Insurance Adjusting – Understanding That Estimates Are Just That: Estimates

In light of a recent 60 Minutes story that rehashed allegations against Florida's property insurance companies, it is crucial to address a fundamental aspect of insurance adjusting: estimates are, by their very nature, estimates.

These initial figures represent the field adjuster’s best assessment of damages, but they are rarely the final word on what a policyholder will receive.

Unfortunately, the story presented only one side of this complex process, sparking controversy and misunderstanding.

The allegations focused on how insurance companies alter field adjusters' reports, suggesting that insurers systematically cheat policyholders by reducing claim payouts.

But such accusations ignore a critical reality: field adjusters often do not have all the information needed to finalize a claim.

Insurance policies vary significantly, with some covering only actual cash value or excluding certain types of damages altogether. Because of this, changes to estimates are often a routine part of the process rather than an attempt to withhold payment.

Former Florida Deputy Insurance Commissioner Lisa Miller recently sat down with independent adjuster Shawn Kelliher of Cape Coral, who has 16 years of experience in the insurance industry, and attorney Robert Schulte to discuss this very issue.

Kelliher noted that while field adjusters document all the damages they see, they often do not know what is covered under a policy. “It’s absolutely not the case that insurance companies are out to get everybody,” he said.

When the adjuster’s report reaches the insurance company, it undergoes further review to align the estimate with the specific coverage of the policy.

Adjustments are made to these estimates not out of malice but to ensure accuracy and compliance with the policy terms.

For instance, an adjuster may include the cost of replacing a particular item in the damage report.

However, if that item is not covered under the policy, it will be removed from the final estimate.

As Kelliher explained, “It’s not a malicious situation. If the estimate was written inaccurately, by all means, it needs to be changed and adjusted to make it accurate, even if it does reduce that adjuster’s estimate.”

Robert Schulte, an attorney who represents insurance companies, clarified that these adjustments result from a careful review process involving multiple parties.

He emphasized that the final decision rests with the insurance company, not the independent adjuster.

"The insurance company is putting together all of the pieces of the puzzle to arrive at a fair evaluation of the claim pursuant to the policy," he said.

This thorough process aims to ensure that the payout is both fair and consistent with the policyholder’s coverage.

The 60 Minutes story, while raising concerns, overlooks the reality that the claims process is multifaceted and governed by the terms of individual insurance policies.

While the public focuses on a few contentious claims, it’s important to recognize that out of more than 710,000 Hurricane Ian claims filed, fewer than 1% have experienced issues with payment, according to the Florida Department of Financial Services.

To further clarify the process, recent reforms passed by the Florida Legislature require that any altered insurance adjuster’s report includes a listing of changes, the identity of the person ordering the change, and an explanation for any reduction in the estimate.

This transparency is designed to build trust in a system where each party—whether field adjuster, desk adjuster, or insurer—is working to arrive at a fair and accurate claim settlement.

The Bottom Line: Estimates Are Just a Starting Point

An estimate is exactly what it implies: an educated guess, based on the initial assessment of damages. It is not a final figure.

Adjustments to these estimates are a necessary part of the claims process, made to reflect the reality of each policyholder's coverage.

As Lisa Miller pointed out in a recent podcast, “Less than 20 or so questionable claims by these three adjusters are the recent focus of so much of the media’s attention.

We’re missing the forest for the trees.”

Insurance claims involve numerous steps, policies, and stakeholders.

The 60 Minutes story missed an opportunity to present this complexity and instead opted to focus on isolated incidents. In doing so, it perpetuated a misunderstanding of how estimates work in the insurance world.

As Florida’s CFO Jimmy Patronis recently noted, "There’s two sides to every story."

It's time we consider both, recognizing that while no system is perfect, the process of reviewing and adjusting estimates is essential to ensuring fair and accurate claim settlements.