Wednesday, August 20, 2014

Activity Does Not Equal Achievement*

*John Wooden

So far, I've put in for 14 jobs that are within the ballpark of possibilities (and a couple that were stretches). I have my resume out to a couple of other folks in my network that have connections that might help. I've had two, unfruitful interviews and two rejection letters. There are two other jobs in the hopper that I need to apply for tonight.

I will say this though, I really appreciate companies that streamline the application process. Allowing a person to use their LinkedIn profile to apply makes life easier and quicker for everyone involved. Forcing someone at a senior level to fill out an employment application that contains the exact same information as your resume, however, is stupid.

If I could get away with it, I'd chuck it all and go be a gunsmith or welder.

Spent the day at the zoo with The Queen and M&M. Some thoughts:

The Queen is a genius for bringing gel cold packs that fit under my baseball cap and kept my head cool.

Fat women should not wear yoga pants. It's a crime against humanity.

M&M is a delight at the zoo. Standing at the zebra enclosure: "Why won't they come closer? I want to pet them." She wanted to get in the pens more than once. One of these days, there will be a news story of a cute little girl riding a zebra at the zoo. Just wait. It's coming.

If you have a brood of kids hanging off of you or in your arms, get off the stupid cell phone.

Sunday, August 17, 2014

Too Good Not To Share

M&M gave me the precious gift of a special memory yesterday. We were listening to a church service on the computer in the bedroom, and M&M was between The Queen and I. All of the sudden, M&M snuggled in close, laid her head on my chest and went down for a nap.

I had to stay still for the better part of an hour, but it was so worth it.


Over the years, I've done my fair share of pre-employment assessments. The one I did for my last job was the most in depth by far. During this evening's job search efforts, I came across one of the most diabolical. It starts off easy enough with the standard "which of the two following statements best describes you? A) I like to lay naked on a fire ant mound slathered in honey and confectioners sugar. or B) I live to cauterize my intestines with Thai ghost peppers with a hot cinnamon schnapps chaser." As you would expect, they ask you the same questions a couple of different ways to calibrate your responses.

Then, they turn the knob up to eleven.

Math and logic word problems...against the clock.

You have three minutes to read, analyze and calculate the correct answer, you can use scratch paper, a calculator, an abacus or a three year old. No cheating.

Most of them I did okay on. I think. The one that killed me went something like this (not exactly like this since I don't want to get in trouble with someone for sharing their intellectual property).

"Your company has 5 employees that buy widgets. Beavis buys 450 widgets at a $1 more than Cornholio pays. Butthead buys 650 widgets for $0.50 less than Cornholio pays but $0.75 more than Gribble pays. Gribble pays $1.00 more than Boomhauer does but buys 600 widgets. Cornholio buys 500 widgets and pays the princely sum of $5.25 per widget. Who spent the most money buying widgets?"

I locked up on that one scratching it out on paper. By the time I had it set up and was making headway, the clock was down to 7 seconds. Doh!!! Pick an answer and hope it's write. I checked myself it wrong. Just another minute, and I could have narrowed it down. But, they are timing this for a reason. How does this monkey perform under pressure and deadlines.

This monkey thinks this is a stupid shell game designed by MBAs who think solving math and logic problems against a clock is a useful metric.

Wednesday, August 13, 2014

Healing In Progress

As you might imagine, I had a less than restful night last night. I was emotionally and physically wiped out by the time things finally wound down here at around midnight. The poor Queen was in at least as sorry shape as I emotionally. The news hit her especially hard, and poor M&M was getting concerned too since there was a lot of heavy emotion floating around the cause of which she could not fathom. She and I wound up sacked out on a recliner together for mutual comfort until retiring to the bedroom to join The Queen in bed at some unknown hour. M&M was sound asleep when I got up, but she refused to let go. So, I simply took my little clingy monkey with me.

I woke up this morning at 7:30 AM whether I liked it or not (I didn't), and there was no going back to bed. Even if I could have gotten to back sleep, I had a headache and a powerful need to do SOMETHING. So, I fired up the computer and began by responding to some of the emails and Facebook messages that I received. I started updating my resume and got it circulated to several people for a variety of reasons (kymber, I look forward to your thoughts).

I thought I would take a moment to share some of my thoughts on the whole situation as well as some of the blessings I've been counting.

First, despite the passage of 24 hours+ since the axe fell, I still have no better insight into why this happened. I doubt I ever will. I'm still convinced that the reason I was given was not the "real" reason; but, since Texas is a right to work state, they don't have to give me a reason.  I have been in contact with some of my business associates that I've worked closely with over the last two and a half years. Universally, they were supportive and as shocked as I was. No one thus far has had a negative thing to say about my performance or skills which is a relief frankly. The Queen and I have our suspicions as to the reason why, but suspicions is all they are and will forever remain so. I have no interest in confirming those suspicions as it would serve no purpose beyond a small bit of closure. They have chosen to proceed without me, and I have to be content that they thought that was the best course of action for them.

I did get a little bit of appreciation from them today. I realized today that I had an Apple TV that had been bought by the company for use in presentations still in my possession at home. I emailed my former boss and the HR Director to ask them what they wanted me to do with. I was advised to keep it with a note of appreciation for my honesty. Every little bit helps I guess.

One very big blessing in all this is that we do not have a mortgage hanging over our heads like the sword of Damocles. The inlaws and my family have been very supportive. We have a roof over our heads as long as we need it. That is a relief beyond measure; and, I believe, a blessing from God that the house sold before this happened.

I kinda wish He had told me to wait on buying the new car though.

I have been blessed to receive offers of help from many of you as well as others. It's very reassuring to have people willing to go to bat for you when you've been kicked this hard. Having a professional contact you respect tell you that you're well liked and know what you're doing is very comforting when you've been cast aside.

I no longer feel the need to puke, and I haven't cried since this morning. So, that's progress.

The Queen, M&M and I spent some time this afternoon at the lake enjoying the water and sun together. That was very nice. I was even able to forget my situation for a short time. M&M and I had great fun splashing in the water. She can't swim yet, but she loves to be in the water and getting confident in allowing her head to go underwater.

I've been searching through job postings, and I've seen some that interest me and a couple that look like they were written for me. I will be applying for them over the next several days. Hopefully, something will come of that. In the meantime, I'm working my contacts and networking as much as I can.

Yesterday hurt pretty bad.  Before I gave up the company phone, I sent The Queen a text to let her know what was going on as we were supposed to meet for dinner near the airport for a quick meal before I had to fly out on business. As I was cleaning out my desk under the watchful eye of the HR director, she kept calling me on my office phone trying to get a hold of me. I told HR that I was answering a call from my wife and had to tell The Queen a couple of times that I couldn't talk before finally having to hang up. It was all I could do to keep from completely falling apart on the phone, as I boxed up my accumulated stuff and on my way out the door. Even at that, I know I left several items behind for them to ship to me. It was a long two hour drive home. It was one of the hardest things I've ever done to pull into the driveway and face my wife who loves me and relies on me to provide for her and our daughter. I wanted to be anywhere else. Seeing the heartbreak on her face when I finally made it home, not directed at me but at the situation, and hearing the pain in her voice cut deep. I will be forever grateful to her for the love and support she gave me through her own hurt.

I wish I could report that I'm over it, that I'm all smiles and laughter. That would be complete and utter fertilizer. The healing has begun, but it is far from over.

Thanks again to all of you who read here and especially those who took the time to comment or email. Your friendship is very much appreciated.

Tuesday, August 12, 2014

Laid Off

Friends, it is an unhappy day for Daddy Hawk.

I received a call from my boss at 3:00 PM today to join him in the HR director's office. I was gently but bluntly informed that I was being laid off due to my position being eliminated. I have never been so shocked in my entire life by anything. Bar none. Other words were said, but they made no sense to me at the time or in hindsight. This truly came out of left field. I could go through my hindsight analysis of the situation, but the end result is that the stated reason for the layoff still makes no sense.

A lot of what transpired between then and when I arrived home is a blur, and I have no doubt I would not give an accurate account if pressed under oath. Frankly, I'm surprised I made it home without getting lost or into an accident.

I have no idea why this happened, but I do know that things will work out for the best. I'm not posting this looking for sympathy, but I would be grateful for any prayers, warm fuzzy feelings and good vibes you're willing to spare.

Erratic posting and irregularly scheduled programming will continue as normal.

Thursday, August 7, 2014

Seen At Lunch...SHINY

Factory Five Shelby Cobra replica
Slobber....drool....I'll be in my bunk.

Insider's Guide for Outsiders: Evil Insurance Companies

A co-worker forwarded the link to this news article. For those who can't be bothered to click a link, here's the short version:

76 year old man gets into an argument with his insurance agent over why his auto insurance was canceled. Man gets physically thrown out of agent's office. Man sues agent. Man wins judgment. Agent's representatives attempt to partially satisfy the judgment with 17 buckets of loose coins.

As my current boss commented, there's got to be more to this story.

Now, I will admit that I have been sorely tempted to do something like this more than once in my insurance career. The one thing stopping me has been that the hassle of getting that much coinage together and delivering same far outweighed any pleasure I might have received at making a difficult attorney's life more difficult. I'm sure others in my profession will agree.

I bring this up because of a (probable spam) comment I received on my relatively recent post on litigation. The commenter stated: "Great information! Insurance companies don't like to pay claims and some inspectors or adjusters are invented to deny claims. With this said, if you have a legitimate claim, you should expect to be treated fairly and expect the insurance company to honor the claim."

My response to the commenter was: "I'm not sure what you mean by "some inspectors or adjusters are invented to deny claims", but I will say that claims people tend to be a jaded and suspicious lot by nature (it comes from too many dealings with sleazy lawyers and angry claimants). Insurance companies are in business to make money like every other business. As such, saying they don't like to pay claims is almost akin to saying the Pope is Catholic. Having said that, some companies have a well deserved reputation for being difficult and reluctant to pay claims while others are less difficult. Perhaps my next articles in the series will be on insurance companies and adjusters."

I thought I would take a moment and give a brief overview of the insurance business from the company perspective. 

First, let's get one thing perfectly clear from the start: with very few exceptions, insurance companies are in business to make money. Any insurance company failing to make money for very long does not tend to stay in business for very long. 

The primary vehicle for measuring the profitability of an insurance company is the loss ratio. In its purest form, the loss ratio is the total of all written premium collected divided by claims paid including expenses. There are two types of expenses: allocated loss adjustment expenses (A.L.A.E. for short though I've heard some people pronounce it as a word: "A-lay") and unallocated loss adjustment expenses (ULAE). ALAE is any expense that can be allocated to a specific claim file. The legal bill that pays for the attorney defending a specific lawsuit is ALAE as is private investigator, inspector, expert witness and other expenses when they arise out of a specific claim investigation. Adjuster salaries, office rent, electricity, phones, etc. are ULAE. 

A loss ratio of 1.0 is break even. Loss ratios of greater than 1.0 mean a company is hemmorrhaging money, and loss ratios of less than 1.0 mean that the company should be profitable. It is theoretically possible for a company to have a 1.1 loss ratio and still turn a profit, but that feat requires successful return on investment of premium dollars which I may or may not discuss further. In my experience, it is rare to see a reported loss ratio below 0.50. The most profitable companies typically run a loss ratio in the .55 to .75 range. The majority of okay but financially profitable companies run ratios between .75 and .95. Companies having issues typically run loss ratios very close to or above 1.0. A recent example would be Fireman's Fund's dismal performance the last two years running with combined ratios (a combined ratio is the pure loss ratio including investment performance) of 1.294 (2012) and 1.036 (2013).  

That's all so very nice and esoteric, but what does it mean? 

To be honest, lots of things and nothing at all. 

Underwriter and actuaries control one half of the equation (written premium) while the claims department controls most of the other half (losses paid and ALAE). Premium rates are set based on a variety of factors that are well beyond my limited math education and experience. Actuaries perform all sorts of calculations and review statistics (and goat entrails I'm sure) and analyze navels until they come up with a set of rates they think represents the rates that a given category of risk should pay. That's why teenage boys pay the highest rates for car insurance. Underwriters then stick their thumb in that pie and develop a set of underwriting guidelines that define the "appetite" for risk that the company wants to pursue. For instance, the last company I worked for prior to the one I am with now had a solid personal lines (auto and homeowner's insurance) and "middle market" appetite. They were content to pursue small to medium sized companies in a variety of industries, but they would steer away from anything too big or unique. Unique in the underwriting world = risky and hard to price. 

Another driver of insurance premium rates is policyholder retention (or whatever the term de jour is). Basically, there is a finite number of people and/or companies out there. Most of them already have policies which forces the insurance industry to compete on price and service. Service is almost exclusively (but not completely) owned by the claims department. Underwriting sells a promise. Claims delivers on the promise. That leaves price. A company losing market share might choose to lower rates or increase its underwriting appetite or both in order to bring in more premium dollars, at the risk of increasing the loss ratio. A company seeing its loss ratio rise might choose to do the opposite, at the risk of losing market share.  It's a very delicate balancing act. 

That brings us to the loss/claims side of the equation. As mentioned a moment ago, service belongs to claims. There is a distinction here that needs to be mentioned (one I've mentioned before). When you see an ad for an insurance company on TV talking about fast claims service, they are talking about first party claims. A first party claim is one in which you the policyholder are making a claim for benefits to be paid to you under your policy. An example would be making a comprehensive or collision claim on your auto policy. A liability claim where someone else makes a claim on your policy for benefits to be paid to them arising from an accident caused by your negligence is a third party claim. 

What difference does it make? Most states, if not all states, have some form of statutory or regulatory guidelines for how first party claims can/should be handled under pain of fine or penalty for failure to comply. As a result, the claims process for first party claims is pretty streamlined and efficient. Some companies still have field adjusters who will come to you; and, in some cases, they will even cut a check for the damages on the spot. Additionally, there is usually no requirement on a first party claim to prove legal liability as is required by the insuring agreement on a liability policy since a first party claim arises from contractual language as opposed to tort negligence theory. Prove that the contract was in effect and that the damages incurred are covered by said contract (which is usually self evident), and the check is in the mail. 

Most of the time, when someone is griping about an insurance company, they are griping about the handling of a third party claim. As mentioned in a prior post, the time frames on a third party liability claim can go on for years. Most people anymore lose their patience and tempers after a few seconds. So, you can imagine how much fun third party claimants are to deal with when you deny their claims. 

Now, as for the prevailing thought that adjusters look for reasons to deny a claim or that insurance companies don't like to pay claims, the short answer is that it depends. 

Most individual insurance adjusters are hard working people trying to earn a living and do a good job. They have neither the authority nor do they receive the level of reward necessary to incentivise denying valid claims for no reason. The average adjuster, in my experience, is handling between 75 and 175 claims at any given time depending on the complexity of the mix. Most adjusters have very limited personal authority requiring management approval for settlements/reserves above certain amounts, coverage issues, etc. Most adjusters also know that denying a claim does not mean it goes away. In this litigious society, they know that it just means a lawsuit will be coming in soon and that file will be around a lot longer. If anything, there is a human nature tendency to find ways to PAY claims because settled files very rarely reopen, and adjusters have better things to do with their time than reopen files. As such, a permanently closed file is a happy file. Yes, there are individual adjusters that are jerks who are difficult to deal with. Pick any will find your share of jerks there too. The bottom line is that adjusters are people too subject to the same pressures and feelings as anyone else.

At the company level, there is not an insurance company in business today that has an official "smoking gun" document from senior management that says "look for ways to deny claims" or something to that effect. No one I am aware of is that stupid given the lengths to which bad faith lawyers will go to find such information. Now, will middle management do or say something stupid like that? Yes. I had an assistant VP of claims at a large, international insurance company tell me personally "I don't care if it's right. I just want it done." I explained to him that I had no intention of doing what he told me as I had no intention of explaining why such an unethical thing was done when my deposition would be taken in the inevitable bad faith lawsuit. His boss agreed with me after the fact. I still left that company pretty quickly thereafter though. 

Will a company institute policies or procedures that make the claims process more difficult for everyone involved (adjuster and claimant alike)? Yep. Been there. Done that. Google "allstate colossus" for one such example. I've never worked for Allstate, but I did work for one company that also used Colossus for certain types of claims. I can attest that it is just like every other computer program in existence: garbage in, garbage out. 

One consequence of the whole loss ratio analysis discussed above is the cyclical nature of claims settlements. When the loss ratio is high, the claims department gets pressure to "lower the loss ratio" or "reduce expenses". This can take the form of taking more cases in litigation to trial (which is counter intuitive since it involves incurring more expense) or settling more cases (which is also counter intuitive for obvious reasons). Taking more cases to trial is problematic for a variety of reasons not the least of which is the almost Byzantine nature of our legal process. Most adjusters hate to lose cases at trial. As such, they tend to recommend very few cases for trial and then only those that have legitimate, unresolvable disputes or those that they believe are "slam dunk" cases. I have sat in more than a few roundtables where I've told upper management in no uncertain terms that trying a particular case would be an epic mistake. Usually, they are smart enough to listen and the case eventually settles. 

It should be noted that insurance companies don't just take premium dollars and dump them in an interest bearing checking account hoping everything balances at the end of the month. There is a whole side of the business controlled by accounting and the CFO that takes the money, invests it and hopefully scores a boatload of return on investment earnings in the process. Sometimes, that can blow up in their faces. AIG most notably went to the brink of oblivion just after the housing bubble burst in 2008 through over reliance on mortgage backed derivative investments. Hartford got splashed by that same bubble bursting for the same reasons but fared much better through a more diverse investment portfolio.

This is a pretty big topic that I am only scratching the surface of here, but I need to get back to work. If you are really that interested, you can dig into the mechanics of reserving and prior year development charges to present earnings, etc. That's homework for you CPA types. 

In closing, your attorney is no better or worse a person than the adjuster for the insurance company. Treat them with the Golden Rule, and things will usually work out the way they are supposed to.