GOING OUT OF STATE TO PRACTICE PUBLIC ADJUSTING IN THE AFTERMATH OF A CATASTROPHE REQUIRES PLANNING AND FORESIGHT.

If you have ever thought about going to follow the next big catastrophe event like a hurricane, wildfire or hailstorm, you should stop now and plan to ensure your success. As a public adjuster that has mobilized on dozens of catastrophe events over the years, I have seen the PAs that do it right and the ones that don’t. I have made the mistakes, taken the lumps and corrected the path to guarantee both great claims adjusting and profitability. These are a few of my tips to help promote your success and provoke deep thought on your next venture.

Statutory Compliance

This may sound like an obvious step, but over the years we have seen many public adjusting firms move into a catastrophe situation so quickly that they just assume the rules and regulations of the state are the same as their home state. There are many things a public adjuster should know when moving into a new state, and we highly recommend you visit the state’s department of insurance’s website through the NAPIA News and Resources page at https://content. naic.org/state-insurance-departments to familiarize yourself with the local laws and regulations that will affect your team’s ability to process claims. Here are questions you should answer before even packing your car:

  • Are you licensed as a public adjuster in that state (if not how long will it take)?
  • Does your company need to be licensed? Is there a bond requirement?
  • Does your contract have to be approved in the state you are working? Are there contract language requirements?
  • Is there a fee or percentage cap?
  • Do your sales representatives need to be licensed? Can you pay a referral fee?

These are just a few of the things a company must know before going into a new territory. We highly recommend adjusters planning to work a catastrophic event be prepared and even team up with a local adjusting company familiar with the state and regional adjusting rules. Find a local NAPIA member firm at www.napia. com/custom_memberDirectory.asp.

Mobilization

Going to a catastrophe zone is not like working a singular claim out of state. Often after a major disaster, hotels are either damaged or fully booked by displaced locals, carrier adjusters and other public adjusters. Most restaurants and grocery stores are closed or out of food for many miles. Gas is in short supply and utilities are spotty at best. Our job as public adjusters is to support the insureds in the claim process, not become a burden on the community we have come to help. It is important for you and your team to have a plan before you leave on where you are going to stay, where you can eat, where to get supplies and fill up your gas tank while you are on the ground. Many adjusters will wait a few days or weeks for cleanup to progress and for things to reopen and many bring in and utilize RVs. You must decide what is best for your company, but having a good plan is a life saver.

Claims Processing

Disasters are primarily staffed by carrier and independent adjuster CAT teams. This means that the adjuster you are meeting on site has an implied authority to settle a claim, but will often be quickly replaced in the process. Be sure to document every aspect of the claim and agreements made during your onsite meeting and consider copying the in-house desk adjuster. While public adjusters often run from one job to the next, it is important to take the time to document the conversations and agreements made during your meeting and immediately send them to the adjuster. I cannot tell you how many times I have had an incredible meeting with a CAT adjuster and settled a claim, only to receive a reassignment two weeks later with a vastly different scope of repair.

Remember, in a storm, carriers are busy too, and it is your job as a public adjuster to make settling and paying the claim as easy as possible. Write the scope, document the agreements, organize the damage tour, align experts and sub-bids and/or whatever you need to make it easy to settle your clients’ claim. The best claim is a closed claim that has been paid fairly.

“Be sure to document every aspect of the claim and agreements made during your onsite meeting and consider copying the in-house desk adjuster.”

Funding

This is an often-overlooked aspect of claims adjusting after a catastrophe. Many public adjusters see the potential income of offering your services after a major disaster, but forget that it can be very costly to travel and place a team onsite for months with little to no return. While claim payments and money do eventually come, you need to be prepared to properly fund your operation while the carriers adjust the claim. There are many funding options and how much you need depends on the size of your operation. As a rule, I would advise having available at least four to six months of expenses and pay. Over the years, I have found that it takes about that long for undisputed payments and fees to start really rolling in. This is a generic off-the-cuff rule of thumb not meant for everyone. The point is to consider what it will take to fund your operation in a CAT scenario.

Legal Environment

Every state has vastly different case law on time constraints, claims processing, matching, deductibles, etc. It is important when planning to enter a new state to coordinate and team up with local counsel who can give on-the-fly advice on day-to-day claims processing. While most states have a version of the unfair claim practice act regulating the conduct of insurance carriers, there are more refined rules one must be aware of when processing a claim in another state. Among the important considerations when working a CAT event:

  • Is there a statute of limitation on time for suit?
  • Is there a statute of limitation on depreciation recovery?
  • Does the state have case or statutory law on matching?
  • Are there percentage deductibles for the type of loss that occurred?
  • Will your company name be included on claim payments?

Exit Plan

Knowing when to arrive after a storm is important, but the single most costly mistake you can make is not knowing when and how to leave. CAT events can be profitable if you plan right, but endless re-inspections, engineer meetings, claim supplements and client meetings can quickly reduce the profitability of an out-of-state public adjuster. It is important to know when you are going to leave and how the claims will be handled once you are gone. This could mean teaming up with a local public adjuster to close out claims, referring unresolved claims to an attorney on a pending suit deadline, advising your client that you have taken the claim as far as you can and releasing them from their contract or a combination of all these. While there is no way to predict the circumstances of each claim situation, it is important for a public adjuster to plan and understand how and when they are done working a loss event. Like I said earlier, our goal is to help the insured. Make sure you properly plan to position your clients and yourself for success.

As published in Consumer Claims Journal – Fall/Winter 2021

Skipton and Associates, Inc.