Life, Lucre, and Laptops

has brought on."

Insurer staff adjusters are being furnished cell phones, laptops, and home Internet lines in record numbers. Nearly 69 percent said that they have company-paid cell phones, 57 percent have laptop computers, and 23 percent have Internet lines at home that allow them to remain plugged into the office 24 hours a day.

This year, we have received a lot of comments regarding the effect that increased workloads are having on adjuster efficiency. "Staffing reductions to meet expense ratio expectations increase the number of hours per week and negatively affect customer service," commented the manager of a claim department in Texas.

"Because of our company's demands to keep administrative expenses within limits, the staff workload has increased," said a manager from Oklahoma. "However, it is always the claim manager who ends up doing the extra, and cleaning up the mess. In the long run, the activity usually costs more than the increased admin. would have cost in the first place."

"Work-load expectations, typically, are too high to meet service standards, combined with investigation expectations," said a manager from Michigan.

"All companies are trying to do more with less," a manager from Florida said. "It would be good if we had enough time to do the quality job on adjusting that we would like to do."

The manager of one insurer claim department outlined some of the issues that arise when adjusters are penned up in their cubicles and kept out of the field. "Downsizing staff and working electronic claim files without ever leaving the office is causing indemnity costs to skyrocket, because no one from the company is verifying what we are paying for," she said. "Production-driven claims is a winner for the customers, because they can get paid pretty much anything that they want very quickly."

The Independent Life

Independents also expressed concerns about the quality of the work that they are able to do. "Insurance companies want to put flat-fee or sliding-scale schedules on more and more types of assignments," said the 54-year-old owner of an independent adjusting firm. "It becomes confusing, cumbersome, and, sometimes, just plain silly to juggle all the fee schedules. Some schedules are okay; many are penurious on the smaller losses, negatively affecting income.

"The standard of good work at a fair price no longer holds," he continued. "It is now cheap work, and if well done, that is okay too."

"The Walmartization of our industry with respect to large carriers' dealing with independent adjusters will dilute the quality of the claim profession even further," warned a 29-year industry veteran.

"We are grossly underpaid for the amount of hours and energy required, and the stress of the job," said an independent adjuster based in Connecticut. "Clients want reports faster than ever and do not expect any less of an investigation. The claims cannot be handled accurately for the amount of time in which the reports are due."

Technology has affected the way that independent adjusters do their jobs, as well. "Companies require more technology and demand lower fees in return," said a 28-year industry veteran, who is now the president of an independent firm. "Technology is expensive. Lower fees do not pay for the technology, especially with the concurrent increase in productivity to offset costs."

According to our survey results, independent adjusters are making do with less technology. Since last year, the use of company-paid cell phones has declined by 11 percent, and the issuance of laptop computers is down 2 percent. Independents have a greater presence online, however, with a 7 percent rise in the number whose companies are picking up the tab for home access to the Internet.

On the other hand, some independents are embracing new technology. As carriers try to save money on outside adjusting services, independents, who are paid by assignment, find that they can increase the number of files that they handle. "We have more of a claim load," said the president of an independent firm in Chicago, "but it is offset by technology. Technology is the only way to stay profitable."

Independents say that they are continuing to see a decrease in the calls for their services. "There has been a decline in business over the last two years," reported the owner of an independent firm in Utah. "More task assignment, more flat-rate business."

As one 45-year old independent adjuster commented, "There has been an overall down-slide in claims in the last five years. Claim volume is down, which directly affects my salary. When work is down, so is my salary."

Independents must be able to weather the lean times, advised the owner of an independent firm in northwest California. "Workload is feast or famine. Pay corresponds to workload," he said. "You must get used to the extremes."

"Rates for adjuster services are going down, as required by insurance companies," noted a 22-year industry veteran who owns an independent firm. "Therefore, adjusters' compensation and company profits are going down and, as a result, some of the good adjusters are leaving the industry."

We heard from one independent adjuster who had returned to corporate life. "I was an independent adjuster for 11 years prior to becoming a staff resident," he said. "I have less management responsibilities now, but more claim processing. Compensation is less now, but outweighs the negative aspects of being an independent with a family-owned business."

In an interesting twist, one independent said that having fewer claims actually has increased gross profits at his company. "Direct repair and recent issues on water damage claims' going unreported by policyholders for fear of losing coverage has affected the volume of claims received," he said. "However, our other cases have increased our billing, from having more time to investigate."

An independent adjuster in Georgia had a similar experience to relate. "Going independent has allowed me a smaller case load," he said. "Subsequently, my work product has improved to the benefit of me and my clients. Everyone has won: claimant, client, and adjuster."

Another issue that has independents concerned is insurance carriers' use of fee auditing. "A recent development is outside independent fee audits, which are completely subjective and totally unfair," said the owner of an independent adjusting firm in New Jersey. "I think this is a very disturbing trend, as it creates an adversarial relationship among the parties."

As the adjuster from Connecticut summed up, "We are underpaid, and now clients are using auditing companies on our invoices, as well. It's a joke."

Overtime Pay

Company claim staff had plenty to say about the recent DOL ruling on the exempt status of adjusters (for more on this issue, see page 42). The direct result of the ruling has been to increase adjusters' work loads, said a company claim manager from Seattle.

"Insurance companies are overloading the adjusters," agreed an adjuster with 18 years in the industry. "Overtime is not uniform in the industry. Some carriers pay overtime, and others turn their heads."

"As time goes by, more and more clerical work is being transferred to the adjusters by way of the laptop computer," said an adjuster who has worked in the field for 27 years. "In essence, the industry is getting rid of non-exempt employees wherever possible and transferring that work load to exempt employees who don't have to be paid overtime."

Pay, of course, is the ostensible reason for our annual survey. For the first time since 1994, overall salaries for independents and company adjusters are very close. Last year's average salary for company claim staff was $109,033, while independents were paid an average of $81,523, a difference of $27,510. This year, the gap between the two figures is only $1,437.

Although there may be many economic reasons for the change, it must be noted that only 1 percent of the respondents to the 2003 survey were employed as adjusters. This year, 30 percent of the insurer staff sample was sent in by adjusters. Last year's random sample picked up an undue proportion of vice presidents (84 percent), while this year, only 24 percent of the respondents have attained that rank.

The number of officers of independent firms also fell this year, while the percentage of adjusters responding rose from 3 to 11 percent. Among independents, salaries are up in all categories except officers. Adjusters show a $12,204 gain over last year's $43,023. Managers and supervisors also are up, $15,436 above last year's $78,950, while owners are making just a little over $2,000 more than last year. Presidential salaries have declined somewhat during the same period, from $106,413 to $99,045.

Company staff adjusters also posted pay raises, according to our survey data. In 2004, the average adjuster salary is $57,344, which compares favorably to last year's $48,000. Management did not fare so well, however, with manager and supervisor salaries declining from $88,000 to $77,193, and vice presidents' losing about $4,000 on average.

Although it might have been expected that fewer benefits would be offered to claim adjusters during these problematic economic times, our survey shows a relatively small net loss among insurer staff. Fewer are being offered employee stock purchase plans and short-term disability insurance, but more are receiving life, medical, dental, and long-term disability insurance. As a company claim manger with 26 years of claim experience pointed out, "We are typical for company staff adjusters: benefit rich, salary poor."

In contrast, independents have seen their benefits cut in the last year. Although they achieved a gain of half of a percentage point in their access to employee stock plans, the number having company-sponsored life insurance has gone down by 13 percent. Smaller losses were posted in the number being offered medical, dental, and short-term disability insurance, down 1 percent, 5.5 percent, and 5 percent, respectively.

The owner of an independent firm in Washington commented on the need to reduce his employees' benefits. "As claim numbers have dropped for independent adjusters over the last two years, benefits also are being dropped," he said. "Although staff, for the most part, understand the situation, it still is difficult to take benefits from long-time, devoted employees."

Appreciation

Claim staff revisited the issue of respect. Many feel that their perceived value to their companies is undermined by the fact that they are responsible for outgoing payments, rather than incoming premiums. "Claim professionals are not compensated as well as sales staff, because they may not be generating income," said the claim manager at a brokerage firm. "But," she continued, "they are expected to be as knowledgeable or more knowledgeable than sales staff."

"People in the claim profession are still underpaid," weighed in the owner of an independent firm in Puerto Rico, who has 39 years of experience in the field. "Most of the credit goes to production and underwriting. They don't realize that we are the ones protecting the company's interests, especially in the difficult times of the present."

More than money is at stake, pointed out a broker's claim handler from Washington. "Historically, claim departments were viewed as expenses," she pointed out. "Therefore, perks were not something employers handed out to claim personnel.

"That hasn't changed," she continued. "Parking and incentives for doing a good job on a claim would be wonderful. Producers in our company receive free parking and prizes, so, at times, it seems one-sided."

A manager from Georgia fears that this could affect the number of potential candidates for the claim industry. "Compensation is low for entry-level claim employees," he said. "We are losing candidates to underwriting and risk management positions."

As another put it," Marketing still is the place to be if you are looking only at the money."

Not all of our respondents are dissatisfied, however. A 38-year industry veteran, who currently holds the title of vice president, said that, although his salary should be 10 to 20 percent higher, working conditions within his company are good. "I have excellent assistance, and my workload is less than the average claim manager working for other companies," he said. "I am very pleased with my employment situation."

"This is by far the best company that I have worked for, as far as compensation and recognition for work done," said a 50-year old claim manager.

Another lucky adjuster told us, "Excellent employer and workplace atmosphere." What more could anyone ask?