In the construction industry, a quantity surveyor plays a central role in every new build project. They work out the quantities and costs of materials as well as the time and labour on tenders. They also negotiate contracts and work schedules, advise on legal matters (including risks and disputes) and monitor sub-contractors throughout various stages of construction.
In the insurance sector, however, while the professional and technical skill requirements of a quantity surveyor are broadly similar, we’re working in a more complex, dynamic and fast-paced environment.
Working with claims
A quantity surveyor (QS) is appointed by the loss adjuster managing the property damage claim — subject to insurer approval — to provide costings for the building repairs, restoration or reinstatement to the level promised under the insurance contract. The role of the QS is completely impartial. We work within the terms of the insurance policy to do the right thing for the customer at an acceptable cost to their insurer. But the role is not without its challenges.
Recently, we worked on a claim where the ground floor of the property had been badly damaged by flooding. Appointed by the adjuster, we worked on specifying and costing the extent of the repairs on a like-for-like basis, and the total reinstatement costs were calculated at around NZ $200K. In the meantime, the customer decided to appoint their own QS and the adjuster was subsequently presented with an estimate for NZ $800K for the required works – a massive NZ $600K difference!
Fair and reasonable
Of course, claimants are entitled to dispute any aspect of our calculations for the repairs to their property, and it’s essential that we sit down with them and discuss their concerns. We must be fair and reasonable and consider the customer’s requirements against what they’ve been offered under the policy cover. We do our best to provide the right solution for all stakeholders and resolve any issues. But in the above case, the insured instructed lawyers, and the adjuster had to go back to the insurance company for their direction.
While we’re always happy to discuss adjustments, in this instance, we stood by our original estimate to maintain fairness for both the insured and the insurer. This particular customer wanted replacement carpeting, where there was clear evidence that none had been laid previously, as well as a new front door and frame when the original could easily be repaired and repainted.
Reviewing costs
Just over two months ago, the lawyers representing the customer, and our insurer client, combed through every aspect of the specification of the repairs and costings. When presented with our calculations for each aspect of the estimate, along with evidence for items that represented betterment, they agreed to settle at NZ $249K, a reduction of half a million dollars!
Every repair methodology has pros and cons, and we often refer to other independent experts to ensure we’re proposing the best options for the customer. The extent of the damage to a property is assessed on a case-by-case basis, and a lot depends on the cause and the existing condition of the building. On some losses, we cost out three options – repair, reinstatement and reconstruction – to calculate the fairest, most efficient and economical way of resolving the claim.
Over the last couple of years, we’ve also had to stay one step ahead of escalating prices – on timber, cement, steel products and labour costs, driven by a range of market and economic forces. Last year, we had to allow for reasonable and sensible construction cost increase in our calculations, although more recently, rates have settled.
Prioritising customers
The added pressure for quantity surveyors working in the insurance industry is that everything has to be fast-tracked and accurate. Customers want to return to their homes as soon as possible, and the allowance for alternative accommodation can quickly evaporate. In a major loss event, such as the Auckland floods, there were numerous priority customers, and many claims are urgent. In helping traumatised customers, it’s important to appreciate that everyone has different requirements and expectations, and an empathetic and prompt response to each enquiry is paramount.
Strong communication
Working with so many customers from different backgrounds and business sectors, I’ve learned that excellent communication skills are essential, and I always put forward recommendations with an open mind. We make a professional judgement on each scenario and work out the best solution for all concerned. However, we appreciate that the numbers might sometimes be disappointing, and we have to carefully explain why we’ve taken certain practical decisions and ensure that we address legitimate concerns.
Compared to the construction industry, insurance-related quantity surveyor work is much more complicated, diverse and pressurised, but even with all the jargon and terminology, it’s rewarding and interesting – and every day presents a new challenge.
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