Home Testimony in the MDGA regarding proposed insurance bill

Testimony in the MDGA regarding proposed insurance bill

Testimony to the Maryland General Assembly - House Economics Matters Committee

In the Matter of HB 1012: ”Homeowner's Insurance and Renter's

Insurance, Adjustment and Settlement Practices”

March 12th, 2015

Presented by Yakov Shafranovich

Honorable Members of the Committee,

Thank you for giving me the opportunity to testify regarding bill HB1012. I would also like to thank Delegate Rosenberg who proposed the bill, and all members of the 41st district delegation as well as others for helping our family throughout this ordeal.

Honorable delegates – I am here today to speak to you not on behalf of a business, or an organization, or a community; but on behalf of my family. Specifically, on behalf of my sister-in-law and brother-in-law, Sharon and Nathan Benyowitz, and our entire extended family.

The Benyowitzes are a young couple with one child. They do not have a lot of money, having just started their new careers within the last year. However, they made sure to have a renter's insurance policy from a good agent with a reputable insurance company. Having paid the premium and signed a contract for insurance, they expected the insurance company to honor that contract in good faith when the unexpected happened. Instead, they and our entire extended family were put through the bureaucratic wringer.


In the early hours of November 29th, 2014, a fire broke out in their apartment complex. Thank G-d, everyone living in the building escaped unharmed. However, my sister-in-law, brother-in-law and niece had escaped only with the clothes on their backs. They ended up living at my in-laws for several weeks until they were able to get a new place to live.

Two claims were filed with the insurance company: one claim for the fire and second for the theft of valuables because the apartment building was looted right after the fire. Hundreds of hours of paperwork were spent on this by us and our agent to get both claims paid. I do not wish to burden you with the all of the gory details - instead, I would like to focus specifically on the two things that bill HB1012 addresses.


The insurance company did not send an adjuster out, instead we dealt by phone with an out of state employee. The insurance company sent three contractors instead of an adjuster. One company was tasked with dealing with damaged clothing, the second company with electronics and the third company with everything else. When we inquired, the insurance company informed us that using contractors instead of adjusters is normal business for them and they do not have company employed adjusters within the state.

When the “contractors” came to pickup our belongings and inspect them, they also came with paperwork. Much to our surprise, the written contracts presented by these companies required us to grant power of attorney to the contractors to sign our insurance checks to them; to certify that we know that they have no connection to our insurance company; and that we are ultimately responsible for all the costs including pickup, transport, assessment of damage, storage, cleaning, replacement and disposal. An example of such contract is attached to this testimony.

For one company, we refused to sign and asked for our stuff back. For the second company, paperwork was not signed but we were billed anyway. The third company, did not bother to provide copies of the digitally signed paperwork and it took a complaint to the franchise's corporate parent to get copies of the bills. Furthermore, all three companies had a substantial conflict of interest since they were tasked with both assessing the damage and repairing the damaged items. Additionally, the contractual paperwork made our family legally responsible for repair costs exceeding the replacement value of the items.


If we had gone along with the process, a large chunk of the insurance settlement would have gone to the “contractors”, for assessment tasks normally performed by the adjusters employed by the insurance company itself. In addition, the various contractors low balled various estimates of damages, further reducing the potential settlement. Furthermore at various times, the insurance company implied that not using their recommended contractors would end up with no money being paid out on the claim at all.

Current law requires insurance companies to settle claims in a fair matter – but apparently that is not enough. Bill HB1012 is designed to specifically address the two issues highlighted: the conflicts of interest between an insurance company and their “recommended” contractors; and prohibiting the practice of running a “virtual” insurance company with no local adjusters. Passing this bill would force insurance companies to clearly identify who is working for them, and who is not; as well as providing insurance adjusters within the state, employed directly by the company to assist with claims as needed.


In closing, I would like to take a moment to contrast the behavior of this insurance company and another, reputable one. One of the other tenants in the building in question had an adjuster working for their insurance company come to their apartment. Having assessed the damage on the spot and determining that it was at least up to the limit of the policy, a check was cut for them without any further ado . This is the kind of response we expected, but not what we got.

Honorable members of the committee, I urge you to support this bill and thank you for your time.

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