Is It Time to Rename the Claims Department?

Cache. Some believe that a negative connotation attaches to "claims department" and "claims" people. Have you have ever filed a homeowners or auto insurance claim? Did you feel good vibes when receiving a call from the "claims adjuster"? Believe it or not, some folks in our field are sheepish to admit they are in the claims industry. 

Natural job title evolution. Once upon a time, corporations had insurance departments and insurance managers. Today, these titles have morphed into risk management departments and risk managers. In olden times, companies had personnel departments. More often, these are now human resource departments. Remember management information services (MIS) departments? These are now information technology (IT) departments.

Likewise, maybe it is time for the title of "claims adjuster" to evolve to reflect modern demands and responsibilities. Perhaps a different label more accurately reflects the realities of the profession and as a side benefit could attract young talent to the field and promote good vibes.

In this light, "resolution management" could be a better description of the industry served by this magazine. The reality is that today's claim professionals resolve insurance-related disputes. From auto accidents to product liability to class actions, these professionals are truly resolution managers. So, why do we not call them that?

One benefit is a positive vibe without the "stigma" of claims adjusting. "Resolution management" connotes a professional field that disposes of disputes quickly, efficiently and fairly. It sheds negative stereotypes of claims management—a profession perceived by some as following scripts that erect roadblocks to financial recovery. While the stereotype is wrong, some feel it is time to shift public perceptions.

Many people "fall into" the claims profession. Just poll any group of adjusters by asking, "How many of you planned early on to go into insurance claims adjusting as a profession?" (Do you hear those crickets chirping?) Many think the time is now to create the resolution management" profession. Recent studies have shown a recurring concern of industry leaders: the scarcity of young talent entering the profession. A terminology makeover might breathe new energy into the field.

Meet the Resistance
Yet, challenges loom. Historical inertia is one roadblock. Insurers are financial institutions, sometimes conservative and wedded to past ways of doing business. Calling loss adjusting the "claims department" has institutional heft. Some companies may resist, not just because of the hassle of ordering new business cards and signage, but also because they feel comfortable with it the Claims label and think it makes sense.

Others may object to the message they perceive that resolution management signals. Insurers fight fraud and financial leakage. "Resolution management" could imply that cases will be settled. While this is often the case, inherent in the claims role and adjusting function is denying claims. We cannot sugarcoat this. We deny claims lacking merit. Adjusters contest claims that are exaggerated, whether because of histrionics or secondary gain factors. There may be legitimate reasons for these stances. In some cases, there may be no convincing showing of liability on the insured's part. In other instances, there may be no coverage under the policy. In yet other circumstances, the damages alleged may be exaggerated or unproven.

Adjusters need not apologize or gloss over this by draping the gossamer of "resolution management" over the process. In some cases, there may be no resolution. There may be a coverage denial.  There may be a liability denial.  There may be a claim denial. Litigation happens. Trials occur.

None of these actions—legitimate actions often—imply resolution. Calling it "resolution management" may sugarcoat what is occasionally, inherently, and sometimes necessarily a contentious and adversarial process. Calling it something that it is not to make it sound more alluring is like putting lipstick on a pig.

The "High-Cost Claim" Specialist
I once worked with a gruff reinsurance claims executive from New York City. My company ceded some of its primary layer risk to this huge reinsurer. When a claim's exposure reached the reinsured layer, he would insert himself into settlement negotiations, fly in from The Big Apple and appear at mediations. He often seized the reins of the negotiating process. His business card, brandished at such settings, displayed his title: "high-cost claim specialist."

Privately, my colleagues hooted and laughed. What a great message to send the plaintiff and opposing lawyer at mediation or a settlement conference! "I'm the high cost claim specialist!" We could imagine the plaintiff or plaintiff's counsel thinking, "Hmm. I suppose this claim must be a big dollar deal, likely with a hefty reserve. Surely, we wouldn't be here with this guy if this claim didn't involve significant sums. Maybe we should set our sights higher in terms of what we're looking for as a target settlement number."

The point is this: labels matter. Renaming the claims department a resolution management department may evoke objections that, while admittedly most claims do resolve, some do not and should not.

Another concern is one of cosmetics versus substance. We must probe the reasons why it is tough to attract and retain claims talent. Many worry about a claims "brain drain." Seasoned practitioners retire or leave, without seeing suitable successors upstream. Factors often cited as causes of the talent exodus are:

• Non-competitive pay.
• Lack of advancement opportunities.
• High caseloads and tough working conditions.
• Lack of recognition and low cache associated with the function.

If these factors are left unaddressed, then renaming claim departments "resolution management units" serves little purpose. The claim function is what it is. It confronts demands for money damages that people hope or expect will be paid by insurance. Semantic changes and new nomenclature address peripheral factors, not the essence of what often and unfortunately makes claims a challenging career choice for practitioners both young and old. 

My point is that merely renaming the claims department—reframing its mission as achieving managed resolutions—is by no means a panacea.

In Romeo and Juliet, Shakespeare's male protagonist repudiates his Montague name and asks, "What's in a name?" Many loss adjusting professionals might answer, "Many!" Others might say, "Not so much." Dialogue about the name can spur positive changes in the profession.