The auditor and the claims administrator simply must understand each other’s
terminology. For example, there is a
great deal of difference in determining
appropriate adjuster workloads when referring to features instead of claims.
Know Its Organizational
Structure and Assignment
Moreover, the claims auditor must understand the overall structure of the liability claims program, as different structures will necessarily require the auditor
to adjust the work plan to some extent.
Here are some questions to ask when
evaluating the administrator’s structure
■ Does the claims administrator handle claims/features from a central
location, regardless of where the incidents occurred, or are claims handled regionally or even locally?
■ Does the claims administrator rely
primarily on corporate claims personnel, or are the claims/features
managed in whole or in part by independent adjusters or other vendors?
■ Does one adjuster handle all features
associated with a claim, or are different features handled by different
adjusters depending on the type of
claim/feature and the adjusters’ expertise, experience, training, and
■ Are claims/features handed off from
one adjuster to another if the claim/
feature becomes more complex or
costly, or does the initial adjuster
remain responsible for the claim/
feature until it is resolved?
■ If claims/features are eventually litigated, then are they referred to a designated “litigation adjuster,” who will
then work with defense attorneys to
whom the claims/features are assigned for defense?
All of these structures can be found in
today’s claims administration world. The
advantages and disadvantages of these
structures are beyond the scope of this
article, and may be a topic for a future
article. The auditor must understand
the overall structure in which claims/
features are managed to provide an ac-
■ Did the adjusters, supervisors, and vendors fully document their actions
and plans so that anyone reading the file could understand the status
■ Does the file show diaries, action plans, and supervisory oversight
requirements that document a consistent and organized approach to
managing the claim?
■ Was the file promptly set up so that the action steps required to manage
the claim could be accomplished as soon as practicable?
■ Was the file promptly assigned to the adjuster with the appropriate level
of experience and expertise, considering the claim type, the severity of
any damage or injury, and the complexity of the claim?
■ Was the coverage fully analyzed and properly applied to the loss?
■ Were policy limits monitored throughout the life of the claim (and its
■ Was prompt and meaningful contact made with the insured and the
claimant(s) within one workday of claim receipt?
■ Were witnesses contacted within one workday of receipt of the
witnesses’ contact information?
■ Was contact maintained with the insured and claimant(s) throughout the
life of the claim?
■ Was the investigation initiated at the time of initial contact?
■ Did the adjusters’ work include a thorough investigation and
consideration of other avenues to investigate (e.g., potential recoveries,
contribution, fraud, prior injuries or conditions)
■ If on-site investigation was needed, did the adjuster promptly assign
the claim to a field adjuster or independent adjuster so that the liability
decision could be made promptly?
■ Did the primary adjuster properly manage the field adjuster or
■ Was the insured responsible for the loss?
■ Does comparable or contributory negligence apply?
■ Are there aggravating or mitigating factors that will ultimately affect the
value of the claim?
■ If the third party was found to be responsible for the loss, was the
information obtained, documented, and saved to successfully deny the
claim and file a subrogation claim?
■ Did the adjuster gather objective proof and/or documentation of alleged
damages, including, but not limited to:
■ Property damage?
■ Medical bills (past and future)?
■ Wage loss (past and future)?
■ Periods of disability (past, future, partial, full)?
■ Permanent impairment?
■ Was the reserving process appropriate and followed?
■ Were reserves estimated reasonably, and were the reserves reviewed
and possibly revised at proper intervals and/or at times when conditions
■ Did supervisors and managers review the reserves at periodic intervals
and/or when case reserves reached threshold values?
■ Did the case reserves reflect the estimated ultimate value throughout the
life of the claim?
■ Were claims or features closed promptly when the case was resolved to
reduce outstanding reserves to zero?