, but most public adjusters I know would be proud to say they are working for the policyholder.

Now to us in the industry, we know that “independent” refers more to the fact that the “independent adjuster” is separate from the insurance carrier and adjusting a loss for the insurance carrier as an employee or independent contractor of a separate adjusting firm altogether. But to those not in the industry, the term may seem a contradiction.

Would “independent adjusters” disagree that they are hired by and working for the insurance carrier on claims to determine the amount of loss in Florida?

via Florida’s Definition of “Independent Adjuster” Can Be Misconstrued : Property Insurance Coverage Law Blog.