How to Make Adjusting a Profession
Insurers, in a search for profit, have decimated their professional claims staff. They laid off experienced personnel and replaced them with young, untrained and unprepared people. A virtual clerk replaced the old professional claims handler. Process and computers replaced skill and judgment. The promises made by an insurance policy are kept by the professional claims person. A professional claims staff is an effective cost-effective method to avoid litigation.
The professional claims person is an important part of the insurer’s defense to litigation against insurers for breach of contract. A staff of claims professionals dedicated to excellence in claims handling. Experience establishes that claims professionals resolve more claims for less money without the need for either party to involve counsel. A happy insured or claimant satisfied with the results of his or her claim will never sue the insurer.
Incompetent or inadequate claims personnel force insureds and claimants to lawyers. Every study performed on claims establishes that claims with an insured or claimant represented by counsel cost more than those where counsel is not involved. Prompt, effective and professional claims handling saves money and fulfills the promises made when the insurer sold the policy.
Insurers who believe they can handle first or third-party claims with young, inexperienced and inexpensive claims handlers will be faced with the screams of angry stockholders. Profits, thin as they are, will move rapidly into negative territory. Punitive damages will deplete reserves. Insurers will quickly question why they are writing insurance. Those who stay in the business of insurance will either adopt a program requiring excellence in claims handling from every member of their claims staff, or they will fail.
Insurance is a business. It must change if it is to survive. It must rethink the firing of experienced claims staff and reductions in training to save “expense.”
Excellence in Claims Handling
Excellence in claims handling is a program that can help insurers avoid charges of bad faith in both first and third party claims. An insurer must understand that it cannot adequately fulfill the promises it makes to it insured and the Fair Claims Practices Act which exist in almost every state, when dealing with claimants without excellence in claims handling. An insurer must work intelligently and with vigor to create a professional claims department.
Insurance claims professionals are:
- People who can read and understand the insurance policies issued by the insurer.
- They understand the promises made by the policy and their obligation, as an insurer’s claims staff, to fulfill the promises made.
- They are all competent investigators.
- They have empathy and recognize the difference between empathy and sympathy.
- They understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
- They understand how to repair damage to real and personal property and the value of the repairs or the property.
An insurer whose claims staff is made up of people who are less than Insurance Claims Professionals, will be destroyed by expensive and counter-productive litigation.
A Proposal To Create Claims Professionals
To avoid claims of bad faith; to avoid punitive damages; to avoid losses; and to make a profit insurers must maintain claim staffs who are dedicated to excellence in claims handling. That means they will make sure every promise made in every policy is satisfied by the:
- Insurers who only hire insurance claims professionals.
- Insurers who train the claims staff to be insurance claims professionals.
- Insurers who require that the claims staff treat every insured with good faith and fair dealing.
- Insurers who demand excellence in claims handling from the claims staff.
The insurance industry for the last 15 years has decimated the number of insurance claims professionals for insurers to hire. If any experienced claims professionals exist in the insurer’s staff, the insurer must cherish and nurture them. If none are available, the insurer has no option but to train its people. Those who treat all insureds and claimants with good faith and fair dealing and provide excellence in claims handling must be honored with increases in earnings and perquisites. The insurer must immediately eliminate those who do not provide excellence in claims handling from the claims staff.
What Sources Are Available To Obtain Training?
Insurance training is available across the country by correspondence, in local colleges and universities and from law firms that will provide the training as a marketing tool. None of these sources are directed to producing insurance claims professionals. They do provide the basic background information necessary to begin the process of becoming an insurance claims professional. In that regard, I have written courses for Illumeo.com that can be a start to becoming an insurance claims professional.
An excellence in claims handling program can include a series of lectures supported by text materials. It must be supplemented by meetings between supervisors and claims staff on a regular basis to reinforce the information learned in the lectures. The insurer also must institute a regular program of auditing claims files to establish compliance with the subjects studied. There is no quick and easy solution. The training takes time. Learning takes longer. The insurer’s management must support and reinforce the training regularly.
The excellence in claims handling program requires a minimum of the following:
- The insurance policy — how to read and understand the contract that is the basis of every adjustment.
- The formation of the insurance policy.
- Tort law including negligence, strict liability in tort, and intentional torts.
- Contract law including the insurance contract, the lease agreement, the bill of lading, non-waiver agreements, proofs of loss, releases and other claims related contracts.
- The duties and obligations of the insured in a personal injury claim.
- The duties and obligations of the insurer in a personal injury claim.
- The duties and obligations of the insured in a first-party property claim.
- The duties and obligations of the insurer in a first-party property claim.
- The Fair Claims Practices Act and the regulations to enforce it.
- The thorough investigation.
- Basic investigation of an auto accident claim.
- Investigation of a construction defect claim.
- Investigation of a non-auto negligence claim.
- Investigation of a strict liability claim.
- Investigation of the first-party property claim.
- The recorded statement of the first-party property claimant.
- The recorded statement or interview of a third-party claimant.
- The recorded statement of the insured.
- The red flags of fraud.
- The SIU and the obligation of the claims representative when fraud is suspected.
- Claims report writing.The evaluation and settlement of the personal injury claim.
- How to retain coverage counsel to aid when a coverage issue is detected.
- How to control coverage counsel.
- How to retain an expert.
- How to control the expert.
- Dealing with a plaintiffs’ lawyer.
- Dealing with personal injury defense counsel.
- The evaluation and settlement of the property damage claim.
- Arbitration and mediation and the claims representative.
© 2018 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Books from Full Court Press
Full Court Press continues to publish expert secondary content. This time it’s a new collection of ew insurance law treatises from consultant, expert witness, arbitrator, and mediator Barry Zalma.
Barry Zalma practiced law in California for more than 44 years as an insurance coverage and claims-handling lawyer, and has spent more than 50 years in the insurance business. We welcome his deskbooks as the first published under our Full Court Press imprint. Three titles are available in ePub and MOBI format, as well as on the Fastcase legal research platform.
Insurance Law Deskbook: Learn the insurance basics that are essential to every civil practitioner. The Insurance Law Deskbook is intended to help law students, practitioners, insurance lawyers, professional claims personnel, insured persons, and anyone else involved in insurance. The book, published for the first time under Full Court Press, includes the full texts or digests of insurance-related decisions of the U.S. Supreme Court, the U.S. District Courts of Appeal, state appellate courts, and foreign courts that have molded the American insurance law, as well as vital explanatory chapters, historical context, form letters, and more.
California Insurance Law Deskbook: California has long led the way when it comes to insurance jurisprudence in the United States, and few know more about California insurance law than Barry Zalma. The California Insurance Law Deskbook is intended to help law students, practitioners, insurance lawyers, professional claims personnel, insured persons, and anyone else involved in insurance. Similar to Barry Zalma’s general Insurance Law Deskbook, this title focuses on the state where the author has long resided and practiced as an expert in California law. The book, published for the first time under Full Court Press, includes the full texts or digests of insurance-related decisions of the U.S. Supreme Court, the U.S. District Courts of Appeal, and California appellate courts, as well as vital explanatory chapters and historical context.
Insurance Bad Faith and Punitive Damages Deskbook: Understand the relationship between insurance, the tort of bad faith, and why punitive damages are awarded to punish insurers. Previously, a person suing an insurance company in the United States could only recover contract damages, but when the tort of bad faith was created by the courts contract law was enormously affected, allowing insureds to sue insurers for both contract and tort damages, including punitive damages. Read a thoughtful analysis of how punitive damages apply in the United States to insurance bad faith suits, and why some states allow judges and juries to award punitive damages against insurers in civil litigation.
An annual subscription to secondary content on the Fastcase platform includes new editions and updates published by the author as they are rolled out, so you can rest assured that your research is up to date. Go to fastcase.com for more detail and how to use the material on-line as part of your legal or insurance research or as stand-alone e-books. Details on the three new e-books are available at https://www.fastcase.com/product-category/fcp/ Subscribers to fastcase.com can search the three books as they do case law.
An annual subscription to secondary content on the Fastcase platform includes new editions and updates published by the author as they are rolled out, so you can rest assured that your research is up to date. Go to fastcase.com for more detail and how to use the material on-line as part of your legal or insurance research or as stand-alone e-books.
Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/
The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.