Steven Badger from Zelle LLP joins us to talk about all the "hot topics" in the always interesting world of hail and other weather-related claims. Steve will cover all the emerging trends in these claims, including current fraud and other abuse schemes, and provide his recommendations on how to address the common issues. He will also talk about what he is seeing with recent expanded use of the appraisal process. Finally, Steve will talk about how his clients are addressing these issues through underwriting and policy wording changes.
Notable Timestamps
[ 00:07 ] - The episode introduces a discussion on emerging trends in hail and weather-related insurance claims, including fraud schemes, disputes over damage assessments, and how insurers are exploring underwriting and policy wording changes to address recurring issues.
[ 01:22 ] - A key industry trend is shifting toward bigger-picture solutions that reduce disputes altogether, such as improving building resilience or changing claims processes so insurers and policyholders spend less time fighting over losses.
[ 02:12 ] - Roof resiliency is a major topic. If roofing materials could withstand moderate hail, many claims would never occur, raising debate about requiring more durable materials like Class 4 hail-resistant roofing in hail-prone states.
[ 03:28 ] - Some insurers already offer premium discounts for homes with Class 4 hail-rated roofs, but experts argue broader mandates may be necessary to significantly reduce hail claim frequency and stabilize insurance markets.
[ 05:39 ] - Insurers report a rise in fabricated hail and wind damage claims, particularly during slow storm years when contractors relying on storm work may be tempted to create damage to generate insurance-funded repairs.
[ 07:24 ] - Fabricated damage raises complex coverage questions. If a contractor intentionally damages property, insurers must consider whether the loss could fall under vandalism or malicious mischief provisions.
[ 09:40 ] - Disputes often shift from scope of damage to pricing. Estimating tools like Xactimate help set initial reserves, but they are still estimates and can be manipulated by adding or removing line items.
[ 11:27 ] - Many policies ultimately require payment based on the "amount actually incurred," meaning the real cost of repairs. This shifts focus from software estimates to contracts, invoices, and proof of actual payments.
[ 14:08 ] - Contractors and public adjusters may inflate estimates within software systems, even adding items like adjuster commissions that are often not covered, which can raise unrealistic expectations for policyholders.
[ 15:33 ] - One strategy to counter inflated estimates is obtaining real competitive contractor bids. Presenting an independent price for the same work can help challenge excessive claims and refocus negotiations on actual costs.
Your PLRB Resources
Invoking "Our Option" – Increased Use of Preferred Contractor Networks
https://www.youtube.com/watch?v=kC_WAl0N7gI
The Appraisal Process – Is it Still Useful to Resolve Disputed Claims?
https://www.youtube.com/watch?v=v5YgKpL5FlI&t=1s
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The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.
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