Claim managers face a never-ending list of challenges on a dailybasis. Perhaps the most dreaded, however, is the resignationannouncement from one of their best claim adjusters. To theinsurance industry, finding a well qualified adjuster from thedwindling pool of talent is the equivalent of having a first-rounddraft pick in the NFL, minus the multi-million dollar contractsthat have become so prevalent in pro sports.

With high burnout rates, and more and more adjusters nearingretirement age, how can insurers and third party administratorsfind, develop, and retain the best resources to most effectivelymanage their losses? Unfortunately, this issue is not anything newto the insurance industry. If not considered a crisis today, itcertainly is a crisis on the near horizon.

The Bureau of Labor Statistics predicts that the need for claimadjusters will increase 19 percent over the next 10 years. Giventhat the average age among the existing crop of claim adjusters isover 40 and they are beginning to eye retirement, the problem isworsening on a daily basis.

It does not affect just the insurance industry; a major factorcontributing to the crisis is the aging of the work force as awhole. According to the BLS, more than 25 percent of the workingpopulation will reach retirement age by 2010, resulting in apotential worker shortage of nearly 10 million. As Baby Boomersleave the work force to enjoy their golden years, there areinsufficient numbers of young workers available to replace them. Inaddition to the overall reduction in numbers, the insuranceindustry has a history of a constant ebb and flow of adjustersmoving from one company to another.

Cause and Effect

Burnout is a constant concern due to the stressful nature ofclaim adjusting. The stress is compounded with high caseloads thatoften involve excessive clerical tasks and pressures to meetregulatory requirements and performance standards. The trend ofoffering unbundled services and high service contracts has resultedin even more reporting requirements and paperwork foradjusters.

Whether the reason for a voluntary separation is burnout,salary, a shorter commute, or a “once in a lifetime opportunity,”the negative effects on the company remain the same. These includedirect and indirect costs of hiring and training new adjusters,competition for available talent, loss of productivity, andtemporary increases in the work loads of remaining adjusters.

Not only does the company need to deal with the loss of thedeparting adjuster's skills and productivity, the problem iscompounded when the remaining staff immediately gathers around thecoffee pot to discuss the impending departure and speculate onreplacements. Complaints begin to arise about the additional casefiles that will be heaped upon them until the new adjuster ishired.

In addition, if finding a replacement takes a long time, poormorale and increased caseloads may cause the grass-is-greenersyndrome to spread throughout the remaining adjuster staff.Stopping the potential mass exodus becomes the priority, too oftenresulting in hiring any warm body to fill the vacant spot —creating potentially bigger problems and higher costs down theroad.

Even when a qualified adjuster is hired, the loss ofproductivity does not end immediately, as time and resources willbe required to train the new employee on company procedures andtechnology. More often than not, the one providing the training isanother adjuster carrying his own case load and, probably, alreadyoverburdened and potentially near burnout. When additional trainingresponsibilities are added, the stress level is increased, puttingyet another adjuster at risk.

Multiply this scenario by several adjuster departures within ayear and it is easy to see why there is a growing crisis.

What's a Company to Do?

Endless articles and conference sessions have debated thechallenges of adjuster turnover. Ultimately, a company's bestchance to overcome the challenge is to create a superior workenvironment in all aspects. A few of the ideas that companies areexploring to retain staff include offering competitive compensationand benefits; creating a balance between work and leisure;providing for ongoing education and professional development; usingmore effective tools and technology to simplify the work process;and allowing claim adjusters to focus primarily on those activitiesrequiring their expertise.

Although competitive compensation is important, it rarely is theonly reason that an adjuster changes organizations. Workingconditions, opportunity for growth, and attractive career pathsalso come into play. Because adjuster compensation is relativelyconsistent across the industry, insurers and TPAs must focus onother aspects of the work environment to distinguish themselvesfrom the competition.

When a company recognizes the importance of family and personaltime through flexible hours and uses technology to allow fortelecommuting, adjusters are more apt to show company loyalty astheir professional and personal needs both are being met. Movingfrom company to company is as hard on the adjuster as it is on thecompany, so when they find an environment that meets all theirneeds, they are more inclined to stay.

Education

It is particularly critical for a company to view education ofvalued employees as an investment rather than an expense. If acompany invests in an adjuster's continuing education, it is onlynatural that employee satisfaction is increased as the adjuster isgiven the opportunity to hone existing skills and develop new ones.A well educated staff also gives the company a ready pool ofcandidates to promote when openings occur, again resulting in morecompany loyalty.

The advances in teleconferencing and video-conferencing qualityhave made them attractive educational channels. Employees receivethe benefit of out-of-town conferences and seminars without thetime and expense of traveling. The company is able to offertraining to a greater number of adjusters for the fixed cost of avirtual conference connection.

Many insurers offer convenient, in-house training sessions toprovide adjusters further opportunity to broaden their skills. Whenoffered in partnership, everyone has a vested interest in theprogram. The company might allow adjusters to stop work an hourearly in exchange for their staying an hour later than normal;resulting in two hours of class time.

The explosion of the Internet has introduced a plethora of newoptions for online classes and exams. The American InsuranceInstitute, for example, offers online courses for the CPCU program.Online courses are particularly attractive because they allowaffordable, high-quality, individualized, on-demand training thatfits adjusters' schedules.

Technology Improves Skills?

There is an old adage in the claim world that 20 percent of theclaims take up 80 percent of an adjuster's time. What tools andmethods are available to streamline claim processing so thatadjusters can focus on those critical 20 percent of claims, yetstill allow adjusters time to improve and expand their skills?

The natural inclination is to ask, “What magical technology cansolve all claim woes?” Technology can do only so much and, evenwith the best people, is only as good as the information available.From the viewpoint of many adjusters, technology and its promisesof automation have served only to shift the clerical burden tothem; too often adding to the work load rather than simplifying it.After all, does technology primarily eliminate adjuster or clericalstaff positions? Unless the clerical process is fully automated,guess who inherits the remaining work load?

Increasingly, companies are turning to technology to resolveclaim load and adjuster support issues. The anywhere/ anytimecapabilities of the Internet have allowed companies to make bothinsureds and agents more integral parts of the claim process. Itprovides more complete information, more quickly to the adjuster,while keeping all involved parties informed of claim status.

Reporting of first notices of loss via the web now is possibleto increase the speed and accuracy of the claim-handling process.Online reporting allows insureds or agents to enter first noticesof loss around the clock, while requiring nothing more than anInternet connection and appropriate access.

A good FNOL reporting system provides error detection,eligibility verification, and transfer of information. Studies haveshown that the sooner the insurer receives notice of the loss andstarts working the claim, the lower the claim costs. Additionally,adjusters are assured higher quality and more complete claiminformation, often eliminating phone calls to insureds or agents toobtain missing information.

Modern-day claim administration systems allow insurers toautomate processes to minimize the time required for adequateanalysis and decision-making. Some newer systems use rules definedby insurers to determine whether claims qualify for automatedprocessing, possibly bypassing adjusters altogether. When claims doneed to be routed to adjusters, automated reminders can be createdto assist in meeting regulatory deadlines and contractrequirements. Adjusters' time can be better spent, and additionalclaim costs, such as penalties for late claim handling, frequentlycan be avoided.

In addition, proficient and fair handling of claims leavesinsureds more satisfied with their insurers' performance and moreapt to continue doing business for years to come.

The increase in electronic reporting of not only initialnotices, but medical reports and bills, is another boon to claimadjusters, and one that can reduce the amount of clerical workcurrently being thrust upon them. Claim adjusters can review entiremedical reports via document viewers, rather than spending time andeffort entering the data. The ability to automatically generaterequired regulatory forms and documents is an invaluable tool withthe ability to improve insurers' compliance.

When technologies are used effectively, there is little argumentregarding the cost benefits. Adjusters' time is freed up to focuson more complex claims with issues requiring adjuster expertise:compensability, multiple responsible parties, or litigation.

There is no question that claim adjusters play a critical rolein keeping insurers' claim losses in check. Insurers are realizingthat investing in the creation of a work environment conducive toadjuster learning, efficiency, and satisfaction has a real impacton retaining valuable talent while effectively managing the totalcosts of claims.

Creating a superior work environment that provides continuoustraining opportunities and implementation of modern and effectivetechnologies will not, necessarily, make the company the place tobe for adjusters. One thing is certain, however: It will give theinsurer or TPA a clear advantage in the battle to recruit andretain high-quality adjuster talent.

Leigh Brazee adjusted claims for 11 years prior to becominga business analyst with InsureWorx.