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La.: too few BP adjusters to keep up with claims

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Posted: Jul 3, 2010 9:38 AM
Source: Associated Press

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Topics: BP, oil spill, Gulf of Mexico, Louisiana, claims, adjusters

BP PLC is not hiring nearly enough claims adjusters to keep up with a flood of claims from the Gulf of Mexico oil spill, a consultant hired by the state of Louisiana says.

The consultant also says the number of checks being sent spiked less than a week after Louisiana put pressure on the company to speed up claims. And it says the average amount per check peaked when BP gave the state data for large loss claims.

A BP spokesman did not comment directly about the findings, but asserted the company has responded appropriately.

The state hired Cannon Cochran Management Services, Inc. to review the process. A news release says the company found that the number of claims rose 170 percent, from 30,000 to more than 85,000, during June, while the number of adjusters rose 87 percent - from 510 to 951.

Cannon Cochran also found that the number of mailed checks hit 2,500 on June 21, within a week after the state pressure, but was below 500 five days later.

And it says the total amounts paid averaged $2 million a day until June 15 - the day BP gave the state data showing payments of claims of more than $5,000.

The total rose on the 15th and topped at $11 million on June 16 but has consistently decreased since, averaging less than $2 million a day over the last week in June.

More than 60,000 of the 85,000 claims have been for individual loss of income.

During the month, individual claims averaged $1,200 each, rising to between $1,500 and $1,600 per claim.

"The average cost for loss of income, property and commercial damage claims is extremely low and indicates that many claimants had not received any payments by the end of June," said Children and Family Services Secretary Kristy Nichols, who is overseeing the state's response to BP's claims process. "This is extremely distressing; families and businesses are depending on those payments to keep roofs overhead and food on tables.

BP spokesman Daren Beaudo said in an e-mailed statement, "From the beginning of this terrible incident, BP has taken responsibility for responding to the spill and paying full compensation for those financially impacted by it. We're working hard to get money into the hands of people in the Gulf region in response to what is undoubtedly an unprecedented situation."

He said the company has ramped up a system that has paid out $144 million to thousands of claimants in four states.

"We have accomplished this by establishing 35 field offices - where previously there were none - served by a claims team of 1300 members over a relatively short period of 72 days," he said.

He noted that management of the $20 billion claims account is being moved to independent administrator Ken Feinberg.

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