Skill shortage delays claims settlement: Panel

By Stuart Collins
July 23, 2008

LONDON—Settlement times for complex claims could rise if the insurance industry does not tackle a looming shortage in experienced loss adjusters, according to a roundtable held in London Wednesday.

Insurers foresee an acute shortage of loss adjusters over the next 10 years, according to Robin Hargreaves, head of property at insurer Kiln Ltd, a wholly-owned subsidiary of Tokio Marine Holdings.

“The best loss adjusters are mature and seasoned,” said Mr. Hargreaves, whose company organized the roundtable. “We do not see any succession plans in place and we do not see junior adjusters coming through the ranks at a time when claims—such as business interruption claims—are becoming more complicated,” he added.

The resources of loss adjusters are already stretched, according to Paul May, past president of the Chartered Institute of Loss Adjusters. The profession should only use some 80% of its resources, leaving 20% to spare to cope with catastrophes, he said. But currently utilization for large complex claims is running at 110%-120%, he said.

“Insurers are all using the same loss adjusters for large complex claims, resources are stretched thin and the case load for individual loss adjusters is quite large,” said Ashley Lawrence, senior claims adjuster at Kiln.

Insurers’ desire to drive down costs has lead to a tick-box culture among loss adjusters, with fewer full scale investigations and less of a focus on policy interpretation in favour of speed of service, Mr. Lawrence said.

“So some clients are not able to get the claim handled by the adjuster of their choice,” Mr. Lawrence said. “The impact on policyholders [if the industry does not develop succession plans] could be that claims will not be resolved as quickly as possible. Clients do not want to see claims languishing, they want them settled quickly,” he said.

Service levels have not yet fallen, according to the roundtable participants. But if there were a large catastrophe such as a hurricane or terrorist attack, there would be a substantial downturn in service levels from loss adjusters, they say.

The industry’s process driven approach means that loss adjusters do not get the five to 10 years of experience adjusting smaller claims before moving on to complex claims, the participants say. Loss adjusting companies are in competition for graduates with better paid professions, and there is a general lack of a training and apprenticeship culture among loss adjusters, they added.

Mr. May called on the Association of British Insurers, CILA, universities and other bodies to establish a task force to identify the issues.

 It is interesting to note the remark about the lack of adjusters is not combined with the industry doing anything to remedy the situation. As noted it is all cost driven . The one to suffer is the policyholder who should be demanding better service.

It seems like something even a bean counter can figure out.

I recently saved my company the equivalent of my annual salary by catching an error made by a rookie adjuster.  That was on just one claim.

A good general adjuster may well save the company millions on a single claim by applying the knowledge that adjuster has gained over time.  And that adjuster may save the company millions repeatedly over the course of a year. 

Saving a nickel here and a dime there may very well add up to millions over the course of many claims, but one mishandled large loss can wipe out those millions in a single blow.

It seems so obvious that I wonder why the industry doesn't see it.  But then, I haven't been hired as a business consultant so what seems blatantly obvious to me carries no weight with those who make decisions about company policy.

Fortunately, I am one of those seasoned guys who is within ten or twelve years of retirement, so I will not likely be around for the fall out.  Or maybe they can hire me as a consultant once I retire, so they can then deign to listen.

Keep up the good fight, Marc.

Both of you have good points to consider. But, most on this site are "cat workers" as carriers have pressed to get the claim contacted and settled. Speed not quality is the moniker. I just attended a class to learn more about Xact 25  of the 60 or so classmates only a few were under 60 while most were 62 and up. We all struggle with the new 25.1 and sketch as we all learned using DOS when there were no pictures or drawings  You had to know your stuff to write an estimate and handle a claim. Today, a 15 yr old high school student could learn Xact 25 in under 2 hours. He could take our scope and have it done to perfection in about 1 hour and still play video games. The examiner in the Tower would never know because he wants immediate contact and inspection followed by a closed claim the next day. His bosses are pushing him for those goals.  I was asked prior to Katrina how many real adjusters I knew and I said under 20. Until carriers realize complicated claims will not resolve following the initial visit and patience not speed settles claims, then it will only get worse and the talent that is out there now will not exist in 5 years or less.  

     Yea, though I walk through the valley of bean counters, i can revel at what the true cost to the carriers. As Marc and Steve pointed out, a "few good men" will save those carriers the costs of the bean counters salaries 10 times over.  And all because they refuse to look down from their ivory towers and see the real world.

The sad thing is that the "metrics" used by the bean counters focus on passing on the expense of the mistakes made by the poorly qualified to the policyholder thru increased premiums due to poor loss ratios. Maybe if they paid folks decently and millions were saved by savvy adjusters the loss ratios would not be so abyssmal.Seems fairly simple to us why don't they care to see it? As Homer says so well "DUHH!!!!!!!"

In the past week, an independent general adjuster I hired worked together with me to handle a fire loss expeditiouslyand expertly. In the process the insured was able to get their business back into operation amazingly fast. That's called customer service. In the process we saved (conservatively) a quarter million dollars for my company. That's called lower premiums and higher profits. By authorizing under $5,000 in overtime and being willing to pay the IA hourly to stay on site to handle virtually all aspects of the claim by days end, we were able to reduce the BPP exposure by somewhere between $250,000 and $300,000. That says nothing about the potential for Business Interruption that was avoided. If I followed the normal procedures and tried to cut the IA bill and handle the claim according to the manual, we would have lost that money and had a pile of barely worthwhile salvage to show for it.

Compare that pile of beans to the one created by all the nickels and dimes saved by phone handling claims with minimally qualified adjusters. See which pile is bigger.  Then compare the intangibles like customer satisfaction.  I'll bet on my stack of beans.

This is just one more reason why I have made the career choices that I have.

You would not believe the level of competence of the adjusters I am confronted with on  a daily basis.  Or, the lack thereof.  You also would not believe the business practices of some of the auto insurers.

I have to go outside and walk around to "gather my thoughts" daily.  Sometimes, hourly.

Steve If only everyone at the carrier level was as savvy as you it would be a pleasure doing business, unfortunately most of them have blinders and corporate attitudes towards the invaluable services of a qualified claims adjuster.