…Or An Insider’s Guide For Outsider’s to the World of Claims Adjusting
From time to time, I’ve mentioned briefly a little bit about what I do for a living. It’s not exactly glamorous or exciting, and it’s got more than its fair share of tedium and stress. On the flip side, it IS a necessary function that needs to be performed, and it’s a fairly stable industry to be in which counts for a lot in a down economy with a sick wife to support. So, as a public service (or a warning), I think it’s high time I gave you all a little more of an insight into what I do to keep myself off the streets and earn an honest day’s pay.
According to the license issued to me by the state of Texas, I’ve been an Adjuster – P&C (P&C stands for Property & Casualty) for the last 15 plus years. Over the years, I’ve had several job titles including claims examiner, litigation consultant, account claim manager and litigation center manager among others. None of those titles changes what I do for a living: I handle insurance claims.
It used to be back 20 or 30 years ago that an adjuster was an adjuster was an adjuster. Companies had what were known as full service claim centers. An adjuster could expect to handle a workers compensation claim, a property loss such as a building fire and/or a personal or commercial liability claim all in the same day. For better or worse, the days of the full service claim centers are long gone. Today, an adjuster can expect to specialize in handling claims for just one of the three main lines of business: workers compensation, property and liability. True to human nature, people handling claims for one line of business think those handling claims in the other two are insane. I’ve chosen to specialize in the liability line of business.
Even within lines of business there are sub specialties. Workers compensation claims are exclusively commercial in nature; however, within the work comp line of business, there are medical only claims and employer liability claims in addition to the standard statutory work comp claims. In the property and liability lines of business, some companies combine personal lines and commercial lines. The company I work for splits those lines. I work commercial liability claims.
Within in my world of commercial liability claims, there is further specialization still. Some companies allow adjusters to handles all aspects of the claim “from cradle to grave”. Other companies, like the one I work for, do things a little differently. There is a team of adjuster who handle nothing but physical damage claims to cars. If there is a bodily injury claimed for the same accident, that part of the claim gets sent to another team of adjusters for handling. Liability claims involving physical damage to real property go to another team. Any claims involving litigation, claims with an exposure above $100,000.00 and/or severe injuries like fatalities or burns go to another team. Those are the types of claims that I handle. I’ve done the “cradle to grave” style of claims handling, too. Both approaches have their pluses and minuses, and I can’t say one approach is better than the other. Personally, I happen to prefer working solely on the litigation and high exposure claims.
So, what does it take to be an insurance claims adjuster? For starters, a pulse and a deep seated sense of nosiness and curiosity. I’m only partially joking here. No one really goes to school to be an adjuster. In my entire career, I’ve known one person who actually got a business degree specializing in insurance. More seriously, to get your foot in the door with an insurance company, you need to have at least a high school diploma or GED; however, as a practical matter in this economy, most companies won’t even call you unless you have a college degree or scads of experience. Organizational, interpersonal, presentation and negotiating skills are a big plus, but you will live and die by your written and verbal communication skills. If you can’t put an intelligent sentence together and put it together at 75 words per minute or better, this is probably not the right career path for you. If the state where you handle claims has a licensing requirement, you get the privilege of taking a test, paying the government a modest fee in order to be allowed to ply your trade and be required to take continuing education courses to “maintain your jurisdictional knowledge”. The reality is that anyone who does not maintain their jurisdictional knowledge finds themselves without a job real quick. Finally, most of the major companies offer training programs to teach you the finer points of how to investigate and settle insurance claims.
Unfortunately, I didn’t get the benefit of one of the training programs at the major companies. I got the sink or swim treatment more commonly known as “on the job training”. When I came into the business, I worked for a small, family owned, non-standard personal auto managing general agency. A managing general agency, or MGA, is a company that sells and services policies via independent agents on behalf of a writing company that sells the right to use the writing company’s name in exchange for a small percentage of the written premium while leaving the day to day management of the book of business including underwriting, policy maintenance, billing, premium collection, claims handling, etc. to the MGA. Non-standard personal auto is a line of business usually involving month to month policies for drivers who can’t qualify for insurance through a major insurance carrier due to their driving records.
My boss at the MGA was the owner of the company. He handled most of the claims once they went into the litigation himself. He was getting older and wanted someone to learn the ropes and take over that part of the business. I had been working for the company in college in a variety of general office jobs; and, when I graduated, the timing was serendipitous as I was looking for a full time career at the same time he was looking for a protégé. So, I was sent off to a class to obtain my Texas adjuster’s license which I passed very comfortably. The very next week, I was attending my first mediation. I’ve been knee deep in litigation and high exposure claims ever since.
That first boss was a character though. The claims business attracts its fair share of strange and unusual people, but this boss is STILL notorious 12 years after his death. One of several notable incidents involving him occurred when he was subpoenaed for deposition in a bad faith case. My boss was not known for his restraint, and his long time attorney counseled him on the plane flight to El Paso to be polite, not take it personally and only give the minimal answer necessary to respond to the question. Opposing counsel started the deposition by simply asking for my boss’ name to which he replied “My name is Robert W. Cooper* you son of a bitch.” (*not his real name). Things went downhill from there. You can get away with that sort of behavior when you own the company I suppose.
He was also a very shrewd business man. He taught me quite a bit in his own way. One of the main things I remember him teaching me was to treat the money I was entrusted with as if it were my own. Not his. Not “the company’s”. Mine.
So, what does an adjuster do really? The short answer is that we are responsible for investigating the who, what, where, when, how and how much relating to an accident or injury covered by a policy of insurance. The long answer is a bit more involved.
For starters, the first thing an adjuster has to do is figure out if the claim that has been brought against the policy is even covered by the policy. There are two basic ways to evaluate coverage depending on how the courts in a particular state have decided it should be done. Here in Texas, the courts follow the complaint/allegation rule which is also known as the “eight corners” rule. In other words, you compare the facts alleged in a claim or lawsuit with the coverage provided within the policy without regard for the veracity or accuracy of the facts alleged. If the facts alleged fall within the scope of coverage, there is a duty to investigate and defend. In other states such as California, the “extrinsic evidence” rule is followed. In this type of analysis, an insurer is obligated, to a lesser or greater extent, to consider facts known or easily discoverable outside the facts alleged in the claim or lawsuit in its coverage analysis. There are subtle differences in the application of these two rules as you move from state to state, but that’s the basics.
Insurance policies are, at best, dry reading and sometimes can be very confusing and convoluted. The average policy I deal with runs about 20 pages or so of double columned, 10 point, single spaced type written by lawyers. For example, the insuring agreement in the standard commercial general liability policy I deal with daily reads more or less as follows:
We will pay those sums that the insured becomes legally obligated to pay resulting from “bodily injury” or “property damage” arising from an “occurrence” or a “personal and advertising” offense to which this insurance applies
Each one of those terms in quotation marks is defined by the policy. Most of the other terms not in quotation marks have been endlessly dissected and argued in court cases which form the basis of a body of law that forms the rules by which we decide whether or not your claim is covered by the policy. We won’t even get into exclusions and conditions. It’s no wonder I am applying to law school. It’s self defense.
Next up, an adjuster has to figure out who is involved and what happened. You’ve heard the saying “there’s two sides to every story”. We should be so lucky. There are at least three sides to the story if there are only two people involved: each person has their story then there is what actually happened. If you add witnesses or other interested parties, suddenly you have a very hard time separating fact from fiction.
The main tools and adjuster has for figuring out what happened are police reports and witness statements. A lot of TV and phone book personal injury lawyers will try and tell you not to give a statement to an adjuster. Their basic theory seems to be that an adjuster is going to use everything you say against you. Personally, I think not giving a statement is the quickest way to shoot your claim in the foot as most adjusters aren’t able to make a fair evaluation of the facts without getting your version of what happened. Besides, the truth of the matter is that adjusters are amateurs at using what you say against when you compared with attorneys. If you’ve never had to give a deposition or testified at a hearing or in trial, it’s the mental equivalent of having your pocket picked. A word of advice: when someone asks increasingly specific questions about a certain topic, they already know the answers. They just want to see if you will tell the truth.
Police reports are helpful but not as definitive as some people might think. More often than not, the officer was not an eye witness to the accident and has to figure out what happened based on the statements of people who may or may not be coherent. Sometimes, the officer doesn’t even get the benefit of statements from involved parties due to injuries or hit and runs and has to go with whatever limited physical evidence is available. If someone involved in the accident doesn’t speak English and the officer doesn’t speak their language, it’s a good bet the officer won’t be able to make an informed decision about what happened.
So, assuming the adjuster has a handle on what happened and who’s at fault, the adjuster has to figure out what the injuries or damages are and how much the claim is worth. Truthfully, this is where the adjuster’s job can get really interesting. We see stuff normal people would not believe reported in the medical records.
Once upon a time, I received an autopsy report for a gentleman that had the misfortune to die in an auto accident with one of my insureds. Under the description of genitalia, the coroner described that the man’s penis had been tattooed to look like a candy cane. To this day, I am convinced he was a child molester.
Part and parcel with getting interesting autopsy and medical records are the photos we get. If you ever want to know why adjuster’s are a jaded, callous bunch of folks, it’s the photos. Invariably, we get the most gruesome photos in our inbox right after lunch. After a while, you become immune to the gruesome. Eventually, you reach the point where you HAVE to share the gruesome with others. It’s not uncommon in a claims office to here “Hey, come here. You’ve got to see this.” I’ve seen photos of decapitations, amputations, crushed skulls, crispy critters, and one MRI machine that sucked up a floor buffer machine.
Another reason adjusters can be a tad “off” from normal is the people we have to deal with. We get cranky claimants, idiot insureds, looney lawyers and jackass judges. Then there are the seagulls in upper management. I’ve been accused of being a racist when I didn’t offer a claimant of a certain ethnic background what she thought she was owed for her claim. I once saw a letter sent a work comp adjuster from a claimant that said “send me $10 million in small bills or you will hear from my wife.” When I worked for the MGA, our first two questions were 1) was the insured drunk and 2) do they speak English? I saw a driving record for one insured who had six DWIs on his record, two of which were on the same day. When asked, the insured said he was arrested early in the morning, bailed out mid morning, went home, got roaring drunk again and was arrested again before midnight.
There is more that I could talk about. I haven’t even gotten into lawyers and judges yet. One of these days, I’ll have to get around to my civil contempt of court experience. But this post is getting too long, and I’ve bored you to death enough already. I will leave you with this little thought. Stupidity is compensable, and never underestimate the power of stupid.