Editor's Note: This is the fifth article in a six-part series on adjuster ethics.
Does the sameness of claim after 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 suddenly stopped? What if the collision was road rage, or one of the cars was “driverless”?
Each claim is unique
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 adjuster. No two individuals are alike, and the same is true of claim adjustments.
The ethical issue of indemnification must occur. It's 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 answer to the question of what pain is worth.
Taking the time
“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.
The team concept is becoming more popular in the insurance industry. (Photo: Shutterstock)
Ethical supervision and “the team”
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 to management.
Creativity & self-motivation?
“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 11 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.
Part 3: The role of indemnity in claims
Part 4: The ethics of ingenutiy