Stephens
Question: I need a copy of the valuation report for my car. I called the loss assessors who wrote the report. They told me that it would cost $500 to get a copy. I spent $3,000 for the report. This company has done valuations for me for three consecutive years. They said the price was based on the cost of stationery. Does this make sense to you and, is it legal?
- A.R., Kingston 8.
Answer: This is not the usual question about insurance. Loss assessors [or adjusters] however, form part of that industry. They play an important role in the claims process. To be effective they have to be independent, knowledgeable, ethical and professional. Insurers rely very heavily on their opinions. About 15 to 20 per cent of the total claim costs of an insurance company are in loss adjustment expenses. On this basis, the total income earned by all loss adjusters in Jamaica amounted to over $500 million in 1997. Some supplement their income by doing asset valuations. One is not sure what minimum level of training is required to become an adjuster. They have operated as a law unto themselves for years. This will come to an end with the passage of the new Insurance Act.
The background is important for several reasons. It explains why some loss adjusters are generally so customer unfriendly. Secondly, they always get paid; even when policy-owners' claims are turned down. Thirdly, their business is guaranteed. Undertakers advertise. When last have you seen or heard an advertisement from a loss assessor? This type of business can produce the kind of arrogance that creates a pricing policy that blatantly gouges the consumer.
The customers of loss adjusters are mainly insurance companies - persons who pay the premiums to insurers are unimportant! When they undertake asset valuations, they bring an insurance culture to their jobs, even though they are paid directly by consumers. Finally, some of them are owned by insurers, information they do not disclose.
Am I being unfair? Have I lost my sense of objectivity? By the time this is published, two weeks will have elapsed since you contacted me. I phoned the company the same day you e-mailed me. I gave them all of the details you supplied, including your name. I sought justification for their pricing policy. I left my name, telephone number and asked that the company's Managing Director [and sole policymaker] contact me and provide reasons for the $500 charge for two computer-printed pages. [At $300 for 500 sheets of computer paper of a reasonably fair quality the material costs would amount to a mere $1.20]. Guess what? I am still waiting for a reply.
The actions of this company do not make sense. There is nothing illegal about their pricing policy. In my view their policy is immoral, plain and simple. The charges are totally out of proportion to their costs and a reasonable profit margin. Further, they are being very stupid. In their eagerness to earn $500 they have overlooked the life time value of you as a customer. Don't worry, the market will take care of them. I suggest that you contact your insurers and ask them to give you a photocopy of the valuation. Although I bash insurers from time to time about their service, I am pretty sure that you will obtain it free of charge.
Cedric E. Stephens, ACII, Chartered Insurance Prac-titioner, is the president of Aegis Resources Ltd., an insurance consultancy and the co-host of a radio programme on risk and insurance, Risky Business. If you need free, professional advice to solve an insurance problem write to The Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com.
