Marine Surveyor Ethics Violations

Lloyds of London syndicates or any insurance company require information that they can point to when denying an insurance claim. Our claim denial was based on false statements and suppositions in a report written by John Koon and witnessed by Larry Montgomery. We also believe that Larry Montgomery withheld exculpatory evidence. It is our belief that they are both guilty of marine surveyor ethics violations defined by the organizations (ACMS & NAMS) they belong to.

We decided to pursue professional consequences against both of them. Hopefully, they will be held accountable for their actions which has caused us to experience this unjustified nightmare .

John Koon’s Ethics Violations

We have multiple credibility issues with John Koon. He is the surveyor who wrote the “damage” survey filled with false statements and unsupported assertions. He lists the following memberships on his bio/CV

However, his name is not on the SAMS website. Per an individual at SAMS he has never been a member of SAMS. This is a significant mis-representation of credentials. We identified this (and other) credibility issues to ProSight and Hill Dickinson. They apparently ignored them because they continued to accept the findings in his report.

Below is the Code of Ethics for members of CMS, which John is a member of.

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Marine Surveyor Ethics Violations - ACMS Code of Ethics

We believe that the phrase “honest appraisal” exposes him to a marine surveyor ethics violation due to the numerous factually incorrect things stated in the report he created.  Therefore, we filed a violation complaint on the ACMS website on John Koon.

We contacted the ACMS after the filing. They received the complaint, but their expulsion procedures are not based on the significance of the violation. They follow the “three strike rule” and  would not disclose the number of violation complaints he has so far.



NAMS emblem which should represent a high ethical standardLarry Montgomery – Ethics Violations

Larry was the Lloyd’s agent assigned to our claims. He is also a NAMS (National Association for Marine Surveyors) surveyor

The NAMS Code of Ethics is broader than the ACMS. They have a grievance procedure. The procedure involves a board who reviews the complaint and makes a decision based upon the facts and evidence presented.

Marine Surveyor Ethics Violations - NAMS Code of Ethics

Examples of Larry’s Ethics Violations

We believe that Larry has violated the code on numerous counts. Here are some examples.

  • We believe he was not truthful when he told us that the purpose of the survey by John Koon was to “determine a best practice repair“.  The report that we received later stated the purpose was to determine the cause of the dismasting.  We were not in attendance during the survey, as a result of Larry’s mis-representation. A flagrantly erroneous survey resulted which was the basis for the claim denial.
  • We believe Larry was not truthful and objective when he allowed the factually incorrect survey report be turned in. There were basic things within the report that any surveyor should have recognized as an error. Especially one who was on site when the survey was done.
  • We believe Larry was not being truthful and objective when stating to us that he concurred with our surveyor’s findings and would report his findings. These findings were in direct contradiction to the John Koon report. To the best of our knowledge did not report his revelations and admissions to ProSight, LJJ Associates or Blue Water Insurance. Larry withheld exculpatory evidence
  • We believe he was not being truthful and objective from the beginning when he repeatedly told us that we would be made whole again by the insurance company. He should have known he did not have that authority to state the things he did. HIs statements caused us to have mis-placed trust.
  • We believe Larry took a position contrary to his own knowledge or opinion for a direct gain. By providing reports that they used to deny our claim and withholding evidence, he promoted his likelihood of getting future business with ProSight, LJJ Associates and Blue Water Insurance.

As a result we filed a complaint with NAMS and are waiting to hear from them.

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FOS’s Authority to Investigate Complaint

Waiting on Lloyd's againToday is 7 days after the deadline the FOS gave the Society of Lloyd’s to respond and 21 days since the letter was sent by David Northcott of the FOS. David asked if the Society of Lloyd’s agreed that the FOS had the authority to review our complaint. The FOS wants to proceed but they want the SOL to agree so there are no problems after the investigation and decision.

ProSight originally told us to go to the Indiana Department of Insurance  if we disagreed with the denial. However, the IDOI said that they have no authority to investigate this complaint.

LJJ Associates, and ProSight are regulated by the FCA. Therefore, we believe that the FOS should be able to investigate our complaint. Otherwise, no organization is overseeing them.

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One nice thing about putting this blog together has been revisiting documents and websites that you haven’t looked at in a while. We never imagined this specific road block and hadn’t looked at the documents from this perspective. Therefore we were looking at them with a different perspective. Below is what we found.

Lloyd’s Complaint Process

Lloyd's of London Complaint Options (UK or non-UK)The Lloyd’s Complaints page identifies the complaint processing procedures based upon your location and role. Our logical choice is “Lloyd’s policyholders outside the UK. How to make a complaint“.

 

 

 

 

The “outside the UK” page it states “Lloyd’s is currently introducing complaint handling processes for International policyholders and where possible complaints will be handled in line with local regulations.  Where no local regulations exist, complaints will be handled in line with UK principles and standards.”  That’s us! But we need to make sure what that process is!

 

Lloyds US Complaints Handling:

Lloyds US Complains Handling - FCA Authority

On the Lloyd’s US complaints handling page. it states “Lloyd’s arrangements for international complaints are intended to allow for the oversight of complaints handling, consistent with the regulatory expectations of the UK Financial Conduct Authority (FCA), whilst allowing flexibility for managing agents in the way they handle complaints in accordance with local rules.”  So essentially they are giving the agents (ProSight) the latitude to choose. 

However, at the bottom of that page it links to a page Market Bulletin Y5019 (International Complaints Handling: USA). Within the document it states “The new arrangements are being implemented commencing from 1 January 2017 on the renewal of each binding authority or placement.”  Our policy begin April 1 2016. Therefore it appears that we should be processed as a UK policyholder would.

Lloyd’s UK Complaint Process:

The Complaints by Lloyd’s UK Policyholders is described below:

Lloyds Complaints Process for UK policy holders - FOS Authority

If we should be processed in that manner then it appears that the next step is Stage 2. The Society of Lloyd’s should review our complaint.

FOS Authority?

Lloyd’s acknowledges the authority of the FOS to review all complaints in the “Code for Underwriting Agents: UK Personal Lines Claims & Complaints Handling” dated June 2016.

International Complaints

The procedures set out in this Code apply to complaints that arise from UK policies of insurance. Lloyd’s operates separate arrangements for non-UK policyholder complaints. While managing agents must comply with the local rules of any territory where a policy is written, the jurisdiction of the Financial Ombudsman Service is wide and covers firms for all activities carried on from an establishment maintained by it in the United Kingdom (see DISP 1.1.3 & DISP 2.6.1R).

The Financial Ombudsman Service may therefore have jurisdiction over complaints made by eligible complainants in all territories where Lloyd’s underwriters write business. However, the Financial Ombudsman Service has the discretion to dismiss complaints without a consideration of the merits where the complaint is or would be more suitable to be dealt with by a comparable independent complaints scheme or dispute resolution process (DISP 3.3.4(7) & (10)). This would include any equivalent overseas scheme in the jurisdiction where the complainant is based.”

Therefore, since the FOS has the authority and there is not overseas scheme, it would make sense that we proceed.

Conclusion:

  • The new US policy holder procedure didn’t go into effect until policies written starting January 1, 2017. Our policy was written April 1, 2016
  • Lloyd’s acknowledges that when there are no local regulations (which should include the IDOI stating that they have no jurisdiction), it should be reviewed by the FOS.
  • The Lloyd’s underwriting handbook specifically recognizes the FOS’s jurisdiction over all complaints regardless of the territory.

It appears that the only question is whether we should go thru Stage 2 of the UK process or just go right into the FOS process.

Fingers Crossed - AuthorityWe shared our learnings with David Northcott and Daniel Crockford. We don’t want to assume that they are aware of these. We hope that this will move along soon.

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We Are The Society of Lloyd’s and You’re Nobody

The Society of Lloyd's brashly ignores FOSThe deadline of Nov 22 came and went without any word from David Northcott from the FOS. He’d requested a response from The Society of Lloyd’s by that date on whether they believed the FOS has authority to investigate the non-UK complaint. 

We sent an email to David at the end of his work day on the 23rd and he immediately responded stating:

“Lloyd’s were chased up on the 21 November 2017 asking for a response to my letter of 8 November 2017. They were originally asked to respond by 22 November 2017.

I will continue to chase them. Once I have news I will update you again.”

Frustrated by a lack of response of The Society of Lloyd’s and now to even the FOS, we contacted our UK solicitor Daniel Crockford to see if he could assist in moving this forward. It appears to us that this could go on indefinitely since they do not feel any obligation to meet the deadline set by the FOS. We do face some legal time limits and we don’t want our back against the wall.

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Daniel called Al soon after he talked with David. He said that David felt hopeful that the FOS would be investigating the complaint since it is a Lloyd’s policy AND the policy was written by LJJ a UK-based company. However, he felt they needed to wait for the response from Lloyds. He wanted to make sure that this did not become an issue after a decision was made by the FOS.

David also stated that he clearly understood our frustration as it is now more than 19 months since the claim was submitted. He stated that he felt positive that it would move forward based on his conversation with the judicial expert within the FOS. However he felt it was important to receive a response from them either agreeing or providing solid reasons why the FOS should not proceed.

So we continue to wait….

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Whoa…Not so Fast

STOP - US Complaints are not so simple

We started the process with the FOS on July 15 and were now waiting for an investigator who specializes in marine cases. But it wasn’t going to be that simple.

On Oct 10, we received an email from David Northcott an FOS adjudicator. It stated “I regret to confirm we are unable to consider your complaint as the policy complained about is not a UK-based policy. The full explanation as to why we don’t have jurisdiction is explained in my letter.” 

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David followed up on Oct 16 with an email stating that he was aware that we had filed a complaint with the Indiana Department of Insurance (IDOI)In my previously assessment I said your complaint was one that we could not consider because on the basis of “Not a service from within UK” but now we cannot considered it because “Other ADR Entity dealing/dealt with”. That is to say another complaint arbitration scheme is dealing with your complaint.”

He gave us one day to respond before it would be put aside. We responded and requested additional time to receive a determination from the IDOI if they could even address the complaint. He said he would return to the office on Nov 1.

Nov 1, 2017 we sent David Northcott an email communicating that the  IDOI did not have statutory authority. We explained that it only made sense that their organization review the case since they ensured the FCA regulations that ProSight and LJJ Associates were to abide by.

David responded that he would “be able” to respond to us on Nov 8. We didn’t understand the reason for the delay. So we called him. He said that the case was very unique and “complicated” and he needed to talk with an “expert” to determine if they could proceed.

We explained that we believed that even though the policy was paid for in the US, the policy was written by a UK broker and underwritten by a Lloyd’s syndicate. Therefore, it should be heard by the FOS who enforced the FCA’s regulations.

On Nov 8, we received an email from David “As a result of the discussion, I have written today to the Society of Lloyd’s (the underwriters of the policy cover) to seek clarification on various points to include jurisdiction confirmation from it that we can deal with your complaint. They may raise reasons why they don’t think we can consider the complaint. Because the issues are complex in nature I have allowed until 22 November 2017 for a reply.”

We were shocked! It sounded like they were asking the financial institution that forced people into bankruptcy if they should be regulated or not. However, when we talked with David Northcott, he stated that he felt that the FOS should be able to investigate the case and the Society of Lloyds needed to put forth reasons the FOS shouldn’t proceed.

So we wait….again.

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The FOS and Lloyd’s of London Complaint Process

Financial Ombudsman Service

During one of our initial conversations with Daniel Crockford, he explained to us that in the UK there was an independent organization which would investigate unfair practices and denials called Financial Ombudsman Service (FOS). The FOS has a complaint process which is available to everyone with a Lloyd’s of London policy.

Background

The Financial Conduct Authority (FCA) regulates the financial and insurance industry of UK based companies including Lloyd’s of London. If an individual feels they are not treated fairly they can submit a complaint to the FOS and it will be investigated. If the FOS determines that the complainant is correct, the FOS has the authority to force the respondent to pay. Companies do not want cases heard by the FOS because the results are made public. An unfavorable decision reflects poorly on the company and most do not want that exposure.

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This service is also free to the complainant, making it very attractive over seeking expensive legal council. Also in the UK court system the looser pays, significantly increasing the risk of the complainant. This service is intended to equal out the playing field of the large powerful corporation against the individual.

There is also the Lloyd’s of London complaint process. If you have a Lloyd’s of London policy, you can complain to them. In fact, you are supposed to complain to them prior to the FOS. They provide the opportunity for the syndicates internal complaint department to address it. If the result is not satisfactory to the complainants than there is a complaint process within the overseeing Society of Lloyds.

The SOL complaints department will hear the complaint and make a determination. According to the internet, the majority of the cases are overturned. However, if the individual is not satisfied, they still has the ability to go to the FOS.

Recent changes to Lloyd’s complaint process

FOS Complicated Complaint ProcessHere is where it starts to get convoluted.  Effective January 1, 2017, Lloyd’s of London changed their process. If the policyholder is non-UK, and the response from the syndicate’s complaint department is not acceptable, the individual is referred back to the department of insurance in the state where the policy was purchased.

 

Actual Authority

We went to the Indiana Department of Insurance where we live and Florida Department of Insurance where Blue Water Insurance is based. Neither have the authority to address the issues within their complaint process. Therefore, it appears that the Society of Lloyd’s sends us into a black hole and effectively the syndicates have no regulatory oversight. Our only option would be costly arbitration.

Daniel Crockford, our UK solicitor, believes that our case should be heard by the FOS.

Our policy was written in the UK by a FCA regulated company, LJJ. We paid for the policy via Blue Water Insurance, US broker. However, our policy is with LJJ Associates. The policy is underwritten by ProSight Syndicate 1110 which is also regulated by the FCA. The IDOI doesn’t have authority over these organizaitons, therefore it makes sense that our case is investigated by the FOS.

The procedural change is the Lloyd’s of London procedure and not the FOS complaints procedure. So we submitted our complaint to the FOS on July 15, a few days after we had received the final claim denial from ProSight’s complaint department.

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Indiana Department of Insurance

Indiana Department of Insurance (IDO)In the final letter of denial from ProSight’s complaint department, they instructed us to contact the Indiana Department of Insurance (IDOI). We submitted a complaint to IDOI on Sept 13, 2017 after calling them to see if they could process the complaint. The customer service person said that we would have to submit the complaint for that determination to be made.

We previously talked with the Florida Department of Insurance. They told us that they had no ability to process claims for Lloyd’s of London policies. But since ProSight had instructed us to contact the IDOI we submitted a complaint to them.

We honestly hoped that this could be addressed in the US. Our risk was reduced if we decided to go into litigation. In the UK loser pays all expenses of the winner. In the US, each pays their own. There were also significant bad-faith penalties allowed in US law. However, we were not very hopeful. Our policy said only UK laws could apply to any dispute.

IDOI has no authority to review Lloyd's complaintsOn October 27, 2017 we received a letter from the IDOI stating that “This department does not have statutory authority“.

They instructed us to pursue arbitration per the “pre-dispute agreement” in our policy. However, they do not know the UK-FOS or legal system.

We were previously instructed by our UK solicitor, Daniel Crockford, to file the complaint with the FOS.

So back to the UK-FOS we go.

Submitted Complaint to Financial Ombudsman Service

Waiting for the Financial Ombudsman Service to respond to the submitted complaintOn July 16, 2017 we received an automatic response from the FOS acknowledging the submitted complaint. It said “If you haven’t heard from us, it’s worth checking our junk mail or spam folder to see if our response is there”

After the recommended three weeks of waiting and checking our junk mail on a regular basis, we call the FOS customer line. Moray Pringle answered the call. He pulled our submitted complaint from the queue and said he will look at it.

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August 15, 2017 I followed up with Moray and he responded that ProSight submitted their data, but due to the format it is taking an extended period of time to load it into their system. We ask him if we can get a copy of the files they submit. He said that he can do that, but he may have to redact information that represents their internal process. Moray suggests that we request a copy of the documents from them. We respond, telling him that they have not been transparent. We believe it would be more efficient to get it from him.

August 31. Moray responds to our inquiry that it is still taking time to input the information from ProSight.

Sept 15. Moray says that they are still technically delayed in uploading the data.

Sept 27. Moray says that the data has now been uploaded. “After having a brief look over what’s involved, I feel I personally may not be best placed to look into your complaint due to the complexity and depth of the situation. There is somebody within the organisation that specialises in marine insurance, however she isn’t due to return to the office until 10 October at the earliest. Can you let me know if you would be happy to wait for her to return for your complaint to be investigated?”

Watching the calendar after submitting complaintWe agree to wait until Oct 10, 2017 for the more marine knowledgeable investigator.

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ProSight Admits Claim Mishandling

ProSight admits mishandling the claim processing.On August 22, 2017 we received an email from Satty at ProSight regarding our complaint hollowly admits to mishandling our claim. The letter states:

  • Crew’s Mess Limited  the company the complaint response was sent to, is a cover holder of ProSight. Satty did not apologize for the lack of communication for 4 weeks and assuming that we would know this.
  • They advised Crew’s Mess to address issues directly thru Hill Dickinson. However, it was made clear to us that we were not required to have our solicitors deal with the matter. Therefore this is absolutely false, we have an email from Wayne Scott who states “you will need to liaise on all claim matters with your legal representative. They will need to discuss with underwriters and/or Hill Dickinson directly.”
  • That they have considered the additional evidence and information and maintain their stance on declining all three claims.
Meaningless apology by ProSightAdmits Claim Mishandling

The letter states “it is our aim to respond to claims as soon as possible and to maintain our customer service. Whilst it was a technical claim that required more investigation and consideration, ProSight recognises that the investigation and consideration of the dis-masting claim dated 1/5/16 took longer than may have been anticipated, and that there was a failure on our part to explain the reasons for that delay to you at the time and to keep you advised of developments. In consideration of that failure and in full and final settlement of any complaint that you may have in connection with the claims handling and speed of response regarding the dis-masting claim we would therefore like to offer you the sum of £5000.” 

How insulting! £5000 is a paltry amount for the months of expenses caused by waiting on them. It’s obvious that they have no regard for the impact, even though they have expense reports. To think that we would walk away with this small amount made us more determined to fight.

However, their admission of mishandling the claim, is positive and will be helpful during the review process.

 

Dragonfly’s Safe Arrival in California 1 Year Late

At 10am on Saturday August 12, Dragonfly sailed under the Golden Gate Bridge and then moved on to Richmond Yacht Harbor. Dragonfly’s arrival was one year later than originally planned.

Dragonfly's arrival under the Golden Gate Bridge

The trip went smoothly. While they always seemed to be chasing the wind, they didn’t have any severe weather during the 18 day trip.

We had a great celebration for the safe arrival with the crew and the welcomers. Everyone was healthy and happy to be in San Francisco. It was a long trip.

 

Dragonfly Crew and SF Welcoming Team celebrating arrival

We spent 4 weeks at the Richmond Yacht Club and then moved up the Sacramento River to Courtland Docks, where Dragonfly will stay indefinitely.

Dragonfly in Courtland Docks

 

 

Preparing Dragonfly to Sail Away from Hawaii

We knew that it was important that Dragonfly could sail on the trip back to California. Al anticipated a 14-18 day trip and didn’t want to motor the entire way, it wasn’t a safe proposition. Al found a temporary mast in Hawaii. He made the necessary modifications and put it in place with new rigging. He found some used sails and with the help of the crew, they prepared and raised them. Al fixed the engines and addressed a variety of other typical things that need to be done before a passage.

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Crew:

Al recruited a familiar crew which consisted of :

Crew - Emerson.jpg

Emerson is our nephew who was on watch when Dragonfly was dismasted. He has been sailing with us many times and is familiar with it’s systems. He enjoys hand steering and trimming the sails. Unfortunately this sail and rigging configuration wasn’t ideal. However, it still responded to his changes. We were very happy to see Emerson get back out sailing after the dismasting experience. It demonstrated his confidence in Al and Dragonfly.

Crew - Jim.jpg

Jim (Emerson’s father and Sheri’s husband). Jim is a professional photograher and professor of fine arts in Indiana. Jim and Sheri (Jill’s sister) have also sailed on Dragonfly multiple times, including a passage from Florida to Belize in 2013. Jim also has a background in engineering and love for cars, so his mechanical skills are always good to have around. He was assigned the job of being the communicator for the trip, using our new tool described below:

Crew - Joe.jpg

Joe a long-time cruising friend of ours. We met Joe in 1996 when Al was building Dragonfly. Joe was also building a Kurt Hughes catamaran and had been in the marine industry for many years. His insights and experience were always a great help! When we went sailing on our own boats, we spent many many days together enjoying the cruising life with Joe and Helen his wife. Joe wanting the Pacific experience, was happy to come along.

 

Ready for the trip:

Sails on Dragonfly for use to to CAAfter everyone arrived, they modified the sails and did some sea trials. Unfortunately the first main sail blew out, but they were able to get another sail locally. It was small, so it would be like they were double reefed all the time, but it was far better than nothing.

Delorme Inreach

 

This time they had a Delorme InReach on board, which would allow us to exchange text messages and automatically provide their position regularly so that everyone could watch their progress online. We were also signed up for Predict Wind, so Jill was able to provide them the forecasts and recommended headings via the text messages.

Jill’s mom’s health had been failing steadily and was now on 24 hour watch in home hospice.

Departure:

Dragonfly Leaving Hawaii

 

Dragonfly left Hawaii on July 24th, 2017 on their 2400 mile trip. They hoped it would take 14 days, but knew that they may have to pass thru the doldrums.

 

Jill's Mom's last birthday (91) 1 month before she passed.

Three days later, Jill & Sheri’s mom died quietly at home.

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