Triumph, Carlisle, Buncefield - as the major loss events start to pile up, the pressure on the loss adjusting profession is increasing and, many feel, starting to change the nature of the entire profession. Anthony Gould listened to a panel of industry experts.
Major loss events, like the fire at Triumph Motorcycles in 2002, the Carlisle floods and the Buncefield oil depot fire last year, seem to be increasing in frequency, and the loss adjusting industry - the highly trained and independent claims experts who assess the extent and value of claims - cannot help but feel the strain to a certain extent. Post Magazine, in association with Cunningham Lindsey, recently gathered a group of industry professionals together to discuss the changes the profession is experiencing.
"Incidents such as the Carlisle floods change the name of the game," opened Harry Roberts, director of technical and product assurance at Cunningham Lindsey and president of the Chartered Institute of Loss Adjusters, "as we are asked to provide additional services or varied services."
Advice and guidance
Harry Rule, property claims manager at Allianz Cornhill, agreed: "The role is not only to adjust the loss for the insurer any more. It is primarily to provide advice and guidance, and share the experience with people who suffer the loss. After all, loss adjusters have got the experience of having seen it, whereas the policyholder may well be experiencing it for the first time."
Many around the table expressed the view that loss adjusters now fall into one of two categories. Paul Reddington, claims manager at Norwich Union, explained: "Adjusting has slightly polarised, certainly over the past few years, into the volume camp and the major loss camp. So adjusters will set their stall out into one or the other; it is not going to be both. But when we are talking about something like a storm or a flood event, that is when those two camps overlap and have to work together."
This was illustrated by Jonathan Samuelson, director of the business interruption division at loss assessor Harris Claims Group: "At Buncefield, the experience was completely polarised between, on the one hand, a volume adjuster who had God knows how many claims to try and get through, and those companies where a senior claims manager from the insurers was at virtually every meeting."
One area that everyone could agree on was the loss adjuster's duty to get information to the insurer as soon as possible. Roy Shevlin, regional specialist adjusting network director at Cunningham Lindsey, summed this up: "In the majority of cases, the policyholder, the broker, the insurer, the loss adjuster all want the same thing, which is to get the information as quick as possible, make a decision on liability and get the policyholder back on his feet as quick as we can."
And Mr Roberts believed this was key to the loss adjuster's role: "As a loss adjuster we have to get the information to the insurance company quickly. Because otherwise it is all going to fall apart - people are going to lose heart, lose confidence in the process."
For this reason Alan Robertson, technical director of claims at broker Heath Lambert National, suggested that another part of the loss adjuster's role is to be proactive: "By getting in there on day one, getting a team together, getting a plan of action and a critical path analysis, you are going to see some finality - early finality. One thing that struck me about Buncefield, in particular, was the variety of attitudes from the entire insurance market.
"Many have actually been extremely proactive as companies and we assume policy liability has been accepted early on. And conversely - and I hate to say it - there are other companies that radically change the role of the loss adjuster and seek to modify the CILA royal charter on impartiality."
Claim focal point
Another part of the loss adjuster's role that met with general agreement was that of being a focal point for the claim. Mr Roberts said: "If you are a policyholder - and it does not matter whether it is domestic or commercial - you have suffered a loss, so you are in a stressful situation. Surely one of the roles that the loss adjuster does fulfil and ought to be fulfilling is being the focal point for that policyholder and their access to the insurer."
Kevin Grealis, operational support manager at MMA, agreed: "It is access, isn't it? It is a question of access to the right people to obtain the right answers. To have early access to the correct people for them to make the correct assessment and to give the correct advice."
"Because isn't one of our major roles, all of us around this table, to get the business back up and running and back to its pre-fire/pre-explosion state as soon as possible?" added Mr Robertson.
However, sometimes that is easier said than done: the discussion then moved to the challenges faced by loss adjusters in achieving this apparently straightforward objective.
Liability was a hot topic in this area, with Mr Robertson explaining: "I see a solicitor turn up from the City of London and I know what he is looking for: 'Is there a way we can repudiate policy liability?' And I hate that."
"I think that sometimes decisions on liability are delayed longer than is necessary because of recovery investigations," agreed Mr Samuelson. "From an insured's point of view, they should be entitled to a speedy decision on liability, irrespective of whether there is going to be a recovery in it. They paid a premium for cover. If insurers can make a recovery, that's great; if they can't, that is unfortunate for everyone, but the decision for the insured on liability should not be delayed because of an ongoing recovery."
However, Mr Grealis argued that in some cases it is important for insurers to consider liability in detail early on: "Often early instruction of legal representation is to direct investigations into any potential recovery aspect, which is important to consider early on as opposed to having an inefficient process whereby the adjuster reports to the insurer and waits for the insurer's response in terms of further direction on investigations. Having a co-ordinated team early on to consider these points can, I think, be helpful in terms of speed of investigation."
However, Julian Millar, technical claims services manager at Royal Bank of Scotland Insurance, said that this should be done at the same time as getting the business back on its feet: "I think this should be a background function that happens concurrently and I do not think it does the insurance industry any favours whatsoever to overtly be putting legal people in front of the policyholders."
Another challenge for loss adjusters is that of other professions entering the market such as forensic accountants and network suppliers. But while some companies such as disaster restoration companies have managed to enter the low-level claims arena, Mr Shevlin said they were no substitute for real loss adjusters in a major event: "The solution in 'peacetime' might be press the button and send a disaster restoration company to sort your carpet, but in the event such as Carlisle it is no good."
In other situations, however, Mr Roberts admitted that loss adjusters may have to do more: "The fact that insurers increasingly use forensic accountants must be a reflection on what we were doing. I think perhaps the thing we were not doing, and did not grasp as rapidly as the forensic accountants, is IT. I think we were not presenting the information on the claim in a way that perhaps a lot of people would want nowadays."
So, after agreeing that the loss adjuster's role in a major loss is to provide information, get a businesses back on its feet and act as the focal point for a claim against various challenges, can loss adjusters plan for the next major catastrophe?
Mr Samuelson believed this would be difficult: "I suppose my experience is that there is just so much that needs to be done, and there are sometimes just too few people from either insurers or adjusters to get a coherent plan together on any kind of timely basis."
For this reason, Mr Millar said any plan would have to be flexible: "Plans have to be pretty much living, breathing documents. Hour by hour you are formulating your response, how flexible you should be. Were there interim payments relating to the accommodation? What is your exposure? And that is where a close relationship is important; it cannot be a static document stuffed in a drawer to be wheeled out when needed."
David Damsell, regional co-ordinator for the corporate and major incident team, Crawford and Co, supported this: "They cannot be definitive, because every loss is different with different issues. We can always learn from our response and how we have dealt with it and improve on it in future. After every major event we have, we will have a de-brief afterwards to see what we did not do so well and how we can improve. I suspect that others are exactly the same."
Mr Shevlin added that Cunningham Lindsey also went through this process and said that after each event something new is added to the plan.
However, Mr Millar questioned whether it would be an idea to look more closely at these plans during the times between big event. "I don't think we actually look at this stuff in peacetime; we do a very good job in wartime, but we don't look at it in peacetime."
War and peace
Mr Roberts added: "The significant point is that, in wartime, you need to change the service level agreement. Insurers have asked us and other suppliers to do things, and do things more promptly, and that is absolutely right. It is just that, in these different scenarios, we need to have a little breather, say 'right, what is the most important thing right now?', and do that rather than sticking with the things that were laid down for the peacetime scenario."
Mr Shevlin agreed: "Supplier chains and contractor networks are peacetime operations and we have to review how they work when we have an event, not religiously try to shoehorn the process for one type of incident into a completely different type of incident."
However, Mr Damsell didn't just see this as a job for adjusters: "Our response is almost a market issue. It is not just an issue for adjusters, it is an issue for insurers and all the other specialists in the area to also bear in mind going forward and possibly get a joint agreement approach in the future."
Is it possible for these industries to have a joint approach, and is this what is wanted? Mr Roberts tackled the area of commercial claims first: "As an adjuster, we work for a number of different insuring principals and I must admit, professionally, I do not have a problem with different insurers having different attitudes to claims. In fact it is a good thing, I think, that you can buy cover with one insurer or another.
"If we had standard procedures for how we settled claims, we would have to have standard procedures for how claims were underwritten, we would have the same rate charged by every insurer, and there would not be any difference."
However, Mr Millar said in domestic claims it could be important for the industry to work together: "I absolutely entirely agree about commercial coverage: we all want to have a different service, market differentiation, because that is why we are in business. However, in domestic claims, there is reputation risk to the industry and I know that some of us round the table are involved directly or indirectly with the Association of British Insurers in terms of possibly getting a protocol together to look at event management.
"We do not do ourselves any favours whatsoever if Mrs Smoggins gets a different response about the way her kitchen is going to be replaced to Mrs Jones at the next house, with different insurers."
Mr Shevlin added: "Selling insurance is selling to individuals and you are branded, you have a different product, because you are selling to a person. When you have an event such as Carlisle, you are introducing a new dynamic to it, which is community. Everyone then gets together and everyone discusses what they are having - which there is nothing wrong with. It is perfectly right that you should sell different products for different prices, but it does create a difficulty when you add it together in a community. This is an challenge for insurers."
Mr Millar summed up the situation by saying: "The big conundrum for all of us is how do we get individual differentiation and how much are we prepared to work together for the good of the industry? We need to find that common point. It is a conundrum for us as to how much we can share, how much we can leave the weapons at the door and just talk about the capacity of the suppliers that we use and how integrated we can really get. We want to protect our own brands and policyholders, and give them the customer service, but at the same time work out how we can work closely together."
And co-operation it would seem will be the key to major losses and events in the future. As Mr Roberts concluded: "I think the greatest need is for co-operation between insurers and between loss adjusters across the market to deliver something that is common and sensible. That, I believe, is the challenge."
Chair: Stephanie Denton, supplements editor, Post Magazine
David Damsell, regional co-ordinator for the corporate and major incident team, Crawford and Co
Kevin Grealis, operational support manager, MMA
Julian Millar, technical claims services manager, Royal Bank of Scotland Insurance
Paul Reddington, claims manager, Norwich Union
Harry Roberts, director of technical and product assurance, Cunningham Lindsey; president, Chartered Institute of Loss Adjusters
Alan Robertson, technical director of claims, Heath Lambert National
Harry Rule, property claims manager, Allianz Cornhill
Jonathan Samuelson, director, business interruption division, Harris Claims Group
Roy Shevlin, regional specialist adjusting network director, Cunningham Lindsey.
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