Bias in any industry can cause issues. It can cost people money, their jobs and worst of all some companies lose the trust of their clients if they engage in conflicts of interest by using people who may be perceived as having a bias.
In the case of property insurance claims, the problem is more monetary and can even cause twofold issues for a business. Not only do they have to deal with the property damage, at times their business may suffer revenue loss in the wake of a disaster.
In Georgia a company called Omni Health Solutions, LLC ran into a similar situation when dealing with hail damage done to their property.
After the damage was discovered, Omni filed their claim, but it was disputed by their insurance company, Zurich American Insurance Company. Omni then used a provision in their insurance policy with Zurich to ask for an appraisal of the hail damage, which required the assigning of two appraisers and an umpire. The damage done to the roof of the property also damaged certain pieces of equipment and created mold and water damage throughout the building. This added to a business interruption for Omni, which was included as a loss in the claim.
The policy specifically referred to the use of a “competent and impartial appraiser” for the process. The umpire and appraisers were selected and come tot he conclusion that the damage amounted to a total loss of $800,000. The compensation for the business loss also amounted to $322,445.61.
Unfortunately, things went pear shaped when the original umpire assigned joined another company. A company which had done work for Zurich. Omni then requested for a new umpire from the court under suspicion of a conflict of interest. The court not only appointed a new umpire but declared the original total loss as “non-binding” because of the situation with the first umpire.
The obvious response was for this case to continue into appeals…and so it has.
The more important point here brought out by the court was the fact that the umpire should have taken the initiative to step down once he began his employment with the company that had business dealings with Zurich.
When it comes to dealing with people’s business or money, we can see how important it is to avoid conflicts of interest. Even the court recognizes that.
What do you think? Was this truly a conflict of interest or were the courts assuming too much?