This article focuses on claims adjusting. It provides an overview of the claims adjusting process, public adjusters, and the future of claims adjusting. The relationship between claims adjusting, insurance and settlements will be described. The growth in claims operation technology as well as the issues associated with claims adjusting after natural catastrophes will be addressed.
Keywords Claims; Claims Adjusting; Claims Operation Technology; Insurance; Public Adjuster; Settlements
Individuals and businesses purchase insurance to protect against losses and perceived risks. Examples of insurable risks include death of a spouse or key employee; fire, flood, or earthquake damage; interruption of business; theft; vandalism; or terrorist acts. When an individual or business experiences a loss for which they have purchased insurance, the individual or business files a claim with their insurance company. A claim refers to the notification to an insurance company that payment of an amount is due under the terms of a policy. Insurance claims, which generally fall into the categories of property damage, liability, or bodily injury, are handled by claims adjusters, appraisers, examiners, and investigators. These insurance professionals are responsible for the fair and accurate settlement of claims.
Claims adjusting, also referred to as claims examining, involves the investigation of insurance claims, the negotiation of settlements, and the authorization of payments. Claims adjusters, or claims examiners, work with insurance appraisers and investigators in insurance investigations and claims resolution to determine the value of insured items and rule out insurance fraud. Insurance companies may hire independent claims adjusters or create an in-house claims department to assess, evaluate, investigate, and process all insurance claims.
The following sections provide an overview of the claims adjusting process, public adjusters, and the future of claims adjusting. This overview will serve as a foundation for later discussion of the growth in claims operation technology as well as the issues associated with claims adjusting after natural catastrophes.
The Claims Adjusting Process
Claims adjusters are responsible for processing insurance claims. In the event of natural or man-made catastrophes or disasters, such as earthquakes or terrorist acts, claims adjusters may be in the field evaluating claims and preparing reports for extended periods of time. Due to the unpredictable nature of losses and claims adjusting, claims adjusters tend to work outside in a wide range of environments. For example, claims adjusters must be ready to visit roadside automobile accidents and collapsed buildings. Claims adjusters work around the claimants' schedules and requests for evening appointments as much as possible. The range of claims adjusting activities includes interviewing the claimant and witnesses; consulting police and hospital records as appropriate; inspecting property damage to determine the extent of the company's liability; and consulting with relevant professionals to attain an expert opinion or viewpoint.
Claims adjusters use new forms of technology to increase the speed and efficiency of claims review and processing. The main tools of claim adjusters include laptop computers which make insurance information readily accessible, digital cameras to capture images for reports and transmit images for review by insurance companies, and cell phones for in the field communication. Insurance adjusters increasingly record claim details and information directly into their computers creating an immediate claim file for shared use by adjuster and insurance company. Once the claims adjuster has gathered all relevant information, the claims adjuster prepares a report with, as appropriate, photographs and written or recorded statements. The claims adjuster negotiates with the claimant and resolves the insurance claim. When claimants contest the claims adjuster's decisions or insurance fraud is suspected, claims adjusters aid attorneys in representing and defending the insurance company.
There are two claims scenarios when the services of claims adjusters working directly for the insurer are not used. First, insurance claims may, in claims without suspected fraud or complicated coverage, be handled cooperatively between the insurance company and the relevant service provider without the aid of claims adjusters. Cooperative appraisal between insurers and service providers and contractors, such as builders or doctors, is a growing trend undertaken to increase efficiency and reduce costs (Plant, 2006). Second, in some instances, individual or business claimants may choose to hire a public adjuster rather than accept the findings of the insurer's claims adjuster.
Public adjusters, or independent loss adjusters, serve as advocates for the policyholder. Public adjusters, who prepare and present the claim to the insurer, earn a percentage of the benefits or settlement. Public adjusters work for the claimant rather than the insurance company. Public adjusters work with their clients to prepare and present claims to insurance companies as well as negotiate a settlement in their client's favor (Hofmann, 2006). Public adjusters are advocates for their clients and are paid by the client, often out of the proceeds of a claim (Reitz, 2011). Licensure for public adjusters do not necessarily have the same requirements as independent adjusters (Elias, 2012). In the United States, public or independent claims adjusters are unofficially grouped and governed by the National Association of Independent Insurance Adjusters (NAIIA). The National Association of Independent Insurance Adjusters, which was founded in 1937, is an association of 300 property and casualty claims adjusting companies. The National Association of Independent Insurance Adjusters operates to uphold the following functions and principles: Cooperate with the insurance fraternity to ensure a cordial relationship between the independent adjuster and the public; guide the activities of independent adjusters so that the highest standard will be encouraged and maintained; and attempt to find solutions to matters concerning and affecting both the association and its individual members.
The Future of Claims Adjusting
There is debate in the insurance industry about the appropriate role and scope of power for claims adjusters. The debate may be characterized as claims processor versus claims adjuster. Uncomplicated claims are thought to require only the lowest level of insurance expertise of claims processors rather than the higher-level of expertise held by most claims adjusters (Plant, 2006). In the United States, the qualifications and licensing requirements for claims adjusters vary by state. Numerous states have a voluntary professional designation in addition to a licensing exam. Claims adjusters generally specialize in one category of insurance claim such as homeowner claims, business losses, automotive damage, or workers' compensation. Claims adjusters tend to have a wide range of skills such as the following: Interpersonal and communication skills, knowledge of architecture or building trade, familiarity with insurance law, computer skills, and driver's license. Claims adjusters working for insurance companies generally operate under company license while public adjusters are generally required to file a surety bond. A surety bond refers to a bond issued by an entity on behalf of a second party guaranteeing that the second party will fulfill an obligation or series of obligations to a third party.
According to the U.S. Department of Labor, 263,280 people worked as claims adjusters, appraisers, examiners, and investigators in 2012. In 2012, the average annual salary for claims adjusters, appraisers, examiners, and investigators was $61,530, up from $44,220 in 2004. The majority of these claims adjusters, appraisers, examiners, and investigators worked for insurance firms rather than as independent contractors. Increasingly, insurance companies are working to reduce costs by using customer service representatives to record the specific details of claims. This practice allows claims adjusters to spend their work hours assessing losses and developing claims reports. The U.S. Department of Labor expects that the need for claims adjusters will increase, and a shortage of claims adjusters may result, as the population ages and the number of active insurance policies grows. While the job of claims adjuster is made faster and more efficient through the use of new technology, the job of claims adjuster cannot be fully automated. Individuals are, and will continue to be, needed to inspect damages and mediate between claimants, experts, and insurers.
Claims Operation Technology
Claims adjusters use new technology such as networked computers, cellular phones, and geo-positioning devices to increase the speed and efficiency of claims reviewing, processing, and reporting. In addition, claims adjusters use and increasingly rely on computer applications designed specifically for claims adjusting activities. For example, the SMART technology implemented by CGI...
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