The time has come for a proper introduction. Like a family that has scattered over time and generations, claims professionals who participate in the handling, assessment, investigation and resolution of cases have become distant and unrecognizable to each other. This has caused problems of communication and a lack of understanding. It has also confused the insurance buying public.
Each claims professional described in this article has a different purpose and end game. And, each uses different methods and tools to achieve the objective. But all share the common goal of resolving the claim.
Each participates in a type of clean-up effort. Often, these professionals are brought together in some combination when someone or some “thing” got hurt. Conflict can occur as each attempts to ‘make it right.’ For fighting the good fight, all will be recognized by the deity of their choice when their days on earth are done. But, why wait until the gathering in the golden banquet hall to get to know one another? Let’s introduce the players now while there are still claims in the inbox.
1. The Carrier Adjuster
This claims professional comes in a few varieties but typically specializes in either property or liability. The 1980’s version of this person likely handled both. Carrier adjusters use words like “coverage disclaimer,” “liability denial,” “reservation of rights” and “panel counsel.” They constantly ask questions about each other’s “pending volume.” A larger pending is a badge of honor in these circles.
The sad, unspoken truth is that being a prolific closer of files in this circle only gets you slammed with more files. They tend to talk about “lines” of coverage because they think about claims in terms of their relationship to insurance policies which belong to a certain “LOB” (line of business).
Self-insurance is a foreign concept. Their old system would not add a claim record unless there was a policy number associated. It is common for the carrier adjuster to be well-schooled in claims intake, assignment routing, and identifying an exclusion. But many have been swallowed by the processing and administration portions of the job, leaving little room for actual field investigation and gathering of witness statements. Instead, they often work their files through outside vendors and service providers. Their desk is like an airport hub where reports and info requests are constantly coming in and going out. Damage appraisers and defense attorneys pour information on the carrier adjuster by the gallons, and it’s their job to soak it all up like an air traffic controller the day before Thanksgiving.
The carrier adjuster faces obstacles right out of the gate when a claim is assigned. The days of one set of forms per insurer were over a long time ago. Today, insurers issue policies under a dozen different NAIC issuing companies and each policy form is slightly different. Although it can take some work to deny coverage, the carrier adjuster is secretly happy to deny but not for the reasons you may think. A coverage denial is one quick way to be “done” with a claim. Many carrier adjusters have become the victims of out of control business processes that prevent actual work from getting done. Actual tears will flow when the claims manager has to tell the carrier adjuster that they must drag along the carcass of a green screen AS/400 system for another 5 years because “we can’t afford a new system.”
The ideal day for a carrier adjuster involves attending a mediation or conference. This provides the chance to work with outside defense counsel to craft a settlement within authority and within current reserves. Carrier adjusters are often controlled by their diary of tasks and deliverables. They must meet reserve setting deadlines and must be timely with reserve adjustments in order to avoid a negative audit. A harrowing day for a carrier adjuster is claims committee day. In this setting, they argue and recommend a handling strategy that calls for settlement or trial. Confident adjusters enjoy making recommendations to “pay no more than.” Really confident adjusters recommend trial. Contrary to popular belief, the appetite for a trial decreases as you climb the insurance claims hierarchy. Carrier adjusters are painfully reminded that the defense dollars it takes to get a case to trial often makes settlement the best resolution…. as compared to all other relatively bad financial outcomes. This fact is a massive hidden cost of a broken legal system, but we shall not digress. The best thing a plaintiff attorney can do to a carrier adjuster is make a final demand in the upper stratosphere. Nothing makes the job easier than saying “no” to an absurd demand.
2. The TPA Adjuster
The Third Party Administrator Claims Adjuster has seen her share of hell on earth. The TPA adjuster is especially motivated to serve her client, which is often a self-insured organization, captive, or risk pool. She usually feels a strong connection to that customer and knows their business well.
Of course, TPA owners are true “fee for service” businesspeople. And, often times, the amount of work and servicing required barely turns a profit as the work tends to expand over time, but the “fixed price” does not move. TPA adjusters can be overworked and undertrained. Depending on the structure, some TPA adjusters are dedicated to a certain industry or account and can actually get their hands into the meat of investigative and legal issues. Those adjusters become proficient quickly with the repetitive issues found within the volumes of food poisoning or slip and fall cases, for example.
The TPA Adjuster is used to doing a lot of external reporting. Letters to excess carriers and letters to the client contact are a normal part of everyday life. The reporting can be counterproductive at times as clients may require a report every time the TPA adjuster inhales oxygen. For a stretched TPA adjuster, these requests are like pulling up the flowers to see how the roots are growing.
3. The In-House Claims Professional
In-house claims professionals may work in the legal department or the risk management department of a larger organization. These claims professionals may be lawyers, so it is important to understand their perspective. Their goal is to cut off liability and reduce or eliminate the chance of a future claim. They see many interactions through the lens of the litigation forum and are quick to understand the impact of poor investigation.
In-House Claims professionals are able to spot issues and complexity. Typically, they are not hampered by stale or outdated processes which gives them great autonomy. Although their overall volume may be less, the average level of difficulty is relatively high when compared to other claims professionals. They may outsource and manage service providers and defense counsel and usually have their favorite “go-to” lawyer on the outside for regular consultation and guidance.
In-House claims people work closely with risk control and offer strategic ways to reduce exposure. They do this because there is no hiding in this role. Do a poor job, and you’ll be back at InsureCo in no time. These professionals pride themselves on knowing exactly what the insurance policy says in terms of coverage, conditions, and exclusions. Depending on how business savvy they are, some get creative on alternative ways of resolving problems other than the traditional “deny, defend, litigate, mediate strategy.” You can tell someone is in-house because they use words like “exposure” and “retention” or “excess layer.” They have a keen sense for what to prioritize, and they usually set the tone for the organization’s appetite to try cases.
4. The Subrogation specialist
The subro specialist is a special kind of annoyance in the industry…unless he is on your side. Many insurance companies have learned that pursuing loss recovery takes a special kind of person that is in almost direct contrast to the defense-minded claims adjuster persona. Subro specialists are part of the bizarro world. They are on the attack and may have cauliflower ear from spending so much time on the phone doing follow-up from their demands.
Subro specialists have a high volume of work and often deal with a high degree of complexity in the area of accident reconstruction, origin and cause and allocation of fault. These professionals are greatly underappreciated for their skills and their value to a company.
Subrogation is the red-headed stepchild of claims. Subro specialists are not understood by the traditional claims adjuster nor are they welcomed into the club by plaintiff’s counsel. They assert rather than defend claims. Because they work for insurance companies, the plaintiff’s bar shuns them. A subrogation specialist quickly learns where the low hanging fruit is and when they may need to climb a long, steep hill and risk finding a lump of coal instead of a pot of gold. They use words like “arb” (short for arbitration), “restitution,” and “responsible party.” Their greatest tool is a well-reasoned demand letter and a smart claims system that understands their needs. But, many do just fine by assuming liability and writing a “please pay us” request.
An exciting day for a subro specialist is when they get word that a brass fittings manufacturer just admitted their poor design caused thousands of homes to flood during a particularly cold winter. Their finger-pointing can serve society well. Properly placing financial responsibility with the source of the problem keeps everyone focused on safety and loss prevention. But, if this was a claims pool party, the subro specialist will be the first to do a cannonball near the cupcakes.
5. The Broker-Agent Claims Representative
See also, “box of chocolates.” You truly never know what you are going to get here. The broker claims rep can be someone from the sales side of the business or an underwriter in transition. They can also be a well-trained coverage expert who knows the policy inside and out. The goal here, coverage for all and coverage now.
There are reps whose sole purpose is to obtain coverage for expected property damage, stemming from a drug transaction in mainland China, submitted by an incidental beneficiary of a voluntary worker hired to remediate a chemical spill. You can talk conditions and exclusions until you turn blue, but you will wind up paying defense costs under a reservation of rights somehow.
The agency claims rep sees the world differently. “If it’s not covered, why did my client buy the insurance in the first place,” they ask. This is where the carrier adjuster has to admit that the warranty coverage applies only to…. “things that never break.” Ouch! Score one for the policyholder. Indeed, the broker rep is a necessary part of the process.
No one should see a doctor alone and no one should seek insurance coverage alone. Having an advocate in the room is a great protection against getting the run-around. The broker claims rep strength may actually lie in “not knowing” the coverage back and forth because it forces the carrier to explain the purpose of the policy in plain language. Few underwriters can even do that. Headscratcher since they sold the policy.
Day to day interactions between claim professionals can be difficult. Increasingly, dialects and terminology are getting more diverse. For that reason, this light-hearted portrayal of certain claim personas is helpful for all to keep in mind.
