The Insurance Loss Adjuster: A Value adding Professional – At a Cost

If the appointment of a loss adjuster will not add value to the specific claim, then the cost of appointing a loss adjuster should not be incurred. This guideline should surely be considered at the time of each appointment of a loss adjuster.

The reason for the existence of the loss adjusting industry can only be explained if loss adjusters add value to the insurance industry as a whole.

It has on many occasions been pointed out and supported by the insurance industry, not only locally, but internationally over the years, that a fair and transparent claims handling procedure requires the input of objective experts. Although Insurers can and should make use of in-house assessors on the large volume low value type claims it is especially on the larger or more complex claims where  a qualified, experienced professional loss adjuster who provides  technically sound and objective input can add value.

The loss adjusting industry provides a pool of experts with a range of knowledge and experience from where the insurer can pick the individual required for the specific claim.

Insurers have often “gone in-house” by trying to create their own claims adjusting teams and although this can be sustained to a degree it has always become evident that it is only at a huge cost that an Insurer can recreate the pool of experience required to deal with every type of claim that may crop up. The experts required to deal with all types of claims over the entire risk spectrum cost money and will result in an increase in costs and overheads to the Insurer if all are retained in-house.

It has been shown over and over that it is far more cost effective to only elect the specific adjusting expert required for the specific claim at hand out of the adjusting pool as and when required as opposed to attempt to retain all experts who may possibly be required as permanent staff in-house. This does mean that the insurance industry as a whole contribute to the costs of the expert as opposed to each insurer carrying the entire cost of a specific expert.

It also means that the adjusting expert is used to his full potential, receiving multiple instructions from several insurers as opposed to not being used at times when only being employed as an in-house expert

The fact remains that the existence of the adjusting industry is, inter alia, a cost driven issue…it is simply too expensive for each Insurer to maintain a fully fledged team of adjusting experts in-house to deal with every type of claim eventuality which may arise.

And let’s not confuse high volume low value claims handling contracts with loss adjusting…this is what competent claims handlers in-house should be able to do far more cost effectively.

The claims handling team comprises the effective in-house claims handler, the external adjuster and the claims manager or eventual decision maker at the insurer. The claims handler must sift through the “fluff” and should be able to decide what claims evidently, without any further enquiry, do not fall within the ambit of the policy cover provided and finalise it accordingly. The external adjuster should only be appointed on claims where further assistance is required, which can take the form of a fully fledged investigation into circumstances and cause, auditing, verifying and adjusting the presented claim, acting as project manager in the reinstatement and/or salvage disposal processes etc. The adjuster in turn providing sufficient feedback to the claims manager or decision maker at the insurer to enable this person to make final decisions based on the feedback received and taking into consideration the cover in place etc.

Service Level Agreements often does not take cognisance of the fact that the performance of the external loss adjuster relies on input from and the level of performance of the remainder of the claims handling team.

There is also pressure from some insurers – and we must hasten to say that this is at this stage not a general trend – on loss adjusters to provide services at rates which over the long term will adversely affect the actual existence of the loss adjusting industry. To what aim…for those insurers, who have then killed the general adjusting pool, to revert to the far more costly approach of having to create an internal adjusting pool – a short term fee saving achievement with a long term eventual cost increase to the same insurer?

The time has come for the loss adjusting industry …for all loss adjusters… to not only become transparent on the fees and costs/expenses incurred presented to insurers, but also to continuously remind and advertise to insurers what costs are involved in operating a successful loss adjusting practise which provides professional input to the benefit of the insurer and the insurance industry as a whole …costs which insurers over the years have elected not to incur and carry in-house.