A Tale of Two Adjusters

What Do Adjusters Love?

Let's start by saying that commercial adjusting is not a nurturing business. Many of the job functions and environments are not what most of us would voluntarily choose in a career. However, there are some common aspects to the job that adjusters find appealing.

• Autonomy - Most independent adjusters work on a semi-autonomous basis with a stable of clients who provide them with losses to adjust. Decisions about where to go, when to come in, and who to see are up to the individual adjuster. In fact, some relish the autonomy so much that they are able to make room for a dual life. Clients, whether they are brokers, insurers, or insureds, develop a comfort level with a particular adjuster and often will follow him even if he changes firms.
• Substantial Earnings Potential – Adjusters normally bill by the hour and typically participate in the revenue they bring in, often in a manner similar to lawyers in a law firm. Adjusters with extensive experience and skills command higher billing rates because they are able to manage the recovery process quicker, better, and at a lower overall cost.
• Job Satisfaction – Most professional adjusters take great satisfaction in a job well done. To the crime and specie specialist adjuster who determines that the stolen Picasso was actually a fake, or the transit adjuster who rebuilt the freight-damaged tunnel boring machine in India with local resources, saving clients' money and getting insureds back in business quickly, the work provides warm feelings in their hearts.
• Ownership – Some firms are employee-owned. Like a home, ownership usually delivers more satisfaction than renting. Adjusters in employee-owned firms feel they have a voice in management, and a potential long-term reward for continued employment.

What Do Adjusters Hate?

Of course, it's not all roses. Management needs to be aware of — and anticipate dealing with — the potential downsides of the business for their employees.

• Travel - Losses rarely occur in a company's back yard. Clients who have built a long-term relationship with their adjusters may have a loss anywhere in the world, and expect their adjusters to be on-site quickly. Local support is certainly helpful, but adjusters are expected to manage the loss and recovery process until concluded – which can be weeks, months, or years later. Successful adjusters can sometimes become strangers to their own spouses and children.

Best management practices ensure that as a part of the recruiting process, adjusters are clear on the extent of travel required for the position. No glossing over here. Once hired, management needs to monitor employee travel, and work proactively to lessen its impact on the individual adjuster. Flight upgrades and a decent hotel ease some of the pain, and a family-friendly policy on extended assignments costs little but delivers big rewards. Companies can sometimes forget that they have informally hired a spouse as well as an adjuster.

• Long Hours – Large, remote, or catastrophic losses may require a series of 18-hour days. Unfortunately, there is little management can do to reduce adjusters' client commitments.

Best management practices for extended-hour assignments mean that management must be aware of adjusters' workloads, and discuss with each individual adjuster what help he needs to get the job done. Some adjusters are reluctant to ask for help for themselves, thinking that only they can do it right or that they don't want anyone else "messing" with their clients. This speaks to the need for open and honest dialogue to resolve these issues.

• Boom or Bust – Ours is a cyclical industry but with an underlying loss volume that is generally predictable. The problem is that catastrophic events such as an active hurricane or typhoon season, or an atypical earthquake or tsunami, can quickly cause available adjusting assignments to double, and firms and individual adjusters can find themselves overcommitted. Boom times coupled with over-commitment creates an issue of reputation for the industry, and often costs individual adjusters and their firms valuable clients.

Best management practices include monitoring both adjuster and firm commitments to individual clients, and to work with them to complete contingency planning for best- and worst-case scenarios.

• Pressure to Produce - Some adjusters have great technical skills, others have excellent business development and management skills, and a lucky few have both. But at the end of the day, each adjuster is evaluated and paid based on their ultimate contributions. Management must recognize the skill set each adjuster brings to the table, and provide help for the thin spots. Adjusters with strong business development skills may find themselves overcommitted; those with exceptional technical skills may suffer with a great reputation but low revenue.

A best management practice is to monitor the business managers. Consider a plan to appropriately compensate the manager, while at the same time moving some of that business to the technicians. Seminars and other group environments are a good way to allow a technical adjuster to shine in a less-threatening situation than one-on-one calling. An honest marketing program can also deliver clients who appreciate a firm's commitment in addition to that of its individual adjusters.

Lessons from Sam and Dave

So what exactly happened to Sam and Dave?

Well, Sam thrived at his new firm because they provided the autonomy he desperately wanted but didn't have at his old company. Free to manage his own business, Sam built new client relationships and began to mentor several junior adjusters to help him manage his portfolio of clients. Dave, on the other hand, while being very technically proficient, discovered that he was not the self-starter he believed he was, and had a very difficult time in developing client relationships. In order to provide Dave with additional billable hours, he was assigned to a team working catastrophe hurricane claims in Central America. He was gone 45 days from his wife and children, and resigned soon after his return from that assignment.

The interesting thing about Sam was that his new management really didn't do anything unique for him; it was simply that his personality and work ethic fit with his new company. However, Dave's short tenure serves as a cautionary tale to management. Dave was doing well at his previous company and had succumbed to the lure of greater earnings. His new management assumed that because he worked large claims from well-known companies, he could deliver a substantial client base. This did not happen. In retrospect, neither party asked the difficult questions of one another.

Well, so much for Sam and Dave, but what can be learned from all of this?

First, while global independent loss adjusting is a unique business calling for unique skills, the basic rules of human resource management apply just as they do everywhere else. Ask the important questions as a part of the hiring process, not simply the ones to which you know the answers. Have a deep dialogue rather than a charm call.

Next, stay on top of what's happening with your adjusters, and don't assume that no noise is good noise. Low billable hours are an obvious sign of a problem, but high hours can be as well. Learn the signs of over-commitment, and deal with it earlier rather than later. You'll save clients and adjusters.

Be certain that younger adjusters have a clear job development plan, and that the plan is followed and reviewed regularly. Unlike the United Kingdom where there is a governing body and progression examinations specific to loss adjusters, the U.S. adjuster training program is typically whatever management makes it. We all recognize that ours is a business with thin margins, and we would all like to have a higher ratio of managers to adjusters, but that likely will not happen. This being the case, as managers we have a heavy responsibility to maintain a focus on human as well as business development for our organizations.

Vernon F. Chalfant is president and chief executive officer for McLarens Young International. He may be reached at (770) 729-5460, Vern.Chalfant@mclarensyoung.com, www.mclarensyoung.com.