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By Barry Zalma, Esq., CFE
© 2013
Insurance claims handling is a profession that requires a jack-of-all-trades and a master of insurance and insurance claims handling. Every day and every claim revolves around different facts, different issues, different businesses, and different personal relationships. To be an effective claims handler the person given the title of adjuster, claims representative, or claims examiner must be ready to deal with every possible issue that can arise to cause damage to persons or property.
The biggest mistake insurers have made in the 45 years I have been involved in claims is to reduce or eliminate training for their claims handlers and to ignore fraud training.
When I was a trainee claims adjuster in 1967, I was required to attend 30 full days of classroom study on every subject — from how to read an insurance policy to anatomy, from the parts of an automobile to how to replace a wind-damaged roof, and from the law of torts and contracts to the covenant of good faith and fair dealing. After the classroom training I spent months riding with senior adjusters in each area of insurance written by my employer — from inland marine to workman’s compensation and from Surety bonds to fire insurance — until my employer and I felt I was competent to assist people insured by my employer present their claims and to negotiate settlements.
Today the new adjuster is a young person who just graduated from a liberal arts college and has little or no work experience. The new adjuster is hired, given a checkbook with $2,500 in unsupervised authority, and told to go out and settle claims. The new adjuster is told that if he or she has a question about the claim to ask his or her supervisor. Unfortunately the supervisor has only been involved in claims for approximately two years.
Claim training, if there is any, is haphazard and provided – at no cost to the insurer – by contractors, accountants or lawyers who are vendors of the insurance company seeking more assignments. The training, therefore, is directed to advise the adjuster that nothing can be accomplished unless the adjuster retains the professional who is providing the training.
This system saves money on the training expense side of the ledger. It is, however, fraught with danger and will probably cost the insurer thousands of dollars in indemnity payments and damages in suits for breach of contract and the tort of bad faith.
* Claims that can be easily adjusted and resolved by an experienced claims adjuster may be denied by an inexperienced adjuster.
* Claims that could simply be resolved by an adjuster will be assigned to a team of experts.
* Other claims will be denied because the new adjuster does not know how to read a policy, investigate a claim, or apply the law in the jurisdiction to the interpretation of the policy.
* More than necessary lawyers, accountants, and other experts will be retained at high hourly rates to explain to the young adjuster what any well-trained and experienced adjuster already knows.
The insurance adjuster is the representative of the insurer. It is the adjuster’s obligation to aid the insured and the insurer to fulfill the promises made when the policy of insurance was acquired in accordance with the obligation to deal fairly and in good faith. Since it is the adjuster who fulfills the promises made by the policy, insurers should recognize its staff of adjusters as a profit generator, a customer loyalty builder, and the personnel who protect the insurer from excess payments and fraud.
A professional claims staff must include people who can read/understand the policy, confirm or deny coverage, adequately explain benefits, coverage, limits, limitations, deductibles, duties, and time limits. The adjuster must then be competent in cause determination, interviewing, inspections, retaining experts if necessary, estimating, obtaining bids, evaluating bodily injuries and medical records, understanding the intricacies of each type of loss, investigating the facts and determining the cause of loss, knowing the relationships of torts, contracts, and equity (subrogation and salvage) … and be a good enough communicator to maintain a professional (yet friendly) relationship with the client/claimant.
Combining all that with the stringent time limits imposed by rules and regulations that govern timely claims handling, we end up with a highly trained, multi-faceted Superman.
Conclusion
The insurer that wishes to fulfill the promises made by its policy must have a staff of welleducated, trained, experienced, and professional claims handlers who can evaluate a policy and a claim after completing a thorough investigation. The insurer is mandated by state guidelines requiring that personnel be provided with continually updated training and education concerning the ever-changing law of insurance claims and insurance fraud with a minimum of one training course on each subject annually. Claims people should be encouraged to regularly read insurance trade journals, insurance fraud journals and newsletters, insurance law blogs, subscribe to free insurance law newsletters, and attend regular CPCU, IASIU, PLRB, LIRB, IRMI, and other insurance meetings. Such attendance not only improves overall knowledge, but sets the stage for increasing professional relationships within the industry. A handshake and an exchange of business cards may, down the line, make or break a case. ——–
[color-box color=”gray”]Barry Zalma, Esq., CFE, a prolific writer, trainer and speaker, has practiced in California for more than 40 years as an insurance coverage and claims handling lawyer. He also serves as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. http://www.zalma.com.[/color-box]