The Value of Intelligence

Phil Gusman, an associate editor of our companion publication, National Underwriter, Property & Casualty, writes in the Feb. 16, 2009, issue of the "High Anxiety" facing top-notch claim adjusters. Gusman speaks of a "poor image" that is "hindering the best and brightest for claim jobs." He quotes our co-columnist Kevin Quinley, who said "There is a sense that claims is the orphaned stepchild of the insurance industry — the Rodney Dangerfield of the insurance industry: They don't get no respect."

"Beyond individual company recruitment, training, and development programs, some experts point to the need for concerted industry-wide efforts to devise ways to make claims a more attractive field for current and new talent," Gusman writes.

Many of the insurers' most qualified adjusters are either leaving for better jobs or retiring, if able. Right now, however, if a qualified multi-line adjuster has a job, then he or she had better keep it. Joining the unemployment line is not the best current move.

Gusman continues, citing Quinley, "Adding to the problem of a talent exodus, the industry is experiencing trouble recruiting successors who can replace the expertise and the judgment that is walking out the door." It's clear that the current cadre of claim representatives and clerical personnel who pass for modern-day adjusters may not be able to handle the complicated claims. But how should we expect them to when their only experience has been handling claims involving stolen bicycles, scorched kitchen cabinets, or routine fender-benders where the claimants are represented by Sleazebag Shyster & Shrewd, and the adjuster has to beg a supervisor for a little more authority than a Colossus computer that says what the claim is worth?

Legacy of Ashes

Where have I recently heard all of this before? After my national credibility-gauge was blown apart by reading a detailed biography of J. Edgar Hoover, I took up the history of the CIA in Tim Weiner's bestseller, Legacy of Ashes (Anchor Books Division of Random House, Inc.). Weiner, a New York Times reporter, starts with Wild Bill Donovan and the Office of Strategic Services and chronicles the misadventures of the CIA on a president-by-president basis. The CIA came into being under President Truman. It totally blew any intelligence operations during the Korean War; was secretive with Eisenhower; acted stupidly about Cuba and the Bay of Pigs fiasco, perhaps leading to JFK's assassination while RFK ran the covert operations. The agency had a bit of success for Johnson in Laos but failed miserably in Vietnam, was distrusted by Nixon and Ford, and had no idea whatsoever that the Ayatollah Khomeini was a threat to Carter in Iran. But the rest of us knew. I thought when CNN was still interviewing Khomeini in Paris that somebody should have sent in our "James Bond" to shoot the rascal. But, alas, we had no Bonds. We didn't even have anyone who spoke Farsi or Arabic or any other language when our covert operators were supposed to keep Presidents informed.

The CIA loved its little puppet generals throughout Latin America during Reagan's administration. A bright moment arrived when George H. W. Bush became President, as he had once been head of the CIA and understood how it worked. The boys in the band let him down though. Saddam's army was sitting on the Kuwait border. The CIA's best analysis was that he would not attack. That conclusion was relayed to Bush later on the same morning that Saddam was already halfway through Kuwait. How's that for intelligence? The CIA had no spies in Russia, and it did not know that the Soviet Union was about to collapse. There were two moles in the CIA that informed the KGB of every Russian agent the CIA had recruited; they were all arrested and executed, and the FBI didn't identify the moles until years later.

Ah, but it only got worse from there. Bill Clinton totally ignored the CIA. If they sent him any information, then it was stuff he'd already heard on CNN. Most of the intelligence briefings were little more than a rehash of what was already in the newspapers or on television. When the Air Force asked for a solid Serbian target during the Bosnian War, the CIA consulted tourist maps and pinpointed what they said was a top Serbian military target. We ended up bombing the Chinese Embassy. Things went downhill after that. In one little adventure, the Guatemalan secret service bugged the American ambassador's bedroom. She had a secretary, a young woman named Murphy. The bug detected some lovey-dovey cooing to "Murphy." The CIA obtained a copy of the recording and rushed it to the President to declare that his lady ambassador was a lesbian. The good ambassador, it turned out, was very happily married and adored her pet poodle, Murphy.

George Tenet became the CIA director in 1997. He quite correctly identified al Qaeda and Osama bin Laden as America's greatest threat. The CIA was even tracking bin Laden. Despite the ability of drones to fire rockets, however, Tenet doubted the intelligence information and wouldn't pull the trigger. Prior to Sept. 11, 2001, the CIA warned that America would be attacked, but it did not know when, where, how, or by whom. We tried to find bin Laden in Afghanistan, a useless endeavor. Instead, the CIA believed that Iraq had weapons of mass destruction. Wrong again. Wrong war. Well, who spoke Arabic? Apparently the man "W" sent to Baghdad as our ambassador did not.

In the end, the CIA was falling apart. The book stops in 2008, just before the election of Senator Obama, who has since appointed Leon Panetta as the new director. But for the CIA, it may be too late. All of its experienced senior officers who were unable to produce realistic intelligence have been fired, retired, or fled for less stressful, better paying jobs. Many of those jobs were with private civilian intelligence companies like Total Intelligence Solutions. Large military contractors, including Lockheed Martin, Booz Allen Hamilton, and the newly reorganized Blackwater — now called Xe — may take up the intelligence service contracts that the CIA once provided but now lacks the ability to fulfill. Eight and a half years after the terrorist attacks on Sept. 11, we still don't have bin Laden. We're also losing Pakistan as a reliable ally.

Message for Adjusters

"If we want American fortunes to prosper in the future, we will need the best intelligence," Tim Weiner concludes. "Teaching a new generation how to know the enemy is the place to begin." We in the claim business might paraphrase that: If we want our insurance company employers to prosper in the future, then they will need the best adjusters possible. Teaching a new generation how to know the coverage, liability, and damage factors of an insurable loss is the place to begin.

Hang in there, guys. If you are in the claim department of a large P&C insurer, then make yourself a true expert. Become qualified for the 21st century. Learn a new language; stay current on the new coverages. Take the IIA and CPCU or other college and graduate school-level courses to make yourself invaluable to your employer. If your position appears dead-end — an endless number of routine rear-ender auto claims or slip-and-falls or employee injuries — then consider where your employer is headed. Is there a future for a bright, aggressive claim adjuster? Or is the role little more than that of a clerk? The CIA had thousands of clerks — they read newspapers all day, looking for "intelligence." They're probably sitting there today, out on the Beltway in McLean, reading endless newspapers, seeking "intelligence." Undoubtedly, the government pays them accordingly. Lately the CIA has represented about one percent of the total military budget.

Phil Gusman, in preparing his article about the high-stress claim industry, interviewed a number of insurance company executives. Most "mentioned proper training and education programs as a key to attracting and keeping talent." One commented that colleges are starting to offer "courses in claims for degrees with insurance specialization." That isn't exactly news. Colleges and universities have been offering insurance courses for decades. In 1976, I was on a panel composed of insurance industry representatives responsible for recommending the criteria for insurance courses at the Miami-Dade College. Georgia, Florida, and Illinois universities had major insurance departments with top-notch professors, as did many other state and private universities.

Ever more frequently, I note the word "education" alongside the word "training." This column has often pointed out that training teaches how — in regard to claim handling, for example — while education teaches "why." Both are necessary. The CIA knew why intelligence was needed, but it didn't know how to perform the espionage necessary to produce it. It's the reverse in our industry. Computers can be programmed to do the "how." The money and the future lies in knowing why a loss occurred and why coverage does or does not apply. The future may not be with the company that currently employs you; it may be with a different insurer, or as an independent contractor.