Unveiling the Reasons Behind Delays in Insurance Claims: Why is My Insurance Claim Taking So Long?
At Lindstrom Restoration, we are hearing home and business owners voice that question more frequently in recent years. It all started with the pandemic and the economy shutdown back in 2020.
You remember it well. Work in many homes came to a dead stop as many families feared that workers would spread Covid-19 to their families.
People soon realized that they couldn’t live in a mess and were willing to take on the additional exposure risk. Companies launched new safety protocols complete with respirators, chemicals, and N-95 masks. After many painful months, the pandemic subsided and we eventually returned to some normalcy.
But that didn’t stop the delays. Today, fire, storm, and water restoration estimators across Minnesota report that it takes a lot longer to get approvals and agree to a scope of loss. Since contractors and insurance adjusters work on the same restoration and construction estimating software platform, Xactimate, why is progress still so slow?
Multiple Factors Contribute to Delays in Insurance Claims
To begin, Minnesota handily led the nation in hail losses in 2022. We jokingly refer to our state as “the frozen tundra,” but not many people would relate that label to golf ball-sized ice falling from the sky. It turns out the May 2022 severe weather events and others later in the summer resulted in $799 million in hail losses, by far the largest in the nation. Texas was the runner-up with $510 million.
To give you some perspective of just how severe these storms were, Arkansas was third with $231 million, Illinois was fourth with $225, and Nebraska came in fifth with $212. Amazingly, next door Wisconsin was sixth with $194, further proof that hail can be very localized.
$799 million amounts to a TON of claims, and local adjusters are feeling the gut punch. As a result, the majority have excessive claim loads. Some adjusters have well over a hundred active files, which seasoned veterans call “totally unrealistic.” One adjuster who declined to be named said, “I close 5 files and get another 7. I can’t keep up.” Is it any wonder why approvals are delayed? Adding to the problem, many insurers are short-staffed and looking to hire adjusters. In the last decade many experienced, seasoned adjusters have either retired, been laid off, or have sought other employment. \
Several have started up appraisal services to respond to the skyrocketing increase in insurance claim disputes, another reason why claims are taking longer to settle.
Appraisals are a policy provision found in the loss settlement section of an insurance policy. An appraisal is an alternative dispute resolution process that occurs when a policyholder and an insurance carrier cannot agree on an amount of loss. Any claimant has a legal right to this under Minnesota State Law. In this process, the two parties each hire an appraiser who presents the cases before an unbiased umpire and agree to abide by the settlement reached.
In a recent Minnesota Insurance Alliance seminar given by former Cunningham Lindsey (now Sedgwick), former general adjuster Jim Stoops of JAS Appraisals, and Attorney Kevin Kennedy of Kennedy Law Firm, P.C. both agreed that that the claim settlement process has gotten much more contentious in the last decade.
Minnesota historically has been a profitable state for insurance companies. That all changed in May 1998 when two severe storms did enormous damage to the Metro. Since then, a new insurance-paid roof has become almost an entitlement for many Minnesotans. A new term, “Neighboritis,” was dubbed to refer to people who after chatting with their neighbors felt compelled to contact their agents and file a claim, or at the very least, get a roof inspection. Wise agents convinced their clients to hold off on filing a claim until a reputable contractor could inspect any possible damage.
In recent years insurance company executives have obviously been unhappy with Minnesota’s profitability. The result has been dramatic increases in premiums, much tougher adjusters, deductible increases, and policy coverage tightening. The combination of more inexperienced adjusters (who may not be able to spot legitimate damage), overburdened adjusters (looking to quickly close files), and tougher standards have led to more disputes and lengthier resolutions. It seems executives have had enough.
Finally, some blame for lengthier claim settlements must go back to contractors and the labor shortages they face. There simply aren’t enough able-bodied men and women who can effectively swing a hammer, paint, and install. Too few young people are learning the trades. The result is most contractors are constantly looking for skilled people.
People who do graduate from local trade schools like Dunwoody and technical colleges have their choice of offers. The good contractors are not sitting around waiting for work and are very busy. Many are weeks out to get started on jobs. A local roofing contractor operator had this to say about the current labor market in the trades: “At this rate, I am going to be paid like a brain surgeon. It’s a supply and demand problem.” His exaggeration isn’t too outrageous if trends continue.
Another issue plaguing contractors is enduring supply chain issues. Things have gotten a whole lot better but there are still delays that are slowing deliveries. That extends the time it takes to get projects completed.
What’s the solution? For starters, we could use more normal weather. Many meteorologists and scientists blame warmer temperatures for increased severity, but the Dakotas and Wisconsin hail losses are nowhere near Minnesota’s so it’s unlikely that we get a repeat of 2022. Clearly, labor shortages are going to continue to be a challenge, but perhaps we will see a renaissance of the trades. There is good money to be made. Insurance companies will also need to do a better job of relieving claim file burdens and attracting talent to the adjusting ranks.
Improved training is needed as well. Veteran adjusters complain that too many carriers are sending improperly trained adjusters out in the field. “We had a lot of great mentoring back in the day,” said one professional, who like most, declined to be quoted. “Today’s company executives increasingly view claims as a cost. A knowledgeable and experienced claim adjuster can save the company a lot of money on the back end if they allow him or her to work claims properly. They can also improve client retention. But the people in charge don’t look at it that way.”
So far there’s positive news. The slow melt of last winter’s ice and snow resulted in a lot fewer claims. April and May’s weather was unusually quiet. Eventually, storms will erupt, but hopefully nothing like May 2022. Long-range forecasts are always iffy, but the National Weather Service is predicting nothing out of the ordinary for this summer, so let’s all cross our fingers.
Unfortunately, there is still a backlog of hail claim damage. It helps that several carriers have a one-year deadline to report claims, and we’ve surpassed that. Other insurers will continue to see more claims be reported as contractors, particularly storm chasers, get up on more roofs.
Continued patience will be required for everyone.
Don’t let the delays in your insurance claim prolong your recovery process. Contact Lindstrom Restoration today and let our team assist you in expediting your claim, restoring your property, and bringing you peace of mind. We are committed to providing exceptional service and helping you navigate the complexities of the insurance claim process.