Whatever Happened To Integrity?

by Mark Goldwich

It’s everywhere in the news and online lately. Integrity is in decline. Political scandals involving everything from campaign financing, to disappearing emails, to marital infidelity, to deflated footballs, influence peddling and cronyism…you name it. Maybe it’s the 24/7 news cycle, or maybe it’s just happening more frequently, but there does not seem to be any shortage lately of stories where a person’s or company’s integrity has been compromised.

Image courtesy of CBS News

And if you’ve been at all in touch with insurance related news lately, you may have seen something about the story that was also featured on “60 Minutes” recently. An engineering firm was raided by government officials who suspected the firm of altering reports related to Super-Storm Sandy. If you saw this, then you got the main idea. Government officials carrying box after box of files from this now-disgraced engineering firm, accused of changing reports to the detriment of insurance consumers.

If you didn’t see this, then like most people in the country, you were completely unaware that an engineering firm could even be thought of doing something as sinister as writing or altering a report that would prevent an insurance customer from receiving a fair settlement. But that is the charge, and more than likely, in my opinion, that is exactly what happened.  Of course LL denied any wrong-doing, as are the insurance companies. And that is probably the last most people will hear of it, until eventually there is another story about the fines handed down (I suppose I should say IF these companies are found guilty). And then it will be back to business as usual.

While the press will in all probability downplay the end game, I will look forward to it, because it is something that has been stuck in my craw for a long time now. You see, I have known about this practice for decades. That’s right, it is not something new, nor is it something specific or isolated to Super-Storm Sandy claims.

Writing engineering reports for insurance companies is a HUGE business. Insurance companies pay billions of dollars every year for these reports, and many engineering firms specialize in this field.  They target insurance companies, knowing they can make big money year after year.

Personally, I have known about this from my days working for an insurance company. Engineers would sometimes ask what we wanted the report to say. I was trained to respond, “just tell me what you find, just give me the truth”. Whether we were worried about the litigation that would result if we ever got caught fixing reports, or whether we simply wanted to maintain integrity, I’m not sure. But either way, our (my) integrity stayed intact.  Of course that was years ago.

I just don’t know that insurance companies have the same mindset anymore. In fact, I am convinced many do not. Also, I think most have gotten smarter about how they approach this. They may not outright tell an engineering firm what they want, but the engineering firm knows, or thinks they know, that they tend to consistently deliver exactly what the carriers need to reduce claim payments, or avoid paying claims altogether. Is it coincidence? I just don’t see it that way.

You see, for years my adjusters and I have been meeting with engineers, junior engineers, or the engineers-in-training that these firms send out. While at the property, we make small-talk with them, and try to gauge what they will say in their reports. We know that what they say, and the way they

say it, could determine the outcome of the claim. That is, whether or not the claim will be covered.

Image from hurri-clean.com

For example, I recently met with an engineer to determine why mold was suddenly developing in a client’s home. The engineer walked around the home, asked a number of questions, poked his head up in the attic, took pictures, and admitted he was not sure what was elevating the moisture levels in the home enough to cause mold to grow. When pressed a bit, he said he would report that there must be a leak in the roof that was allowing water in, and that was the cause. He further said that in his opinion, that would give us the greatest chance for the insurance company approving the claim. The insured and I were satisfied, but I cautioned the insured to wait for the report before proceeding with repairs.

And as happens too often, when the official report came back (not within 2 weeks as we were told by the engineer on the scene, but 2 months later), we were shocked to see the report looked nothing like what the engineer on the scene said it would. Instead, the report claimed the mold was due to general conditions of high humidity, probably caused by water seeping into the building walls and windows (despite little if any evidence of this), combined with an air handler that was too large for the home (although he took no calculations at all that would be required to make this determination). And there was no mention at all of the roof leak he was sure would get the claim paid. Of course, the claim was denied.

We all “know” what happened. The engineer first wrote it up as he saw it, or initially discussed it with his senior engineers at the firm.  But after some back and forth between his bosses and the folks at the insurance company, the report was changed (they’d call it “revised”). That’s why it took so long, and why it looked so different. It happens like this all too often.

But I will admit they don’t always change, or revise, their reports. Usually, they know up front how to write their reports so the insurance companies will keep them busy writing more reports, and earning more money. We see those guys too. We meet them at the home, and they spend 90% of their time looking at, photographing, and making notes on every defect, deficiency, workmanship issue, and other issues we all know aren’t covered, whether we are claiming those things or not. They spend very little time looking at what we are telling them is being claimed, and when they must see it – because we insist on them looking at it, they usually dismiss what we are claiming. They say things like, “those shingles should not have blown off in that storm. If the roof was newer, and kept in better maintenance, and if the shingles were properly installed, they probably would have been fine.”

Image courtesy of weather.com

Somewhere up north, maybe in Boston, where we all know the snow has been falling for weeks, there is an engineer earning his stripes by looking at a roof that has collapsed under heavy snow loads,while trying to figure out how that loss could be attributed to poor design, materials, or workmanship – anything but record snow loads. Besides, anyone could look at the situation and say, “heavy snow did it”. The challenge is using your degree, training, and intuition, to uncover a critical flaw, no matter how minute, that few others would have detected.

This engineer no doubt went to school for a long time. He has student loans to pay. He has a long career ahead of him. He has mouths to feed. He certainly doesn’t want to disappoint his boss. And he knows if he is good at his craft, he can make a good living writing reports for insurance companies. He also  knows that engineers who routinely write reports leaning in favor of insureds, get passed over when it is time to assign the task or writing these reports.

And so it goes. Little by little, integrity takes a back seat to progress. Besides, they must think, it’s everywhere. Everyone does it, even our leaders. 

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.