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My colleague Mike Bryant is a personal injury lawyer in Minnesota. I recently read an article he posted on The Legal Examiner, An Email Exchange with an Adjuster. Mike talks about some comments he received from an insurance adjuster who was concerned that an ad Mike’s law firm was running warned consumers that insurance adjusters may be practicing the law without a license if they give legal advice to injured accident victims.

Frankly, Mike’s concerns are reasonable. The only professionals that are legally licensed to provide legal advice to anyone are lawyers.

Perception Is Important

The problem is one of perceived authority. If your plumber, your electrician, or your accountant offered you legal advice about your injury claim, you would probably be inclined to discount the advice, or not pay attention to it at all, because none of these people are lawyers.

On the other hand, insurance adjusters are professionals who specialize in investigating insurance claims. The very nature of their position gives them a perceived level of authority that may, in some cases, lead people to believe that the insurance adjuster is capable of providing them with reasonable and fair legal advice about their claim.

That Reminds Me…

The conversation Mike describes made me remember a hearing I was involved in ten years ago before the Nova Scotia Utility and Review Board (UARB). When the Province of Nova Scotia was considering introducing legislation to limit the compensation paid to accident victims, the UARB held public hearings on the issue. I volunteered my services, on a pro bono basis, to the Coalition Against No Fault Insurance, a grassroots organization opposed to limits on injured victims rights.

Fraudulent Insurance Claims

A witness who testified on behalf of the Insurance Bureau of Canada (IBC) claimed limits on compensation for accident victims were needed, in part, because of an increase in fraudulent accident insurance claims.

He testified that the basis for this conclusion was a report prepared by the Insurance Bureau of Canada where IBC reviewed a number of closed claims (claims that were settled by insurance companies with accident victims). According to the witness, one of the factors IBC considered to be an indication of potential fraud was if the claim settled for more money than the reserves set by the insurance company (a “reserve” is money an insurance company sets aside that represents what the company thinks is the value of the claim).

When I cross-examined the witness, I asked him to confirm: if a claim settled for more than the insurance company had reserved, it was evidence of fraud. The witness agreed.

I asked him to confirm that insurance companies frequently settled claims with accident victims who did not have lawyers. He confirmed that it happened all the time.

I asked him to confirm that insurance companies often offered to settle an unrepresented accident victim’s claim for less than what the company had set aside as its reserves? The witness confirmed that it happened.

I asked the witness if he considered that to be evidence of potential fraud on behalf of the insurance company.

His answer was to the effect that it was prudent business practice on behalf of the insurance company.

More Money = Fraud?

In other words, as far as the insurance industry witness was concerned, if an accident victim receives more than what the insurance company thinks the claim is worth, it is evidence of fraud. But if the accident victim receives less than what the insurance company thinks it is worth it is good business practice on behalf of the insurance company.

Bias Is Obvious

Of course there is an obvious conflict of interest in an insurance adjuster providing an injured person with any advice. The insurance adjuster works for the insurance company. Insurance companies are publicly traded corporations who have an obligation to their shareholders (not accident victims) to maximize profits wherever (legally) possible.

One way insurance companies increase profits is by decreasing expenses, like insurance claim pay-outs to injured accident victims.

What do you think?

Would you take advice from an insurance adjuster about your accident claim?

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