"To me, a claims man is a surgeon. That desk is an operating table. And those pencils are scalpels and bone chisels. And those papers are not just forms and statistics and claims for compensation, they're alive, they're packed with drama, with twisted hopes and crooked dreams. A claims man, Walter, is a doctor and a bloodhound...and a cop and a judge and a jury and a father confessor all in one.” ~Barton Keyes, Double Indemnity (1944)
Through the prism of history, adjusting of insurance claims has been a skill, some of which can be learned and some of which is innate. It is for this very reason that not everyone is cut out for the trade. Sadly, much of the profession has been “dumbed down” over the years, with cross sections of the job dissected and turned into processing roles. While this can have a positive impact on productivity, it adversely affects true claims quality.
Handling claims and understanding claims are two very different things. While virtually anyone can answer a series of questions and generate an outcome, comprehending the outcome is what separates the ordinary from extraordinary.
Liability is a great example to illustrate the fundamental challenges posed in claims handling. A common complaint among claims executives is that liability is assessed at either zero or 100 percent, when in fact most multi-party accidents involve shared liability.
According to Jury Verdict Research, a national organization that tracks such data, rear end auto accidents accounted for only 45 percent of auto cases adjudicated, with the remainder comprised of intersection collisions, lane changes, chain reactions, and parking lot scenarios. In other words, a lot of claims involved shared liability.
So how is it that juries, comprised of ordinary citizens with a lack of liability understanding can far outperform claims organizations where an estimated 15 percent of all claims are closed with missed subrogation opportunities?
Simply put, there is not a consistent focus on the fundamental execution of basic blocking and tackling skills. After all, isn’t that precisely what a liability assessment is? It, along with damages, serve as the foundation upon which claims outcomes are built.
While this concept seems so simple, it often is overlooked. Liability, however, isn’t the only aspect of claims where there are significant opportunities. For instance, are claims personnel asking the right questions at first notice of loss (FNOL)? Are they canvassing for witnesses and conducting scene investigations? Other considerations include: locating alternative parts for damaged vehicles, investigating fraud indicators, and identifying pre-existing injuries to refute new allegations. The list goes on.
As discussed in Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary, insurance carriers have become hamstrung by a number of challenges. From contacts and inspections to negotiation and settlement, there is no shortage of executables. To be able to achieve goals, however, one must first have in place the foundation for success.
Building a Foundation
Comprising this foundation are three key elements; people, processes, and technology. While the latter two are important, nothing can replace hiring the best and brightest while providing them with a path for long-term success.
Often, this is not the model being followed because of the prevailing thought that ‘just about anyone can fill the seat of a claims adjuster.’ However, as Barton Keyes astutely points out in the insurance claims thriller Double Indemnity, ‘claims is not a desk job.’ It is a bona fide skill, where success comes from keen intuition and following the occasional hunch. Hiring into this skill is critical to the ultimate outcome of any insurance organization.
Identifying the skills for an organization has to start at the top, as the acquired talent will ultimately define the corporate culture. By recognizing the difference between “A” players, “B” players and “C” players, leaders can build an organization destined for success.
The key is to first recognize that there is a talent gap between the top and bottom performers, with the latter, or C players, comprising about 20 percent of a typical organization yet being the cause of 80 percent of administrative and technical problems. Simply put, if your left tackle is weak, then your quarterback will consistently get sacked. Replacing the tackle not only protects your biggest asset but also creates a solid line of defense against potential problems.
Unlike football, you don’t always need to have eleven men on the field. With the right people in place, it is possible to do more with less, as there is a direct correlation between talent, productivity, and quality output. These economies of quality are precisely what can be used to gain a competitive advantage in an increasingly difficult marketplace.
Christopher Tidball is a 20-year industry veteran and frequent speaker at claims events, including the upcoming Combined Claims Conference in Long Beach, Calif.