The changing or developing role of the loss adjuster from a marketing perspective

First and foremost, the client base of loss adjusters, which mainly comprises insurance companies, has changed dramatically. Back in the 1970s a typical client base would include: The Royal; Sun Alliance; Pearl; Phoenix; Guardian; Royal Exchange; General Accident; Commercial Union; London & Edinburgh; Norwich Union; Municipal Mutual and others.

Nowadays however, a typical insurer client base might include:

ACE; Allianz; Aviva; AXA; Chartis; Chubb; Generali; Mitsui; RSA; QBE; and Zurich.

This highlights the fact that the arrival of foreign capital, from as far afield as the USA, Bermuda, Japan, Australia and Continental Europe, has seen many household names merge or disappear altogether.  

While Aviva and RSA are UK companies, the only UK insurers to have survived intact are arguably NFU Mutual, Cooperative Insurance Society and Ecclesiastical Insurance Group – which perhaps tells us about the benefits of mutuality or at least being owned by a charitable institution.

Coupled with this arrival of foreign capital has been the convergence of the market and a possible reduction in the absolute number of insurers; today’s insurers are, however, stronger than their predecessors.

This increased strength and sophistication of the client base has led to a rise in the role of the ‘procurement’ or ‘supplier’ manager. Panel arrangements have forced adjusters to look more closely at their cost base and business models and have, perhaps uncomfortably at times, driven adjusters to make efficiencies within their firms.

At the same time insurers have no longer been prepared to pay for a qualified chartered loss adjuster to deal with a claim, unless that level of skill set adds value.

In other words, qualified adjusters were previously handling claims that could equally have been dealt with by less experienced, and cheaper, colleagues.

This increased role segmentation has led to significant movement around the claims market and many adjusters turning their hands to claims preparation (of which more later).

As our client base has changed, so the loss adjusting community has undergone massive upheaval. Some 30 years ago the market included names such as Ellis & Buckle, Howell & Brooks, Robins Davies and Little, Toplis & Harding, Trundle Heap & Baker, Ormond Jones, Thomas Howell & Co, McLaren Dick & Co, Selfe & Co, Sharpe &Co, William Penney & Co and Pycraft & Arnold.

As far as I am aware, only the names Cunninghams, Robins and McLarens have survived – and the entities that they represent today are unrecognisable from what they were 30 years ago.

So, what else has changed?

One of the major areas of growth for chartered loss adjusters in recent years has perhaps been claims preparation work on behalf of policyholders. This was formerly the preserve of traditional assessing companies; however, following the changes within the claims market, many members of CILA have successfully made the transition.

Additionally, outward portability has enabled adjusters to take the CILA qualification into previously untouched mainly claims related areas.

Regulation has arisen in recent years and while I don’t think that it has really changed the roleof the adjuster, it has required adjusters to become much more disciplined at recording and keeping records.

Although firms of chartered loss adjusters are not directly regulated, the insurers for whom they act are. To quote Angus Tucker, they are indirectly regulated. On the other hand, claims preparation companies are directly regulated and must make regular returns to the FSA.

Equally, ‘Treating Customers Fairly’ has been a hot topic, but I’d like to think that TCF is really nothing new for the adjusting community – it simply articulates what has always been good service and good behaviour.

Role of the loss adjuster

I wonder whether the term ‘loss adjuster’ is really representative of the work undertaken, particularly in the household claims market. With the development of contractor networks and the claims fulfilment option perhaps the title claims manager or even project manager would more accurately describe the function.

And while on the topic of supplier networks, I would like to make a couple of observations:

• Firstly, does dealing with claims under the network or fulfilment route make it harder for the adjuster to evidence the value he or she brings to the claims event, other than as a network manager?
• Secondly, it is a truism that the first site visit is critical to getting the claim off on the right footing. That first site visit is now often undertaken by someone other than the adjuster, and I am thinking here of building inspectors .This gives them, rather than the adjuster, the opportunity of evidencing their value.

Although the adjusting role is now much more segmented, this is probably sensible and in line with the mantra of getting the right person with the right skills on the right job at the right time.

 I also suspect that there are now fewer general adjusters handling both domestic and commercial claims. Again, this is probably a natural development.

Career path

The normal route for progression used to be to move from an insurance company, usually the claims department, to a firm of adjusters. It is arguable that this route has reversed – there are several examples of adjusters who have moved to insurers for career progression.

Outward portability is certainly a factor in this change, but perhaps insurers have altered their perception of the importance of the claims function within their own organisations. And remuneration packages have improved dramatically.

Technology

Long market reports used to be produced on a Roneo machine and changes were a nightmare. The thought of an irate secretary complaining about last minute corrections encouraged accurate report writing and engendered a culture of getting it right first time, something we would welcome today.

Most of us now could not operate without a mobile phone, email, Blackberry, etc. The whole communications environment has exploded and ‘instant’ is now the order of the day!

While we tend to complain about technology, we shouldn’t overlook the very tangible benefits it delivers in terms of speed, connectivity and information exchange, all vital in a modern society. It will continue to develop and I think the connectivity between insurers, their customers and adjusters will become even closer.

Management Information

The insurance industry is data driven and data hungry and adjusters have access to vast amounts of data, but I wonder whether this opportunity is being maximised. Are adjusters helping their clients interpret the data, and as importantly, are they being remunerated for that service?

Drawing together some themes as to where the changes have occurred, I thought it might be interesting to look at the many different claim scenarios where adjusters are involved. Arguably some of them are not traditional adjusting and that is a challenge for the CILA.

The one sector I want to highlight is household, an area that has undergone a big transition and one where loss adjusting, in its traditional sense, probably does not apply to the work undertaken.

The workflow falls into four areas:

1. First Notification of Loss
2. Validation
3. Fulfilment
4. Production of management information to evidence performance.

Some insurers may buy all four services, others may only buy two; or they might buy two from one firm and two from another. What they do does not matter. What is important is that the adjusting firms which have grasped these changes have a great opportunity going forward.

Don’t regard the household market as the poor relation to the commercial market: it’s just very different and requires different skill sets.

Some things haven’t changed

Many years ago there was an article in an American insurance magazine which described a good adjuster as:

‘Someone with a ready smile, a glad handshake, a good suit, good cigars, good brandy and good stories but also an intimate knowledge of good and evil in all its different forms.’

My interpretation is that a good loss adjuster should be amiable, approachable, not pompous, not a ‘show off’ about technical knowledge yet someone who can spot fraud or a ‘wrong-un when confronted with it, and have the tenacity to investigate and report faithfully and accurately.

I don’t think that characteristic has changed, nor do I expect it to in the years ahead.

Other features of the role that haven’t changed, in my opinion, are the absolute requirement for trust and integrity, with a good reputation being the result. These are absolutely critical – insurers are entrusting the adjuster to deal with their customers fairly and so is the policyholder. This is especially relevant under delegated authority schemes.

In summary

·         Entry of international insurers and capital into the insurance company market

·         Emergence of  panel arrangements via the procurement function

·         Changes in the ownership and structure of firms of loss adjusters

·         Segmentation of the role

·         Qualified Adjusters using their qualifications and skills in other areas of the claims market

·         Regulation  and Treating the Customer Fairly

·         Supplier Networks and Claims Fulfilment.

·         Career paths

·         Technology and Management Information

·         And last but not least, the continuing requirement for trust and integrity

The Future

So, what’s around the corner?

The Legal Services Act 2007 is likely to be passed by the Government later this or sometime next year.

Using the term ‘Alternative Business Structures’, the Act permits external investment in legal firms, leading to comments about the big supermarkets setting up their own law firms.

Of possible interest to the adjusting community is that the Act will permit greater cross selling of professional services, so it’s conceivable that adjusters will enter into more joint ventures with lawyers or even merge, take or be taken over.

Undoubtedly, if the Act is passed we should expect a change in the financial services landscape

My final point is that adjusters see at first hand where insurance policies work and where they fall short. Without wishing to tread on the toes of insurers, brokers or risk managers, I anticipate that adjusters will become increasingly involved in wording reviews and the work currently being undertaken by the Business Interruption Specialist Interest Group is a good example of that.

CILA

In order for the Institute to succeed it must be relevant and it must appeal to a wide range of disparate groups. I think the creation of the various Specialist Interest Groups is a step in the right direction and I encourage the Institute to maintain the momentum and to constantly review the suite of services it provides to its members and also to deliver value for money.

Will adjusting survive?

I’m pretty confident about the future: I think we are more innovative than we sometimes give ourselves credit for – just look at how we have transformed the way we deliver services to the household market as an example.

So, in conclusion, yes, adjusting will survive provided:

1. We continue to adapt
2. We innovate
3. We are able to evidence the value we bring to claims related matters.