180 years of Post: Loss adjusting after the heydays (part one)

Loss adjuster shook up

180 years of Post: Loss adjusting after the heydays (part one)

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180 years of Post: Loss adjusting after the heydays (part one)

180 years of Post: Loss adjusting after the heydays (part one) (page 2)

180 years of Post: Loss adjusting after the heydays (part one) (page 3)

As Post celebrates its 180th anniversary, content director Jonathan Swift takes a look back at the highs and lows of loss adjusting through the late 1980s to the early 2000s

Participants and loss adjusting/claims businesses they worked with 1990 to 2000

  • Global Risk Solutions chair and director Jeffrey Bowman, Crawford
  • Scor global head of single risks claims management Jonathan Clark, Ellis & Buckle [1990 to 1997], Crawford [1997 to 2000]
  • Fitzgerald Consulting managing director Bev Fitzgerald, Thomas Howell Group [1990 to 1995], Cunningham Group [1995 to 1998], Miller Fisher [1998 to 2000]
  • Questgates managing director Chris Hall, McLarens
  • Former managing director, Echelon Claims Consultants Candy Holland, Sedgwick [Marsh]
  • Cognitive Risk founder and chairman Mark HuxleyDavies [1997 to 2000]
  • Chartered Institute of Loss Adjusters executive director Malcolm Hyde, Ellis & Buckle
  • Former Cunningham Lindsey UK CEO Phil McNeilageEllis & Buckle [1990 – 1998], Cunningham E&B [1998-2000]
  • Sedgwick International CEO Ian Muress, McLarens
  • Former Crawford & Company UK and Ireland CEO Clive Nicholls, GAB Robins
  • Former Cunningham UK marketing director Tony O’Reilly, Cunningham [1990 to 1998]
  • Advanta Global Services United Arab Emirates manager Jim Pittman, Ellis & Buckle [1990 to 1998], Cunningham E&B [1998 to 1999]
  • The late Arthur Rackstraw, Toplis & Harding, Ashworth Mairs, GAB Robins
  • Global Risk Solutions major and complex claims executive Mike Reeves, Thomas Howell Group [1990 to 1996], Crawford [1996 to 2000]
  • McLarens chief commercial officer Graham Smart, Thomas Howell Group [1990 to 1996], Crawford [1996 to 2000] GAB Robins [2000]
  • Sedgwick, Europe Middle East and Africa CEO Stewart Steel, Thomas Howell Group [1990 to 1996], Crawford [1996 to 2000]

There is a saying repeated by some loss adjusters of a certain vintage that beginning a career in the late 1980s or early 1990s was like turning up to a party as the glasses were being tidied away and washed. “The heady days were beginning to change,” as one commented.

Writing in Post as the previous decade came to close (7 September 1989) Richard Campion noted: “As we approach the 1990s the future of the loss adjusting profession seems uncertain. We can study the current situation and future prospects and still be quite unsure as to whether the next few years will be a time of prosperity or failure.”

So what changed – or was changing – to lead to this potentially gloomy forecast?

On a broader socio-political scale the end of 1980s turned up some big challenges for the country, let alone the insurance market as a consequence of an economic downturn that followed the Black Friday stock market crash on 19 October 1987.

For some loss adjusting groups, however, the initial impact of this was potentially masked by major domestic storms in 1987 (15 to 16 October) and 1990 (25 to 26 January); and internationally Hurricane Andrew (August 1992), but the dynamics were changing.

Only two decades earlier senior adjusters were often referred to as ‘Mister so and so’, according to someone I spoke to, “and their word was law”.

And they were also the ones getting all the most interesting claims as Mike Reeves, Global Risk Solutions major and complex claims executive, remembers: “I worked for an insurance company for a couple of years on a graduate scheme where you did six months underwriting, six months in claims, six months surveying; and I used to enjoy the claims piece.

“But every time I got something half decent or interesting it was handed on to these people called loss adjusters. In those days Thomas Howell Group and McLarens were the big two in Birmingham. So I got to know these guys, and the fact they got a company car, a credit card and that sort of stuff meant it did not take much persuading at that age to move across, so I joined Thomas Howell Group.”

Stewart Steel, Sedgwick, Europe Middle East and Africa CEO, had a similar experience: “I was at the Zurich Insurance in Portsmouth having joined there in September 1979. I was there about three years and ended up in claims. I was on a trainee management course and at the end you had this Hogwart’s Sorting Hat moment when I got sorted into claims.

“So I started in claims and did personal lines, a bit of motor fleet and then I went to the accident claims department and I handled some employers’ liability ones. I soon started to realise that we were sending the more interesting claims to loss adjusters, so I thought how do you become one of them? And as it happened THG in Portsmouth were hiring.”

However, as the 1980s became the 1990s, insurance companies were starting to scrutinise their expense ratios more and vendor management was becoming increasingly professional.

At the beginning of the 1990s there were many sizable loss adjusting businesses vying for trade from Robins, Davies & Little [GAB Robins from 1992] to Thomas Howell Group; from McLarens Dick & Company to Cunningham Hart; from Toplis & Harding to Miller Knight. By the end of the decade two North American head-quartered businesses stood out fueled by deeper pockets than their competitors, Cunningham Ellis & Buckle [now Sedgwick] and Crawford THG [now Crawford & Co] that still dominate the market domestically today. Others were absorbed into these businesses, sought new owners or simply faded away altogether. This is a deep dive into what happened to loss adjusting in the late 1980s, 1990s and early noughties, that shaped the market as it exists today.

Bev Fitzgerald Colin Hart
Bev Fitzgerald, left, succeeding Colin Hart as CILA president in 1998

Turning up to the party late

Phil McNeilage, former Cunningham Lindsey UK CEO, comments: “For well-organised businesses there was a lot of financial success [to be had in the 1980s]. The companies that delivered value in that era generally did well. But the 1990s presented challenges that sorted the wheat from the chaff. The strong from the weak. There was a change afoot but you cannot unpick the 1990s without [also looking at] the early 2000s. And if you think about the mergers of loss adjusters, it was dwarfed by the consolidation that insurers saw.

“Twenty insurer clients became eight in a four to five-year period. Some turned up to the party late, but there were other parties to be had. You just had to create them and have the wherewithal [to enjoy them]; and not everyone was going to have as good a time in the 1990s as they had in the 1980s. Because if they turned up ill-prepared and financially weak – they were going to have trouble.”

Ian Murres George Cuthbert
Ian Murres, right, succeeding George Cuthbert as McLarens Toplis CEO in 1998

Graham Smart, McLarens chief commercial officer, adds: “I joined Thomas Howell in 1991 as a trainee adjuster and the profession was a profession. There were far more companies and the whole business structures were entirely different. The way the businesses had evolved was essentially creating offices in every town and city. There was a very clear career progression; if you qualified [as a Chartered adjuster] you were soon offered a branch to manage and that was in town. And then you might progress to a city and then a bigger city.

“There was not the level of specialisation that there is today. You’d see a greater variety of claims starting with household at a relative low level and then you’d progress through the complexity and start to be introduced to modest commercial claims. Alongside that you might also be working as a bag carrier to one of the more technical people in the office. And that gave you a far broader outlook than today.

“If you were a competent adjuster in the provinces, you’d see everything from personal injury claims to third-party property and construction as well as, in my case in Liverpool, marine and cargo. But insurers were starting to look at professional services through more of a vendor management lens. And that started to drive some of the change [throughout the 1990s].”

HOLLAND, Candy, Echelon
Candy Holland

Candy Holland, former managing director of Echelon Claims Consultants, continues: “I joined Thomas Howell Selfe in 1980 and left in 1990 to join international broker Sedgwick as claims consultant. When I left someone said it was good timing and I was leaving a sinking ship. In the 1980s, every single adjuster at THS was expected to take and pass the associate Chartered Institute of Loss Adjusters qualification. I had a degree and always said ‘no more exams for me’. But it was made absolutely clear to me when I joined in 1980 that professional qualifications were essential for career progression. And the financial rewards were very clear when one looked at the senior management.

“In the 1980s you had to have the associate Chartered Insurance Institute before you could take the ACILA. This was nine exams. It was very hard studying and dealing with the heavy workloads arising from the many surge events – such as the storms in 1987 – that prevailed in the 1980s. The hours were long and it took a great deal of commitment – but it simply had to be done. It took me four years to do the ACII then seven ACILA exams followed over the next three or four years. The carrot that was dangled was career progression. Adjusters would be promoted and receive financial reward when they qualified – this was a massive incentive to us all.”

“However, in the 1990s this all changed. As fees reduced, branches closed and businesses rationalised, there weren’t the management jobs available to give to new qualifying adjusters. So adjusters who qualified at the end of the 1980s (Holland qualified in 1989) found they had empty promises – we had worked very hard for low salaries through the years of qualifying, only to find the rug had been pulled from under our feet and the rewards we had expected simply didn’t materialise. Hence the comment about turning up to the party as everyone was going home. That’s exactly how it felt.”

 

Downward trajectory

RACKSTRAW, Arthur - 2006
Arthur Rackstraw

The late Arthur Rackstraw, who worked for various loss adjusting firms, believed the view of profession among colleagues in the wider insurance space was on a downward trajectory too. “I joined loss adjusting in the early 1970s and I went in to be the assistant of Eric Fouts who was a senior partner. I remember going into the Commercial Union office and as he walked through the claims department people would say, ‘Mr Fouts could you give me some advice’. People respected loss adjusters.

“But by the end of the 1990s there was no respect for loss adjusters; you were a servant being paid by the insurers and they were treated like shit.

He continued: “But then again in 1987, we made a bundle of money, it was immoral. And [insurers] recognised that. [Some adjusters might] have looked at those golden years and thought they were going to continue, because again there was another storm in 1990 and a lot more money was made. But insurers also saw that and they were putting in systems and moving control to the centre.

“In the early 1980s a local branch manager decided how he was going to settle claims and who he was going to use; but in the 1990s that changed and you started to see friction between operational claims managers and procurement in terms of who was in control. That resulted in revenue and fees going down and to [external] investors it did not look good.”

STEEL, Stewart - 2010
Stewart Steel

Steel picks up the theme: “I was too young to have participated in the boom years – to have been a director of a loss adjusting company in the 1980s and early 1990s was a good ticket and place to be.

“But like a lot of professions the insurance industry caught up with better procurement. I remember looking at the first fee scale at THG in 1983 and what we were charging for a £10,000 claim of any description, household or commercial, is not far short of what we charge as a profession for a job of the same size [today]. And there are two sides to that.

“Back in the day there was no technology, the secretaries worked with typewriters and almost every adjusters had one. There were no mobile phones too and so productivity was significantly lower. Whereas we have vast improvements today in that there is far less administration and support. But putting that aside those guys were making hell of a lot of money in the 1980s.”

However, it is acknowledged there was still good money to be made in the 1990s, albeit maybe not as much as by those in the past. Malcolm Hyde, Chartered Institute of Loss Adjusters executive director, comments: “My son was born on 2 July 1990. The next day I went into the office and on my desk was an envelope from [Ellis & Buckle] head office and my initial reaction was ‘crikey, what have I done now?’ We were still dealing with the storm claims and I opened it up and it was letter saying, ‘here is a £1500 bonus, this is in addition to your profit-sharing bonus and will have no impact on that. And this is only half of what you’ll get in addition to the profit- sharing bonus. The remainder will be paid in December’. It was a really profitable time. It involved serious hard work, but as a new father, getting that [money] was incredible.”

And while for some the party might have been over, for others the glasses were still flowing with alcohol. “I missed out on the serious money the generation before me made,” Jim Pittman, Advanta Global Services United Arab Emirates manager, adds: “It might have been different across the country depending on the region. But if you were at McLarens or E&B we worked hard and went out socially. We put stuff on expenses you would never get away with today. I can remember taking out the TSB Claims department on a Friday night and spending £3700 in the mid-1990s on beer. It was just insane stuff.

“But if you were at some of the other adjusters the good times were drying up. McLarens and E&B were expanding in the 1990s and that fueled that. If you were at THG I expect you were under the cosh from the US because they were spending all the money on acquisitions and not getting the traction [they hoped]. “

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