The Corporate Veil

Gentlemen,

As we all know, the PA Lobby hates it when contractors act as licensed and/or unlicensed Public Adjusters. My question, is how far does the corporate veil extend? Here is what I mean.

Construction Company Inc. seemingly cannot have a PA on staff to go adjust claims. HOWEVER, what about

*Parent Corporation owns two separate corporations. We’ll call one Construction Firm and we’ll call the other Public Adjusting Firm.
*Construction Firm has problems with insurance company, so they send out Adjusting Firm on a standalone agreement with the homeowner.

Is that still a conflict of interest, or does the corporate veil nip that inconvenient phrase in the tail?

[quote=“ReroofGA”]Gentlemen,

As we all know, the PA Lobby hates it when contractors act as licensed and/or unlicensed Public Adjusters. My question, is how far does the corporate veil extend? Here is what I mean.

Construction Company Inc. seemingly cannot have a PA on staff to go adjust claims. HOWEVER, what about

*Parent Corporation owns two separate corporations. We’ll call one Construction Firm and we’ll call the other Public Adjusting Firm.
*Construction Firm has problems with insurance company, so they send out Adjusting Firm on a standalone agreement with the homeowner.

Is that still a conflict of interest, or does the corporate veil nip that inconvenient phrase in the tail?[/quote]

Good question… A bit more complicated that it needs to be, though?

My approach considering curent trends: Dear contractor sales associate. On any job where you are successful in writing a contract where the customer is fully paid at RTA rates on their claim, your compensation shall be as follows; $$$. However, should you not achieve the goal of full RTA payment, the company has established relationships with public adjusters who will, for an agreed to percentage fee, take over the claim and if successful in achieving the goal of full RTA payment, will be paid on the additional as well as a portion of the commissions that you would have otherwise been paid had you achieved the stated goal.

other:

Adjuster suggests you are “acting as a licensed PA”, my response would be, “No, I’m simply pointing out the damage that needs to be repaired and paid at rates relative to the premiums paid that if not paid for at rates relative to the premiums paid as a result of your refusal would make you personally liable for any unjust enrichment or gain on the part of your employer and the insurance company (his/her 3rd part adjusting company if an IA) or the insurance company directly if a staff adjuster. I’ve already figured my price, the customer has approved by proposal and both are non negotiable. If need be, I also have a ready list of licensed PA’s and attorney’s who are ready, willing and able to get involved with this claim if need be – your choice…However, if you believe we can come to an agreement and would like to make any suggestions on how that might be done, I’m willing to listen.” The onus is now on the adjuster (or in house claim rep) since they expressed a desire to “negotiate”.

That is currently how we are handling things, and it works brilliantly. However, I am trying to turn up the heat a notch. I am in the process of getting all of my sales reps their P.A. Licenses in order to “force the hand” of the insurance companies on some of the more difficult claims we inevitably run into. I am just trying to figure out the best logicstics to handle that. If we can legally act as fullscale Public Adjusters, then why the heck not? As we all know, adjusters shake in their Cougar Paws at two things: Lawyers and Public Adjusters

I say it’s a conflict of interest if your sales force has double duty as a salesperson and PA.
Common sense,moral judgement and ethics should be be your guide. If you still have questions I would contact your state DOI.

Moral judgement and ethics are not an issue here. I do not believe it is immoral to do everything in your power to turn a large profit, as long as you are not bringing unjust harm to anybody in the process. Especially in this case, all we would be doing is helping homeowners pry money they are owed out of the greedy hands of their big bad insurance company. I do not see a moral or ethical issue at all.

Common sense does not seem to dictate this one either, actually. Legally, the corporate veil completely separates the two entities. My question is what hang-ups I would possibly run into, because this appears to be a loophole in a system that is bought and sold by insurance carriers and their lobbyists.

Also interesting to note, all of my sales reps do not work directly for me either. I only hire corporations, so I do not contract “Timmy Thomson,” rather I contract with “Timmy Thomson Enterprises, Inc.” That saves a mess of paperwork and headaches, and takes the names and faces out of the picture completely.

Looks like a legitimate business model/relationship.

Kinda like a doctor that has an attorney to work with…

It is not a legitimate business model. I have previously run into this set-up and reported the contractor to the TDI (as I am required to do). Texas clearly prohibits exactly the scheme you propose. No ambiguity. Here is the section in the Texas PA statute that prohibits this…

§ 4102.158. CONFLICTS OF INTEREST PROHIBITED. (a) A
license holder may not:
(1) participate directly or indirectly in the
reconstruction, repair, or restoration of damaged property that is
the subject of a claim adjusted by the license holder; or
(2) engage in any other activities that may reasonably
be construed as presenting a conflict of interest, including
soliciting or accepting any remuneration from, or having a
financial interest in, any salvage firm, repair firm, or other firm
that obtains business in connection with any claim the license
holder has a contract or agreement to adjust.

[quote=“InsurerPerspective”]It is not a legitimate business model. I have previously run into this set-up and reported the contractor to the TDI (as I am required to do). Texas clearly prohibits exactly the scheme you propose. No ambiguity. Here is the section in the Texas PA statute that prohibits this…

§ 4102.158. CONFLICTS OF INTEREST PROHIBITED. (a) A
license holder may not:
(1) participate directly or indirectly in the
reconstruction, repair, or restoration of damaged property that is
the subject of a claim adjusted by the license holder; or
(2) engage in any other activities that may reasonably
be construed as presenting a conflict of interest, including
soliciting or accepting any remuneration from, or having a
financial interest in, any salvage firm, repair firm, or other firm
that obtains business in connection with any claim the license
holder has a contract or agreement to adjust.[/quote]

The “license holder” (contractor) is not involved in the Public Adjuster resolution. How exactly are the two separate businesses in conflict with each other?

Sounds more like Insurance Adjusters cannot offer to repair properties with their “preferred vendors”…

[quote=“CatContractor”]
The “license holder” (contractor) is not involved in the Public Adjuster resolution. How exactly are the two separate businesses in conflict with each other?[/quote]

Ah geez. Really? We are going to quibble over this?

The facts: the contractor’s salesmen, who sign up work for the contractor, are going to also become PAs.

The statute says:
–the PA cannot participate “directly or indirectly” in the repair work for a claim he adjusts. The PA works for the contractor doing the repair work. It’s not even debatable.
–and this one is even more obvious: it is a prohibited conflict of interest if the PA solicits or accepts “any remuneration from” or has “a financial interest in” any “repair firm, or other firm” that “obtains business in connection with any claim” the PA has a contract. The guy is a salesman for the contractor. I assume he gets a commission.

Could it be any clearer? Come on CAT, you lose credibility with ridiculous responses like this.

[quote=“InsurerPerspective”]

[quote=“CatContractor”]
The “license holder” (contractor) is not involved in the Public Adjuster resolution. How exactly are the two separate businesses in conflict with each other?[/quote]

Ah geez. Really? We are going to quibble over this?

The facts: the contractor’s salesmen, who sign up work for the contractor, are going to also become PAs. :lol:

The statute says:
–the PA cannot participate “directly or indirectly” in the repair work for a claim he adjusts. The PA works for the contractor doing the repair work. It’s not even debatable.
–and this one is even more obvious: it is a prohibited conflict of interest if the PA solicits or accepts “any remuneration from” or has “a financial interest in” any “repair firm, or other firm” that “obtains business in connection with any claim” the PA has a contract. The guy is a salesman for the contractor. I assume he gets a commission.

Could it be any clearer? Come on CAT, you lose credibility with ridiculous responses like this.[/quote]

Two separate companies do not have to have a collusive relationship when properly established. You however work with an industry that wants to adjust claims in addition to colluding with “preferred vendors”, and then pretend there is no “conflict of interest” when all the while try to fix/rig free market conditions.

What a hypocritical position/web of deceit…

Ok so what you are telling me is that it would have to be

Construction Firm hires the corporations (preventing a PA from working directly or indirectly for a construction company)
and
Adjusting Firm hires the individuals (a corporation cannot be a licensed adjuster anyways.)

Two completely separate entities, game set match! Did a little homework last night. Insurerperspective, legally utilizing the vast number of loopholes presented by the corporate system is no cause for a witch-hunt. The rich 1% do what i am referring to all the time, and the best way to be rich is to do what rich people do.

Based upon some of the stuff Ive seen wealthy folks do, I could not disagree more with this statement.

Usually hard work, ethical conduct and a good business model will start you in the right direction to wealth.

Those who are solely focused on “getting rich” tend to be folks I avoid. YMMV

[quote=“ReroofGA”]Ok so what you are telling me is that it would have to be

Construction Firm hires the corporations (preventing a PA from working directly or indirectly for a construction company)
and
Adjusting Firm hires the individuals (a corporation cannot be a licensed adjuster anyways.)

Two completely separate entities, game set match! Did a little homework last night. Insurerperspective, legally utilizing the vast number of loopholes presented by the corporate system is no cause for a witch-hunt. The rich 1% do what i am referring to all the time, and the best way to be rich is to do what rich people do.[/quote]

No, what I am telling you is this…Be a roofer or be a public adjuster. But dont try to be both.

I guess you’re not understanding. A corporation is its own entity. What I am suggesting is no different than me being a public adjuster and my child being a contractor. Two unique entities.

I understand loud and clear. Go for it. Play your shell game. Just a matter of time before someone calls you on it…and, as you apparently like to threaten yourself (see your other recent post), goes after your license.

There a few potential problems I see.

To apply for a corporate license one must first have a personal license.

You could own a PA firm and a contracting firm however, your contracting firm could not perform repairs for clients of the PA firm and your PA firm could not adjust claims that your contracting firm will be repairing. Even with the corporate veil you will have difficulty proving that the conflict of interest does not exist. The purpose of the law is to prevent unscrupulous folks from lining their own pockets.

Now if your policyholder hired an independent PA that also happened to sell for your company and also kept all transactions mutually exclusive of each other, there might be less issue with that. However he could not work for a PA firm that would generate income an owner that happened to own both PA firm and contracting firm.

Good luck with whatever you do and please consult with more than one attorney before you find yourself in a mess.

Alltex you answered my question. Thanks.