View this article online: https://www.claimsjournal.com/news/national/2008/03/20/88444.htm
Today’s claims environment extensively differs from that of past years. And the decision makers in claims today differ from those of prior eras. We gather information, process it and analyze it in ways unimaginable in past years.
How claims are settled, in many cases, radically differs from when I started in this industry some 35 years ago. All adjusters, whether company, independent or public, now need to conduct an allegorical “claims orchestra.” Adjusters must now lead the charge of experts brought in and keep the claim process moving forward as harmoniously as possible.
In the old days (oh what nostalgia), before cell phones, faxes, e-mail and the Internet, things moved at a slower pace. When a commercial fire claim occurred, for example, the carrier summoned their adjuster to look at the loss and advise the insured on what they needed to do.
The adjuster might then have brought in a restoration firm for water mitigation and corrosion control — perhaps a contractor to board up the property. Then, the adjuster usually spent the rest of the day with the policyholder to deal with arising issues.
After the initial meeting and establishing control of the salvage and loss mitigation, the adjuster began his scope of loss for building, inventory of BPP and made his requests for U&O (business interruption) documents.
Today the process differ greatly with the inclusion of many more players. Let’s look at each of these categories and see the difference in today’s environment.
Building losses
When a structure burned or suffered other losses in the past, the adjuster brought in board-up companies. Today, several companies follow the fire trucks to compete for the board-up, clean up and repair contracts. Thus taking adjusters’ control of expenses, possibly far exceeding the scope of work normally allowed — burdening the carrier or insured with the increased cost.
In the past, adjusters arriving on scene asked the insured to get a bid then wrote a scope of loss and damage on its basis, by hand. Today, construction consultants (contractors) come in and compete to write scopes using computer-generated programs.
Consequently, several contractors write several numbers based upon several different scopes and pricing models. Along with the multitude of contractors at the scene, adjusters additionally interface with environmental testing companies, remediation experts, temporary shoring experts, architects and engineers.
Sometimes even experts on re-building methodologies, experts on materials, subcontractors for each trade and department officials come into the claim. And, with all the new materials to use in construction, plenty of manufacturer-consultants come in as well.
Ergo, adjusters who wrote their own “sheet” in the past, now wade through an entourage of experts to adjust a claim.
Contents / BPP
Adjusters used to look at a piece of equipment as good or bad. If it had water damage, we called in the corrosion control experts or salvage companies to treat the machines and pull them out. If repairable, we consulted with the insured while looking at the manufacturer’s repair quote.
Today, we mitigate repairs by bringing in equipment appraisers, machinery experts, salvors and restoration companies. If the equipment is expensive, be sure an “expert” somewhere has an opinion on something.
On furniture fixtures and equipment, we need to consider opinions from a cost-to-repair expert, a new sales expert, an Internet sales resource, the insured, the insured’s expert and an expert on the question of obsolescence. And don’t forget the interior designer and architects to consult with.
There seems to be an expert for everything these days. With the rate at which new technology is introduced into the marketplace, a new “something to be considered” comes forth on every loss. We can’t slam dunk the right fix on damage anymore because of the possibility an alternative does it better and cheaper.
The adjuster must orchestrate the acquiring of expert opinions from all trades.
Business Income
It seems, in recent years, the business income (BI) arena has become the most complicated. We used to calculate lost income and rents with a minimal amount of paperwork. Now, with the advent of the computer and new electronic bookkeeping systems, the amount of information available to the adjuster can be overwhelming.
For help, the industry looks to “forensic accountants,” an industry proliferating on the coat tails of the computer age. Major international players compete for even small losses now. Subsequently, insureds look to accountants and public adjusters for help.
With the submission of a claim today, the insured usually receives a letter from the insurance company’s accountant, rather quickly, requesting 15 to 20 pieces of financial information to start the process.
As the claim progresses, so do the requests for information. The Internet allows insurance companies to view statistics until they become overwhelmed, bringing in experts from everywhere to bolster their position and cut down claims.
What is wrong with today’s picture?
The expert usurped the adjuster’s role in claims handling. In many major claims, whether it is a forensic engineer, forensic accountant, building consultant or information from the Internet, multiple and conflicting opinions arise as to the loss and damage.
The claim handling belongs to the experts to a great extent and the adjuster has become the conductor of the claims orchestra. Instead of adjusting the claims, we must now oversee the myriad of experts brought in by the carrier, not losing sight of the real expert, the insured.
Years ago the insured discussed with their adjuster the best course of action to get their business back in operation quickly. Now all the experts examine the claim and voice an opinion.
Carriers want expert opinions in writing before making judgments or decisions on any course of action. This often delays the insured’s ability to move quickly through the claims process and resume business. And despite saving a few dollars in the claims payout, this can be disastrous to a claimant, even bankrupting a business — with good coverage in place.
Forensic accountants delay a BI claim settlement with numerous requests for documentation, causing undo strain and costs on the accounting department of the insured. This documentation process can seem endless. In my opinion, many forensic accountants look for ways to reduce the claim, not minding the best interest of the insured. Adjusters need to keep them on track and focus on settling the claim fairly.
Elongated suspension time is another side effect of excessive consulting. While investigating how to make quick repairs, insureds might want to look to the manufacturer or their contractor for advice, but the loss needs to be reviewed by the carrier’s contractor, construction consultant and other experts. The time it takes time to generate a review from all the experts exacerbates a claims strategy.
Often the opinions of these experts contradict each other, so the claims conductor must wade through the muck to find the truth.
The adjustment process
Now we come to the adjustment of the claim. Once all the opinions are in writing, (many times before considering all the facts) we begin dealing with the “pride of authorship” issue — when an expert contradicts another and neither wants to budge.
In many adjustments carriers’ experts and insureds’ experts don’t share the same side of the table and no one considers the other’s point. This impasse usually only breaks if the adjuster finds a middle ground.
However, sometimes all the management skills in the world won’t overcome “pride of authorship.” As a public adjuster, I’ll often ask the company adjuster to step outside and do what our job titles infer and adjust the claim.
Most often, it takes a step outside the box to get to the right answer. Sometimes the cheapest option for the carrier must be overlooked to consider the insured’s best interest.
When the settling process begins with a gathering of experts, the skilled adjuster directs the settlement process to arrive at a fair and equitable settlement for all. By “Conducting the claims process” the adjuster leads the experts to what is right, not what they want — the true measure of loss.
Robb Greenspan, SPPA is a partner and second generation owner in the Greenspan Company/ Adjusters International, a public adjusting firm dedicated to representing the policyholders interest in property claims which was established in 1946. He has written numerous articles and papers on insurance and teaches continuing education for agents and brokers as well as other professionals for over 20 years. He is a member of the Curriculum Board of the California Department of Insurance and past member of the Insurance Commissioners Consumer Complaint and Unfair Claims Practices task force.