The importance of adjusters: The rise and responsibilities of adjusters.
In this series of articles, Why Adjusters Matter, we will be exploring the history and relevance of insurance adjusters from multiple angles. As technology continues to cause innovative changes in the insurance industry, we want to examine the role of adjusters in the industry.
The major contributors to this series are Paul Kottler, U.S. President of Global Technical Services and Larry Milburn, Chief Operating Officer for U.S. Loss Adjusting Services.
In short, an adjuster exists to investigate insurance claims in order to determine the extent of the insurer’s liability. However, adjusters didn’t always exist -- The role was created long after the first insurance policy was issued.
The Origin of the Adjuster
Ben Franklin has been credited as the forefather of insurance in the United States. History tells us that in 1751, Franklin and his Union Fire Company met with other fire-fighting companies in Philadelphia to discuss the formation of a fire insurance company. The result was the formation of the Philadelphia Contributionship.
As the first successful insurance company in the colonies, the Philadelphia Contributionship issued policies that insured against building fires. Members agreed to pay equal payments to the contributions, and that money would be used to pay for losses any member would sustain through fire to his property. There was no adjuster.
Much later, property insurance policies were based upon the New York Standard Fire Insurance policy. That policy contained conditions that required the insured to submit a sworn proof of loss to prove to the insurer the facts and amount of the loss. This proof was typically due within sixty days of the loss.
Once in receipt of the proof of loss, the insurer could either accept or reject the submitted proof. Under those policies, the insurer could sit back and do nothing until proof of loss was submitted.
Still, there was no adjuster. The burden was on the insured, and that burden was a heavy one.
Under this method of doing business, it was incredibly difficult for the insured to successfully present a claim. And insurers recognized this. To make things fair, and to operate in good faith, insurers invented the insurance adjuster role.
Created by law, the adjuster’s role was to identify, ascertain and report the actual loss to the subject matter of the insurance policy due to the hazard insured against. To assist the insured, insurers dispatch a person with special knowledge—the adjuster—to establish the cause and extent of the loss and determine the amounts necessary to indemnify the insured according to the policy. The adjuster was also responsible for distinguishing valid claims from invalid claims.
Today, it is common practice that the first person from the insurer that the insured meets after suffering a loss is the insurance adjuster. It is the adjuster’s role to make the claims process flow smoothly for all parties. Now that policies have become so specialized and complex, the need for adjusters is even more distinct.
“The reason that we have adjusters is not primarily to catch fraud,” explains Paul Kottler U.S. President – Global Technical Services.
“The chief reason is to help the insured work through the claims process. Adjusters are there to make sure all sides are being treated fairly and reasonably throughout the claims process.”
Larry Milburn, Chief Operating Officer for Crawford & Company U.S. Loss Adjusting agrees. “Fair and reasonable is the standard,” he says. “That’s what everyone involved in an insurance contract should be seeking. Not more. Not less. Insurance Companies train their adjusters to help look for coverage under the terms of the policy. It is a great myth that Insurers are trying to dodge paying claims when nothing could be further from the truth. They hire and employ professionally trained insurance adjusters to help their policyholders during their time of need. Together with the adjuster, they work with the policyholder to help solve problems, identify opportunities and concerns, and calculate a fair and reasonable settlement per the terms of the policy.” The adjuster and insured experience may be the only interaction a policyholder has ever had from their Insurer and this is exactly why Adjusters matter.
Specialization of Adjusters
The world of insurance has gotten more complex over the years. A long time ago, there was only fire insurance. Now insurance companies cover things that could only be imagined years ago.
These additional coverages have led to more specialized adjusters in the industry. For instance, adjusters may have very specific experience across a variety of industries and industry verticals; hospitality, marine, environmental, agriculture, aviation, trucking, electric vehicles, and cyber technology, to name a few.
Forensic accounting is another specialty in the insurance industry. “Here at Crawford, we have Crawford Forensic Accounting Services,” says Larry. “These specialized professionals
are typically accountants with strong analytical skills, and handle matters that involve everything from the assessment of the impact of business interruption claims to the analysis of mitigation options. They work together with traditional loss adjusters to drive efficiencies through the overall claims process designed to aid insurers in resolving and adjusting a financial loss.”
Artificial intelligence (AI) is a technology that enables computer systems to accomplish tasks that typically require a human's intelligent behavior. AI now has its sights on the insurance industry, essentially turning insurance claims into self-service opportunities.
Now, if someone has a car accident, they can simply take a picture of the damage and upload it through an app on their smartphone. The insurance company’s AI system will then determine the value of the loss.
This isn’t a great outcome for the insured because the burden is being shifted back onto them to investigate and prove their claim. It also does not make for a satisfying customer experience; a smile and a handshake can still make a big difference in the world of insurance.
Imagine the customer who has been paying their premium for 20 years without ever making a claim. Then one year, a hurricane knocks down a tree that lands on their house and car. That customer may not be satisfied with taking pictures and sending them to a desk adjuster or an AI system.
“What they really want is for someone to come to their home, knock on their door, shake their hand and tell them that everything is going to be alright,” says Larry. “Then the adjuster proves his/her value by assisting the policyholder with their claim filing and looks for coverage within the policy all the while helping the policyholder deal with mitigation, contractors, ensuing damages, business interruption and additional living expense concerns. It’s oftentimes a very traumatic experience for the policyholder, and how their claim is handled undoubtedly drives their brand loyalty and retention decisions.”
Desk adjusters can certainly play an important role in the claims process. “There is a time and place for everything and what is best for the policyholder is ultimately what should matter most. If you do not practice due diligence by doing it right the first time, you will more than likely regret having to try and deal with it the second and even third time.”
Adjusters Improve the Policyholder’s Customer Experience
Exactly what is a policyholder paying for each month when they make that insurance premium payment? According to Larry, they are paying for the opportunity to be made whole again, or in some cases, as close to whole as their policy allows. They are also paying for the customer service and claims assistance that an adjuster provides during a time of need. “It is important to provide a high level of customer service mixed with a whole lot of fairness because customer retention, customer satisfaction and bad faith exposure matter.”
Indeed, customer service is a crucial part of insurance adjusting. Each time an adjuster encounters a policyholder, they are shaping the customer’s experience with the insurance company and the entire insurance industry.
Adjusters help policyholders navigate through the inconvenience and trauma that follow a loss. A patient, calm, and empathetic adjuster is just what a policyholder needs when they have experienced a loss. The policyholder may not know what comes next. And they may not even understand how their policy works. They need help.
“That’s what adjusters do,” continues Larry. “We help policyholders get through the claims process.”
Adjusting goes even deeper than helping policyholders. According to Paul, there are three parties: the insurance agent or broker, the insurance carrier, and the insured. And each party wants the same thing—for the claim to be resolved in a fair and friendly manner.
“We call it finessing all sides,” says Paul. “The best adjuster is someone who can make all parties happy. If all parties are happy with the outcome, each will continue the relationship to everyone’s benefit.”
Everyone’s happiness is crucial when it comes to policyholder retention costs. “Every insurer knows their policyholder retention costs,” says Larry. “When an insurer loses a policyholder, they don’t just lose the premium. They also incur the cost of replacing that policyholder and any damage that may come from it. Once again, here is where having a positive customer experience during the claims process comes in.”
Ideally, insurers want policyholders to go to their neighbors and tell them what a wonderful experience they had with their adjuster. Insurers want policyholders to communicate that the agent was informative, polite, and professional. “That’s what customer experience is all about,” says Larry. “And that’s exactly what Crawford is trying to rejuvenate within the industry by offering speed, accuracy, fairness and respect, one claim at a time. We are striving to always create a positive customer experience and it is a win for everyone involved in the process.”