Procurement Gone Mad
As it has been explained to me, a restoration company is to be appointed and is to attend in a short time frame. (So far so good but this is where it all goes wrong).
If the estimated cost of the works is greater than the paltry amount of $3,000 then they are not to do any remedial work but rather prepare a list of the damaged items and report on whether the item can be saved or restored. If it can be restored it is be quoted. This contractor is to do all of this at no cost to the Insurer.
This report is then to be forwarded to the Insurer who within 24 hours will appoint a second restoration company to do exactly the same and then allowing a second 24 hours the insurer will authorise repairs. The emphasis is clearly on price.
Clearly the person or team that have come up with this procedure:
- has never had their home or business effected by water, fire or smoke. If they had they would realise that this is completely unacceptable behaviour and the Insurer’s claims officers are going to get a lot of irate calls from their customers. I would also expect a lower retention rate at next renewal for any client that has been through this.
- has not been out in the field as a loss adjuster. After 6 weeks into my 42+ year experience in handling claims I learned that the secret of minimising losses is to get in early and stop the damage as soon as possible. If you take a fire or water damage for instance, metal parts will start to rust, electronic componentry will corrode and carpets and other fabrics will rot. Nothing I have seen since week 6 of my career has made me rethink my view. I do not gamble but I would bet that the average claims costs will go up for this insurer using this methodogy.
On the other hand, when I completed my doctoral research program in 2006, the most poorly rated service provider following a claim was the restoration company. The customers felt that they were paid too much, that this often ate into their now precious sum insured, and that they were given preferential treatment by being paid before they, the premium paying, customer..
I do agree that the current system does have to be improved with many of the restoration companies, not all. But the proposed system is in my firm opinion not the way. If anyone had rung me or I am sure any experienced claims person that this would have been explained at no cost.
I will be watching with great interest this experiment and watching what it does to the insurers claims star rating as rated by LMI ClaimsComparison. In the meantime, I am glad that my insurances are not with them.