The following is George’s opinion of what both parties (appraisers) should be looking for in the selection of an umpire in accordance with s. 128 of the Insurance Act of Ontario and similar statutes in other Provinces. Once an umpire is selected and willing to act, they can only be replaced in cases of sickness or death. Conflict of interest and/or bias a consideration in the selection process.
Appointed appraisers should determine the amount of loss between themselves if possible. Only when that fails should matters in dispute be addressed before an umpire, BUT the Insurance Act requires the appraisers select an umpire within fifteen (15) days of their appointments. It’s, therefore, necessary they begin the umpire selection process as soon as they are appointed, most often before they meet.
Unfortunately, it has become common practice for insurers to just return a Proof Of Loss (POL) within sixty (60) days of receiving it, stating the amount(s) claimed is not acceptable. Seldom do they make an offer of settlement or advise what is acceptable or unacceptable. This responsibility then falls to appointed appraisers.
A further problem facing appraisers is matching qualifications and experience of an umpire to the loss and issues in dispute. The more knowledgeable the appraiser with regards to the scope of loss as it pertains to the insured peril for which the claim for loss or damage has been made and coverage provided under the policy, the better the match of umpires to the disputes that may come before them. If the insurer has failed to identify the issues in dispute triggering the appraisal the more difficult this task may be. Consultation with the handling adjuster, claims representative or legal counsel if they have been appointed helps. Unfortunately, appraisers for the insurer quite often take direction from insurers as to their choice of umpire candidates. This is against the spirit of the Act, both parties having vested their interest and authority in the appointment of their appraiser. Only impartial appraisers should be appointed, and only appraisers should be involved in the selection process of an umpire.
Once an umpire is selected and agrees to act, time will be given for appraisers to meet. Tentative dates may be decided to for a site inspection, exchange of briefs and a meeting with appraisers and their witnesses. If they can determine the amount of loss between themselves AND an Award is made in writing, signed by both, the appraisal is completed. If not the date to exchange briefs and with the umpire will take place. Keep in-mind dates may be adjusted based on the availability of witnesses and tribunal members. Either appraiser may request the umpire attend the loss site where visual differences in scope of loss and property insured may be viewed before or after briefs are submitted.
The umpire will review briefs. Since it is the insured’s claim submission that has triggered the appraisal the umpire will first look to see what was not acceptable to the insurer and look for supporting opinions and documents to support each appraisers view. Best evidence will sway the umpire to one appraiser’s opinion or the other.
In order to maintain the efficiency of the process as intended by the policy and to avoid the necessity of litigation or judicial review, the parties may wish to consider clarifying the powers of the appraisal team by way of a written agreement signed by the parties authorizing the tribunal to make determinations that include scope of loss, replacement cost and actual cash value.
As part of an agreement to act as umpire both parties and their appraisers will be asked to authorize and direct George and STAT11 Inc. to destroy all notes, documents, information or research tendered to, or received by him in conjunction with the Appraisal, and that they will not compel George to divulge or submit same to any person or court in any subsequent arbitral or judicial proceedings, save and except the Appraisal Agreement and the Appraisal Award.
George flows income and expenses through STAT11 Inc., his fee based on an hourly rate plus office expense, disbursements, mileage and HST. Long distance travel charged on a flat rate basis.
Call George at 1-800-214-1348 x 701 to discuss!
4-1550 Kingston Road
Box 1412, Pickering
Ontario L1V 6W9