Posted On: April 19, 2006, 11:13 pm CDT

Posted By: Roger Poe

4-19-2006

Underwriter,

You stated;

"When I look at claims info, there's a line-item for "profit and overhead" for the person doing the repairs and/or work on the property."
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Contractors place, and repair and/or replace, homes.

Insurers, to properly indemnify a client / structure, use construction industry generated calculations for the calculated replacement cost of a given property, and necessarily include contractor overhead and profit in those calculations.

Their replacement cost calculations for the structure would, easily, not make sense otherwise.

Calculations of the replacement cost of a given property carry over into premiums.
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*"-- Indemnity is the basis and foundation of insurance coverage.

The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.

This objective requires that the insured receive a payment equal to that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.

The calculation of this payment results in under-compensation if an insurer deducts prospective contractors' overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.

The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.

If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an illegal windfall because the insurer receives premium on insurable values for which loss may never be paid."

*http://www.tdi.state.tx.us/bulletins/b-0045-8.html
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Receiving premium (dollars) equaling future loss values, and not returning those loss values to claimants, equals receiving premium on insurable values for which loss is never paid.

Over priced premiums, illegal windfall dollars gained, and illicit contingent profit potential, are by-products of synthetically undervalued loss claim estimations.

All of which can be "hidden" by year-end loss-ratio appearances, and "proper" profit margins not exceeding regulatory boundaries, and insufficient market conduct examination of carriers claim settlement practices.

Should the premium rates need adjusting downward, after the illegal scheme bears the profit desired, carrier compliance with regulators gives the whole process a veneer of legitimacy...

Every day specific examples of keeping those contractor overhead and profit loss values claimants are paying insurers for, and are entitled to honestly receive back, are being generated by Allstate, USAA, Safeco, Farmers, State Farm and the TWIA, in Texas.

Some insurers claim a primary - general (structure placement / replacement) contractor is "needed" for a loss, so as to include those contractor overhead and profit loss values in estimating the value of the loss.

Not so.

Again, "The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium.

If the insurer in determining actual cash value EXCLUDES costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an ILLEGAL WINDFALL because the insurer receives premium on insurable values for which loss may never be paid."

Predetermined replacement loss values, knowingly collected, and knowingly not repaid, apples-for-apples, thus creating illegal windfall, is knowingly defrauding people...no?

Underwriter, If you would like specific hard copy evidence that this is so, for the past 4 years, please feel free to contact me.

Private client information will be excluded.

rogerpoegc@yahoo.com