Can the world of insurance claims and structural restoration get any more unfair and difficult than it already is?
The answer is yes, and insurance companies appear to be pleased to bring you this new experience. Rather than deal directly with well-qualified restoration professionals who compellingly explain the processes executed in the repairs to the insured’s property, they simply hand the file review process to an auditor or Repair Contractor Network generally referred to as a Third Party Administrator (TPA). Generally speaking, TPA representatives frequently fail to possess any significant field experience and possess education amounting to merely a basic introduction to the subject of restoration (IICRC, WRT and, possibly, ASD).1
The rules imposed by these TPAs regularly shortfall insurance claims of the rightfully owed value for the work performed.2 Those who agree to participate and abide by the rules imposed within these programs set a legitimate precedent in diminishing the entire restoration industry’s value and should seriously consider the broad implications of their ongoing participation. Program participants who cave to unfair demands are part of the industry’s problem and are leading it to its demise.
How can the restoration industry lead a corrective action back to a position of fair insurance claim settlements?
The RIA’s Mission is “We Make it Better” — even the insurance claim settlement process.
Those who participate in these programs do NOT ‘sell their rights away’ to the programs — they BUY the right to have their rightful profits reduced.
C&R magazine dated Nov/Dec 2016 (and Feb/Mar 2017 with photos) had an article titled “Restorer — Insurer Communication: Build Bridges, Not Walls,” (Pg 17-21) which described the original intent of the TPA and why they came into existence. The documentation quality and protocols required for the adjuster to close the insurance claims were slow and of unacceptable quality. TPAs emerged with the promise to expedite the claim settlement process with complete, high-quality documentation so that the adjuster could quickly review and close the claims.
Of course, their promise imposed performance and time demands on the contractor for which the insurance companies did not wish to compensate. TPAs responded with programs that would have the contractor pay the TPA for the referral as well as agree to some billing concessions.
The slippery slope was now greased.
Those who participate in these programs do NOT “sell their rights away” to the programs — they BUY the right to have their rightful profits reduced.
Restoration professionals had to produce revenue to make up for the demands for quality and service, and so began a trend of “creative” scoping and billing practices. It was obvious to all involved when contractors exercised such creativity. In fact, due to the frustration in finding a way to settle claims, insurance representatives themselves even participated in “financial juggling” of the reported scope of work so as to clear the review processes. Intentional efforts to develop trust between insurer and restorer through accurate and fair reporting were rarely even attempted since nobody would reward them; neither the insurer nor contractor benefited from honest reporting of competent restoration.
At the hands of both the insurer and subsequently the TPA, obedience [to program rules] was rewarded before competence. In fact, those who were clearly the most attentive toward competent and skilled craftsmanship were actually harshly penalized with legal threats and financial harm.
Unskilled TPAs presented themselves as “restoration experts” qualified to criticize and debate a service provider’s processes and charges. In fact, since most TPA representatives only possess a mere IICRC basic Water Restoration Technician (WRT) certificate, they are not even qualified to be a lead technician on a water extraction truck. They usually have no actual field experience and naively believe they understand the trade of structural restoration. A 5-year-old child who believes they can drive their family car competently because they have watched the NASCAR races on TV and observed their parents drive for the last three days is sure to experience a rude and likely harmful lesson if they try. So it is with the TPA representative who wishes to debate a qualified service provider’s restoration scope, processes, and even prices.
When insurance companies mistakenly swallowed the TPA’s self-declared claim to be “restoration experts,” they negotiated more TPA service provider demands with incompetent performance and unreasonable monetary compromises. The very fact that TPAs negotiate such absurd agreements with the insurance company demonstrates the fact that they do not possess the expertise of any sort in the restoration industry. In fact, it identifies what they really are: professional bullies. Many of today’s TPAs deliver a service whereby they obtain something, especially money, through force or threats.
There is a legal word to describe individuals exercising such actions, which may be of interest to the legal eagles reading this article. To skirt this issue, TPAs frequently delay file processing, thus imposing financial harm on the contractor, or submit “recommendations” that are substandard or reflect incompetence to the insurer. In the absence of a more authoritative third party than the TPA, the insurer embraces the TPA recommendations and issues a shortfall in settlement funds.
THE RIA REGISTERED THIRD PARTY EVALUATOR
As we reflect on the emergence of insurance-company- preferred vendor programs and the TPA, we can see that their product and process has devolved into one whereby the insurer counts on the TPA to perform more than merely an administrative role (i.e. “pre-adjuster review paperwork and documentation assembly”). Rather, TPAs now regularly fiercely debate matters of scope, processes and prices, and even debate the “accepted standard of care to be followed.”
They are simply in way over their head.
We can fix this. The RIA can fix this!
In reality, a TPA only possesses the authority to enforce the terms of their participation agreement with the service provider. Their IICRC WRT and/or possibly an ASD certificate does not even come close to providing the qualifications necessary to suggest recommendations or debate a qualified contractor. When a (WRT/ASD) TPA representative debates any scoping, procedural or standard of care issues on the restoration performed on a property, the restorer should immediately inform the debater, “You are not qualified to question my processes.”
Of course, they will protest this statement, declaring they possess a couple of IICRC credentials. This is when the service provider should quote from the “Important Definitions” found at the beginning of every ANSI IICRC Standard, where it states at the bottom of the page:
“The IICRC S500 consensus body standard committee interprets the ‘standard of care to be: practices that are common to reasonably prudent members of the trade who are recognized in the industry as qualified and competent.”
The service provider would then follow up with this statement: “I am the reasonably prudent member of the trade who is recognized in the industry as qualified and competent — NOT you, the TPA, or even the S500. I will be pleased to tell YOU what the standard of care is for the industry. Do you have any questions that I may help you with?”
Yes, that is certainly a hard-ball reply, but it is appropriate. Simply halt the discussion before they embarrass themselves, degrade the entire industry’s expertise with incompetent demands, and shortfall the insurance claim.
The “RIA Registered Third Party Evaluator (RTPE)” is a proposed idea under consideration by the RIA. This series of articles is drafted with the intention of determining market interest and sentiment. You are strongly encouraged to provide feedback on this subject — both positive and negative — through email at email@example.com, or the editor of this magazine, firstname.lastname@example.org. We look forward to hearing from you.
Ethical contractors seriously consider the potential conflict of interest when the TPA (or insurer) becomes their customer when their business model promises to serve the property owner. In some cases, communicating with the TPA may actually show a disregard to the property owner’s right to confidentiality. The TPA may attempt to argue from several different angles from this point forward since the TPA may have promised the insurer to do the arguing on their behalf.3
Isn’t it time the restorer had a truly qualified third party of their own to objectively represent the needs of the structure? This could potentially be of interest to all involved.
Indeed, it can be very difficult to locate a truly qualified expert restoration professional who is not swayed by a competitive bias or prejudice. Those who have acquired the RIA advanced designations, CMP, WLS, and CR, are formally trained in producing qualified and objective reviews of restoration work. The RIA’s advanced curriculum includes this particular element of producing a formal report suitable for presentation in a court of law contrasts with all other education programs available to the restoration industry. A review from an RIA advanced certificate should be a welcomed contributor among those who were authentically interested in resolving restoration disputes.
SECURING A RIA REGISTERED THIRD PARTY EVALUATOR
How does the RTPE get paid for their time and expertise? We will leave that business model to organically emerge as the market permits. However, it is important to note that an RTPE does not perform actions that require a law license nor an adjuster’s license. They represent only the needs of the structure and reflect practices in accordance with the standard of care to be followed. They are recognized by their peers as true experts on such matters.
The RTPE can be retained at the start of the project when the original Agreement is being signed between the property owner and the service provider. This element of the Agreement could stipulate the homeowner agrees to the following*:
*Note: This is for general information purposes, and is not intended to be legal advice. This sample should be reviewed by an attorney prior to use and is not recommended for use by RIA or C&R magazine.
“In the interest of consumer protection and the desire to have a non-conflicted, third party evaluation of the necessary and competent repairs performed on my property, the customer directs [service provider company name] to contact and retain an independent and qualified (Registered) third party expert to document the decontamination, drying and/ or repair processes employed on my property. A copy of the expert’s qualifications will be provided to the property owner upon request. It is expressly declared that the property owner wishes the (Registered) third party expert to be retained by neither the insurer nor their representatives or those with whom they collaborate as this might present a conflict of interest in serving the needs of the property. The property owner hereby declares that any consultant sent to the property indicated in this agreement must disclose in writing any preexisting contractual relationship with the insurer, third-party administration, network service provider, or contractor(s) involved in this insurance claim, and may be declined access to the property due to this conflict of interest. The property owner authorizes and directs the service provider to communicate with this (Registered) third party expert on their behalf in establishing a competent and thorough restoration process. As this consultant’s fees are an expense to my insurance claim, the (Registered) third party expert’s fees and invoice(s) are to be given directly to the customer for inclusion in a Proof of Loss that I may submit to the insurance company for the purpose of indemnification. I wish/do not wish (circle one) to be included in the communications between the consultant and service provider as it pertains to the restoration processes. I direct the insurance company to communicate questions and concerns related to the technical needs of this insurance claim through a qualified insurance adjuster only with the Service Provider’s Project Manager who may collaborate with the (Registered) third party expert and include the property owner in any dialogue and/or communications that may transpire in the claim settlement process. I expressly direct all involved in our insurance claim settlement to maintain strict confidentiality pertaining to this insurance claim and are not to communicate in any fashion with third party administrators, network administrators, outside consultants, the public or any non-licensed individual (where mandated) seeking to assist in the settlement of this insurance claim. As an important element of the property’s historical documentation, the property owner will be given a *.pdf copy of the final formal technical report produced by the (Registered) third party expert that may be printed for the property owner’s use and records.”
Upon agreement with the property owner, such a directive can be of enormous value — especially as it relates to the drying documentation processes. As many restoration professionals know, drying documentation software programs fail to reflect the use of the S500’s equipment formulas in a fashion even close to resembling the way they are instructed to be used. Furthermore, some of these formulas are not even a component of the accepted standard of care to be followed,4 yet are mandated as “required” and strictly enforced by insurers and TPAs. There is positively no claim that these formulas dry anything!
Obedience to program rules is not an assurance of contractor competence nor fair insurance claim settlement.
A competent drying documentation service would reflect a competent deployment of tools in accord with the industry standards and would be able to withstand any debater who would attempt to enforce their misunderstandings. A qualified RTPE is just such an individual for that kind of job.
Yes, perhaps it is time to include the use of an RIA RTPE on many of the restoration projects secured by restoration professionals. Even NON-RIA members could benefit from the use of RIA RTPEs, as it would level the restoration playing field and resolve many of the distrust issues present among all parties of an insurance claim.
You are the industry’s finest restoration professionals and have demonstrated your leadership in restoration competency. You are invited to apply to be an RIA Registered Third Party Evaluator and participate in bringing competence back into the insurance claim settlement discussions.
Obedience to program rules is not an assurance of contractor competence nor fair insurance claim settlement.
There are many benefits enjoyed by those identified as an RTPE, including an authoritative source of information in resolving typically minor disputes. Regular RIA Convention features are likely to become an annual event as the state of the industry is reviewed and explored. A pathway to expert witness work can develop with an ongoing RTPE practice. You hold out a beacon, shining light upon a career pathway to those who wish to take this industry as seriously as you have.
The RIA RTPE is the latest great thing that the RIA brings to its membership — and we invite all who wish to be identified as one who actually delivers on the RIA promise to “Make it Better… We Promise.”RIA