Does the sameness of claim af- ter claim permit standardized claim adjustment procedures? One rear-end collision without
injuries is pretty much the same as any
other rear-end collision without injuries.
What if it’s a chain reaction collision?
Who hit who first? What if the car in front
had cut in front of the insured, then sud-
denly stopped? What if the collision was
road rage, or one of the cars was “driver-
less”? No, each claim is unique, the people
involved are individuals, and each claim
needs to be adjusted on its merits. When we
try to do away with individualism in each
loss, we either over-pay or under-pay, hence
the claim is no longer “fair and equitable.”
While insurance is based on the law
of large numbers, ethical claim handling
requires that each insured, exposure and
claim be handled individually by the ad-
juster. No two individuals are alike, and
the same is true of claim adjustments.
The ethical issue of indemnification
must occur. It is unethical to over-pay or
under-pay claims; each settlement must
be fair to the insured or claimant and to
the insurer. That is a difficult objective to
achieve and requires skill. Some claims
specialists believe that over-paying a few
claims to avoid disputes is easier than
proving the correct amount. There may
be some value in that thinking where the
issue is “pain,” because there is no easy an-
swer to the question of what pain is worth.
“Actual cash value” has legal definitions,
and in property matters, that is what may
be owed. Some insurers have advertised
that they will do better than just the value of
the loss, a sort of new for old, but that may
simply mean that they don’t take the time
to calculate the depreciation, wear and tear
and obsolescence into the claim. The premiums charged will reflect the difference.
Ethical supervision and
Supervisors must ethically evaluate adjusters and their work on a fair and individual basis. But is individual supervision
still the norm? Or is “team adjusting” the
best way to prepare young adjusters for
the complicated claims of the future?
Until the 1970s, multi-line adjusters handled any claim from start to finish. One
claim, one adjuster. He or she did the investigation, evaluation, and subject to supervisory authority, the resolution. By handling
claims from start to finish, adjusters knew
whether factors such as subrogation, comparative negligence, insurable interests, other
tortfeasors and similar issues were involved.
Sometime in the late 1970s, the concept of “team adjusting” was introduced,
apparently along the lines of what social
psychologists called “Theory Z,” based on
Japanese-style management. The workers
operated as a team: it was the team that
got the credit, not individuals. In a 1982
column, the Iconoclast cited a CPCU Society report entitled, “The Restructuring
of America in the Decade Ahead.” They
referred to one trend as “Top Down to
Bottom Up,” meaning that ideas would
flow upward from lower level employees
“It’s often mistakenly thought that Japanese workers are so productive because
they perform like robots, ever subservient to authority,” the CPCU article stated.
But this, the report said, was not the case.
“Fully 90 percent of Japan’s industrial
work force is organized in work groups of
eight to eleven people. The whole theory
is: the workers know their job better than
anyone else, and given a chance, workers
will be creative and self-motivated.”
While the “team” concept is now being
introduced at the grade school level, and
the old idea of “rugged individualism”
is being squelched, the insurance claims
industry seems to have bought into a
“team” concept. With “team” telephone
and mail adjusting, one person does the
same job on each claim, then passes it
to the next team-member, and then it
goes to a third person for input. Hence,
one ends up with years of “experience”
doing the same thing over and over, but
never sees a project from start to finish.
No wonder there is excessive turnover in
the claims industry. What ought to be an
exciting job becomes boring routine.
Ken Brownlee, CPCU, is a former
adjuster and risk manager based in
Atlanta, Ga. He now authors and edits
claims-adjusting textbooks. The opinions
expressed are the author’s.
No Two Claims are Alike
Editor’s Note: This is the fifth article in a six-part series on adjuster ethics.