The general insurance industry has been under increasing pressure to deliver positive returns to company shareholders. In an environment where revenue growth is nominal and investment yield limited, insurers are making concerted efforts by insurers to reduce costs.
However reducing costs does not have to entail a slash and burn policy of eliminating external expenditure such as service suppliers (i.e. lawyers, adjusters, investigators). Indeed the claims management process benefits from the skills that everybody in that chain brings.
It is not uncommon for a claims handler to delegate claims based on the “monetary value” of a claim and many times this can be justified, however often this is not the most efficient way of dealing with a claim.
Having a good understanding of the role of service providers such as loss adjusters, lawyers and investigators will ensure that the quality of the insurer’s claims service is kept at a high level and at the same time minimising wasted costs that are incurred by engaging service providers on a traditional “monetary value” basis.
For example, the natural response to receiving a claim for a large quantum sum may be to send it to lawyers. Understandably this is because of the perception that a large exposure requires a “safe pair of hands” to deal with it. In fact, the complexity of a claim is rarely determined by the quantum of the claim and often “small” claims are far more complex in terms of the issues they raise than “large” claims.
Alternatively it may be perceived that if the claimant is represented by lawyers it means legal proceedings are imminent and warrants lawyers being appointed to act for the insurer. In actual fact, often the reason that a claimant has decided to retain lawyers is because the claimant feels that he/she was not engaged with (in discussion) in good faith at an earlier stage of the claim process.
Decisions to be made in the claims process
1. Notification of claim – The insured or broker approaches the insurer and lodges a claim or notification of an incident. They will provide basic facts about the incident and any relevant correspondence to provide a basic outline of the incident. This information allows a claims handler to get a “gut-feel” for the claim. A claims handler can request any other information that they feel is necessary for them to be able to determine what further steps ought to be taken at that stage.
2. If the claims handler has much of the relevant information required or is able to obtain any further missing details from the insured and/or claimant by a simple email or phone call, then there is very little that an adjuster, lawyer or investigator can add to the claims process but cost and delay. If not, the claims handler may decide that an external service provider is best placed to provide what is required within a reasonable timeframe and cost.
3. If the claims handler has previously engaged with the claimant and/or their legal representative and it is clear that the parties have exhausted attempts to resolve their differences and the issues remain in dispute, then the natural progression is for the claimant to commence legal proceedings. At that point the insurer ought to engage lawyers in order to protect both the insurer’s and the insured’s interests.
4. However, if a claim is notified and much of the information required to make a decision is missing, irrespective of the size of the claim or whether the claimant is dealing with the matter personally or through lawyers, it is prudent to first engage a loss adjuster.
5. A loss adjuster is best placed to gather the information from all parties (insured, claimant, third parties, witnesses), collate documentation and evidence, take statements, attend to the loss location, take photographs, and then provide the claims handler with a factual report weighing up the strengths and weaknesses of the claim and make recommendations with respect to the further conduct of the claim, as well as comment on the potential impact on policy response and address quantum issues.
6. At that point the claims handler should have sufficient information to make a decision as to how to resolve or progress the claim. If the loss adjuster has raised issues that require legal advice (or clarification of a legal position), it is at that point that it becomes prudent for a claims handler to engage lawyers to address the specific issues raised (again, all with a view to allowing the claims handler to make a decision as to how to resolve or progress the claim). Likewise, if the investigations reveal that further specialist expertise is required on a specific point, then it would be prudent to engage the relevant consultant to address the specific issues raised.
What benefits can a loss adjuster provide?
When a claim requires investigation, a loss adjuster is generally best placed to obtain the relevant information available from the parties involved in the shortest timeframe.
An adjuster is usually able to secure a visit to the location of the loss and with very few exceptions is able to speak with all parties involved in order to obtain an unfiltered account of events and facts. This enables an adjuster access to places and people that other service providers will not have the benefit of.
The loss adjusting process can be undertaken in a conciliatory fashion (as opposed to the adversarial style of litigation). It follows that with the expectation that the insurance process is in play, all parties involved are generally eager to assist a loss adjuster in furthering the claim. Thus an adjuster is able to move the claim process forward further and quicker than others.
A good liability adjuster should be able to undertake the investigations, obtain as much of the facts as possible, understand and filter through the relevant issues and make meaningful recommendations for the further management of the claim, keeping in mind the commercial aspects of the claims process and where appropriate attempting an early resolution of the matter to avoid unnecessary and expensive litigation, thus saving the insurer both time and money in resolving the claim.
Ultimately the management and resolution of an insurance claim is all about quality and timely information – something that a loss adjuster is often best placed to provide.
At Technical Assessing we have many experienced and knowledgeable liability adjusters with a range of backgrounds and qualifications who are familiar with both the claims and litigation processes.