CLAIMS AUDITING 101: PART 3
Quantitative vs. Qualitative
Regardless of the coverage involved, those analyzing claims files can take two different approaches—either quantitative or qualitative auditing. The best audit involves both, whereas inferior audits involve only one. Too often, auditors, especially those who do not come from an adjusting background, may tend to look at claims files only quantitatively, and may therefore
declare an excellently adjusted file “inferior,” simply based on quantitative factors. Let’s
look at both types of analyses to determine what an auditor must consider
when reviewing a claims file.
Unless the insurer is
solidly in the right,
litigation may represent
a failure on the part
of the adjuster to
and resolve issues.
of vital importance
Undoubtedly, many claims adjusters have been the victims of auditors
who looked solely at quantitative factors. In one of the early Iconoclast
columns, I cited the case of Jack. An
adjuster for well over 10 years, Jack
had expert knowledge of coverage, liability, and damage issues. Even so, he was somewhat lazy and often relied upon this
ample knowledge to take shortcuts that often did not appear in his file notes.
There is an old adjuster’s motto, “If it isn’t in the file, it didn’t happen.” Well, there was
much that did not appear in Jack’s file. Although annotations as to what Jack had done
from minute to minute were lacking, he achieved superior results on virtually every file.
Jack knew the policy language verbatim and therefore understood how the courts had
interpreted every aspect of tort liability. He knew how to read and interpret any contracts
that the case might involve. Moreover,
Jack was an expert appraiser of damage.
When he was negotiating with an insured
or claimant, both sides felt that the results
were exactly right and fair.
A Numbers Game
During several claims conferences, I
have heard numerous speakers address
“the perfect claims file” concept. It is all
about the numbers. Was contact made
with the insured, the claimants, the wit-nesses, the doctor, and others within 24
hours of the assignment? If not, then the
file was deemed lousy. The fact that an
insured might not have reported the loss
iconoclast p. 52 A