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June 20, 2000

This is one of a series of articles under the by line “Butler on Bad Faith” originally published in Mealey’s Litigation Report: Insurance Bad Faith, Vol. 14, #4, p. 35 (June 20, 2000). © Copyright Butler 2000.

Mr. Lesser is a prominent public adjuster. His business office is located in Miami Beach, Florida. The views and opinions stated by Mr. Lesser in this interview are his own. Neither Mr. Craig, nor Butler, necessarily approve or agree with any of them.

CRAIG:

Tell us a little about Lesser & Sons, now known as Lesser & Company?

LESSER:

We are the oldest public adjusting firm in the southeast – in operation since 1944. The business was Lesser & Sons for thirty years and then, as we started to grow and went outside the family, we felt it was time to change to Lesser & Company.

CRAIG:

Who founded the company?

LESSER:

My grandfather, along with my uncle and my father.

CRAIG:

What is your position?

LESSER:

I’m the president.

CRAIG:

How did your family get into public adjusting?

LESSER:

The way I’ve heard it is, my grandfather had a travel agency and he was perfectly happy. Then he had something happen to him and he got the run around from the insurance company. He said: “There’s got to be a better way.” And that’s pretty much how it started.

CRAIG:

Does Lesser & Company advertise?

LESSER:

We don’t advertise per se. We do have a web site but after being around 56 years we don’t have to advertise. We’re well known in South Florida especially since we’ve been here all that time. We’ve been on Miami Beach from the beginning.

CRAIG:

What is a public adjuster?

LESSER:

I would say a public adjuster is a facilitator more than anything else. We are hired by people who need help putting their claim together. We come in and we’re going to do the inventory, we’re going to read the policy and we’re going to handle the whole claim for them.

CRAIG:

How is the cost of a public adjuster justified?

LESSER:

A business owner doesn’t have the time to go and do these things. He’s trying to keep his business running. A homeowner is trying to get their house back together. A public adjuster has seen so many policies and knows where everything needs to go. Most people they either don’t have the time or the inclination or the experience.

CRAIG:

I’ve noticed that public adjusters around the southeast tend to establish relationships with attorneys who specialize in suing insurance companies. Why is that?

LESSER:

Well, if the loss doesn’t get settled through standard negotiations you would have to turn the claim over to an attorney. I don’t think an attorney who does company defense work is going to do it. I would rather see my client use someone that has been doing it for a while. They know the ins and outs as far as how the policy works and it gets back to an experience thing. These are guys that have dealt with each other on many occasions. Once they’ve gotten into it and dealt with the different types of coverages and all the different ramifications that would be there.

CRAIG:

Do public adjusters get referrals from attorneys?

LESSER:

Yes, we do. The client will call the attorney and say: “What should I do?” And most times the attorney may say: “This is not my forte but I do know someone who you need to talk to.” We also get a lot of referrals from accountants. Same thing. They’ll call their accountant: “What about my books?” “You may need to get a public adjuster.”

CRAIG:

Sometimes there will be a loss and public adjusters arrive almost before the fire department, trying to solicit business. I imagine some public adjusters monitor police and fire department radio. Have you heard of that happening?

LESSER:

We don’t do that. What we do is — I mean you have so many different news stations on, you find out about stuff. I’ll have people call and say they’re driving up I-95 and there’s a whole bunch of smoke going on over at 135th Street. We’ll check it out. We get a lot of that.

CRAIG:

Do you have particular contractors that you like to work with, or is that something the attorney controls?

LESSER:

Actually that’s usually by agreement between myself and the adjuster from the insurance company. The way I do it is if it’s someone I know, somebody reputable, then we can agree to one contractor that makes for a lot less argument later. But if the company says: “We’re going to bring Joe Blow” and I know Joe Blow is a lowballer, I’m not going to agree to that. I want to make sure the people are getting the money they need to do the job properly. That’s what my goal is.

CRAIG:

I see.

LESSER:

You know, there are some guys that are company guys and they’ll do anything they can. Then a problem comes up and I’ll say: “All right I don’t agree with your estimate. How about you go and do this job – no supplements – but you’re not going to get paid until the job is complete and the insured is satisfied with the work?” You would be amazed how many times they back off of that.

CRAIG:

Have you been involved in any bad faith lawsuits against insurance companies?

LESSER:

You know, I’ve been doing this for twenty years. I’ve come across a few of them.

CRAIG:

Have you ever testified in the trial of a bad faith suit?

LESSER:

Yes, I have, a few times.

CRAIG:

What do you think leads to those kinds of suits?

LESSER:

More times than not it comes down to the insurance company, for whatever reason, has a red flag go up and they think the insured may have set the fire, or that the claim is fraudulent, or whatever reason it may be. But the problem is, when it comes down to brass tacks, there’s no financial motivation. There’s no evidence of any tampering of any kind. But the company will still try to push it through and say: “Listen we don’t want to pay it.” Gut feeling or something like that. To me that’s bad faith. They can’t prove it and, unfortunately, they end up putting the people out of business or creating a severe financial hardship for them.

CRAIG:

So you think the insurance company gets a mindset early and then becomes inflexible; is that a fair statement?

LESSER:

Yes, I would agree with that. It happens. It happens a lot in bad faith situations.

CRAIG:

Do you see any correlation between that kind of mindset and the involvement of the special investigative unit?

LESSER:

I think the special investigative units are already in there due to the fact that the company has that mindset. So they’re carrying it out and I’ve been through some pretty intense investigations. Not to the level of ten years worth of records, but they’ve come on strong. They’re looking for something. They’re looking hard.

CRAIG:

What else leads to bad faith lawsuits?

LESSER:

Well, what we’re seeing a lot more lately is slower and slower payment. You go in, you get the loss settled with the adjuster. Then the adjuster’s got to wait an exorbitant amount of time to get the okay from the company, and after that to actually receive the funds from the settlement. It’s been happening a lot more in the last three or four years.

CRAIG:

Why do you think that is?

LESSER:

To tell you the truth I really don’t know. I can venture guesses they set reserves and trying to earn interest on the money. It’s becoming more prevalent. Not all companies, but there are some that will do it. Just really slow.

CRAIG:

What does the reserve have to do with how quickly a claim gets paid?

LESSER:

Well, I think it makes a difference. An adjuster needs to set a reserve right away and, the thing is, most times you don’t know what it’s going to be. But, from what I can see, adjusters like to set their reserve a little low. I would think they should set them a little high. When they set it at $300,000, and then it turns out to be $400,000, now the company is going to look at them and say: “What happened? You said it was $300,000 now it’s $400,000.” I think you would want to err on the side of caution and set the reserve at $500,000. Then, if it comes in at $400,000, you look like a hero and everybody’s happy. I don’t know if the insurance companies, once they get reserves if they take the money out and put it in a high interest or short term account type of thing to earn interest on the money before they have to pay it out. I don’t know that.

CRAIG:

Do you think that an insurance claim for a property loss has an objective value? In other words, do you think that there is one correct number for the amount of a loss in any particular claim?

LESSER:

No. Can’t be. It’s impossible for it to be.

CRAIG:

It’s not an exact science is it?

LESSER:

Absolutely not. Let’s look, for example, at a fire loss in a warehouse. You’re going to have goods that are boxed and goods that are open. The fire is going to put out smoke. Everything’s going to have some level of damage. The exact number — level of damage – who knows? Look, you can bring four accountants into a room, you can bring four attorneys into a room, you can bring four doctors into a room they’re all going to come up with a different angle or diagnosis. What you try to do is get it to where everyone’s happy. That’s the main thing you’re looking for. Insurance adjuster is happy, insurance company is happy and insured is happy. We agree there’s a loss and this feels right or this seems right or this makes sense. As long as it makes sense I think it’s the best way to go about it.

CRAIG:

How do public adjusters get paid?

LESSER:

We’ve always gone on a percentage. It’s standard. It’s been that way long as I know and it seems to be the easiest way to do it. All public adjusters I know do it on percentage.

CRAIG:

Do you think companies consistently pay more when there is a public adjuster involved?

LESSER:

I think it’s true. I think it’s true only for the fact — I know there are things that are covered that the insured would not know. I’m not saying the adjuster is going to not tell them. But people sometimes won’t listen. Co-insurance is the best example. I’ll go out there and say: “What do you have?” “I have million dollars coverage with a 90 percent co,” and they’ll be real happy about that. I say: “You have nothing to be happy about. 90 percent you got a problem.” Especially if they have $2 million worth of inventory. So I’ll try to explain to them and we give them the option you go replacement cost or go ACV. Most people don’t understand how that works. Same thing with business interruption. People have no clue. Everyone who owns a business income claim thinks they’re entitled to gross sales. That’s not how it works. So just on the fact that I know how that policy works, yes, I think I’m going to get them more money than they would get on their own.

CRAIG:

Otherwise your fee wouldn’t be justified.

LESSER:

Absolutely. I’ll tell you another example. There was a client with a tornado loss. His policy had a $50,000 hurricane deductible and a $1,000 windstorm deductible. But it was worded in a way that you couldn’t be sure what they were talking about. Being a tornado you would think it was real easy but it was complicated right there. In the end, the adjuster agreed with me. I don’t know what the adjuster would have done on his own. I don’t know what the insured thought. So there was $49,000 more that he recovered that he wouldn’t have gotten without me being there.

CRAIG:

Are there any types of claims that are particularly appropriate for a public adjuster?

LESSER:

Any kind of percentage claim. Any kind of partial loss. Any kind of claim where you get a situation where there’s co-insurance like I said. Any time there’s a situation where the books and record keeping is not sparkling clean. The only time I would say that wouldn’t be appropriate is if it’s a total loss and they only have “X” amount of dollars insurance and their loss is three times what the coverage is and there’s no co-insurance. I’ve walked into losses and looked at it and said: “Well, you got a total loss here and if that insurance company doesn’t come out and hand you a check for your policy limits then there’s something seriously wrong.”

CRAIG:

You wouldn’t take a case like that?

LESSER:

No, I wouldn’t take it. I would tell them you don’t need me.

CRAIG:

What about the policy appraisal? Do you get involved in those?

LESSER:

I try not to. If I have to go to an appraisal, I almost take it as an insult because I couldn’t do it myself. And more times than not, when I’ve gone to appraisal, its actually ended up less than the agreement I had tried to work out. But the insured said: “No, I don’t want it.” Then we went to appraisal and the umpire awarded them less.

CRAIG:

In my experience, some public adjusters want to throw it into appraisal to set up the company for a bad faith lawsuit. They feel they’ll get more in appraisal than the insurance company offered, albeit less than the public adjuster demanded. Then the attorney calls it lowballing.

LESSER:

I know a few people that like to do that. That’s their standard way of doing it. But it doesn’t work for me. If they feel more successful that way, then that’s fine but, for me, that doesn’t make sense.

CRAIG:

Do you think that some insurance companies are more consistently fair than others?

LESSER:

Yes, there are companies I’ll get a loss and find out who the insurance company is and say: “This is great. Everything is going to be above board and professional and it’s going to make a bad experience into a good experience.” Then there are other companies I just shake my head and say: “This is going to be a nightmare. It’s going to drag on. It’s going to take forever. We’ll get nickeled and dimed and it’s going to be impossible.”

CRAIG:

Do you see any correlation between those approaches and the size of the company?

LESSER:

No.

CRAIG:

What about companies that use independents as opposed to staff adjusters?

LESSER:

Again, no direct link. There are some independent adjusters who come out and they’re just crunching you to the wall. Others are trying to be reasonable, get it done, and let’s move on. Same thing with staff adjusters. Although staff adjusters, I think, are more in line with the company policy. Some companies are like: “Go out there and pay them nothing. We just don’t want to pay.” On other ones it’s like: “Get it done. Get it done quickly and let’s move on.” Do I prefer working with either one? Well, me being the nice guy that I am I just get along with everybody.

CRAIG:

What advice would you give the insurance industry about how to avoid bad faith liability?

LESSER:

If you walk out to a loss and you think that there’s something wrong move quickly. You can’t sit on it. You got to move fast. The more you have the people sitting there and leaving them stewing in their juices the more difficult it’s going to be to resolve it later. Number two, pay an advance. I know the policy says they don’t have to, but it would go a long way to get people to be more reasonable or more flexible for settlement if you help them out. Again, I’ve seen businesses go out of business because of the fact it took so long for the money to come and they just couldn’t stay afloat or they might have struggled around for three months and that was it. They just couldn’t catch up.

CRAIG:

Do you use your own proof of loss inventory forms or do you use the ones the insurance company provides?

LESSER:

I will use my own unless the insurance company has a problem with it. My proof of loss and my inventory form pretty much follows the line of what the insurance companies use. Shouldn’t be — I mean I’ve had it where they come back and wait until the 60th day and reject the proof because it’s not their form.

CRAIG:

Is that bad faith?

LESSER:

It sure is. If the proof of loss is defective, don’t wait before rejecting it. You can’t let the people sit there for 59 days or 29 days depending on the policy and then, on the last day, and say nope, sorry, we’re not going to pay you. That sets them off and that’s bad faith. I know the old phrase “we’re still investigating it.” That’s not going to cut it. Any lawyer will jump on that say: “Oh sure, we believe that.”

CRAIG:

Anything else you want to talk about?

LESSER:

Tell the attorneys hire a public adjuster.

CRAIG:

Thank you very much for having us in and giving us your thoughts.

LESSER:

You’re welcome.

LESSER:

We are the oldest public adjusting firm in the southeast – in operation since 1944. The business was Lesser & Sons for thirty years and then, as we started to grow and went outside the family, we felt it was time to change to Lesser & Company.

CRAIG:

Who founded the company?

LESSER:

My grandfather, along with my uncle and my father.

CRAIG:

What is your position?

LESSER:

I’m the president.

CRAIG:

How did your family get into public adjusting?

For the full version of the article, please contact the author.