DennisBeaverNovember 24, 2017 • By Dennis Beaver    

A recent article dealt with the consequences of rejecting advice from professional tree trimmers to eliminate the chance of a giant, 75-foot tall eucalyptus tree causing significant property damage or death when it falls.

Fall it did in early September 2017, crashing onto a neighbor’s corral and injuring their horse. The tree owners turned the incident over to Farmers Insurance and another reason why claims adjusters have a reputation for unethical behavior would soon be evident.

Even when presented with multiple examples of their insured’s dishonesty, evasive behavior and being aware of the danger, adjuster Lindsay McCarty and supervisor Richard Osbun incredibly stated, “Our insured denied ever being told the tree was dangerous. We have to believe them. Claim denied.”

Among the many comments readers submitted, one was stunning. “Richard,” a retired Farmers adjuster stated, “When you have credible evidence that your insured are dishonest, you can’t believe them! This claim obviously should have been paid. Management is responsible for such disturbing, unethical behavior.”

Pay claims and you’ll never get ahead

Salt Lake City attorney Randall K. Edwards writes extensively on this topic and as a young lawyer worked in insurance defense, seeing first hand “how morally low claims adjusters can sink.” We asked him, “Do insurance companies seek out dishonest people to work for them?”

“I don’t think so,” he replied. “After all, who wants someone who is dishonest working for you? It’s more subtle than that. In my experience, dishonest, unethical adjusters are made, not born. Most new employees are simply trying to figure out how best to do their jobs and then move up in the company,” he stated.
The term “grooming” came to mind, and Edwards sees it that way also.

“Adjusters are groomed to make ethical compromises, which come gradually. This is how to hang onto your job and move ahead. Your goal is to protect the assets of your multi-billion dollar employer and cheating the insured or an injured party out of compensation is expected and rewarded.

“Soon, new adjusters realize that by paying claims they will never get ahead. As an adjuster’s supervisor got into that position by the same process, it becomes the corporate culture. Excuses to deny payment are manufactured, often by:

(1) Intentionally misreading the insured’s policy so that coverage is denied;

(2) Arguing that certain statutes do not apply;

(3) Dragging a case out until the insured or claimant simply gives up and accepts an unreasonable, low offer because they need the money and are stressed out.

(4) Just like your tree example with Farmers, adjusters will often reject clear evidence of fault, saving the company money, and their insured then winds up being sued by the injured party.

Adjuster and insurance company lawyers are caught in the middle

Despite all the comforting slogans; Allstate’s “You’re in good hands,” Farmers, “We know a thing or two because we’ve seen a thing or two,” or State Farm’s, “Like a good neighbor, State Farm is there,” Edwards says:

“The corporate culture of non-payment, fighting with policyholders over coverage and rewarding adjusters for trying to find loopholes is self-defeating. The public doesn’t trust their own insurance company to do right by them, and certainly doesn’t trust the insurance company of someone who has injured them to step up and do the right thing. Meanwhile, the adjuster gets caught in the middle.

“You can’t get ahead in the company without trying your best to pay out as little as possible, while at the same time trying to hang onto your sense of decency and self-worth,” he observes and has harsh words for defense attorneys.

“It’s nasty. In order to keep the insurance company sending them cases, insurance defense attorneys are often in a direct conflict of interest with the insured policyholders who have been sued and to whom they owe their primary duty of loyalty. This often results in poor legal representation for the insured policyholder.”

“I am aware of many lawyers and adjusters who finally had to decide between selling their souls and dignity and getting out of the insurance game,” he underscores.

“A necessary evil”

So, are there any “good” companies out there? Edwards isn’t optimistic: “Unethical behavior as a vital part of the insurance industry’s culture, the fact of the matter is that exceptions to this rule are few and far between, in my experience.

Even the best insurance companies can be thrown into the category of ‘the best of a bad lot,’ in my view. As things stand right now, insurance is a necessary Evil. And Evil, necessary or not is still Evil.”

And the takeaway from our story? No matter how friendly, adjusters aren’t your friend.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.