Unlike underwriters and insurance brokers, who are ubiquitous, the insuring public never gets to meet loss adjusters. Some policy holders do not even know they exist. That is until they suffer a big or complex loss. Usually, insurance companies do not engage the services of loss adjusters in small or straight forward claims. They surface when the claim is huge or complex.
Loss adjusters are claims specialists employed mostly by insurance companies to look into big, complex and contentious claims. They investigate the cause of the loss and establish whether or not the loss is covered by the provisions of the insurance policy.
Loss adjusters are also enforcers of the principles of insurance. They ensure that the proximate cause (peril that is directly linked to the loss) of the loss is an insured peril. They also ensure the insured does not get more than indemnity (putting the policy holder in the financial position he was in immediately before the loss). Where there is a negligent third party involved, loss adjusters take measures to protect the subrogation rights of the insurance company among other principles. Subrogation, as we explained some time ago, is the right of an insurer to pursue the party that caused an insurance loss to the insured, in the name of the assured, in an effort to recoup the claim amount paid either wholly or in part. The rights arises after the insured has been indemnified (after the claim is paid), but in practice, subrogation rights can be pursued while the claim is being processed. But the claim will be paid before the insurance company recoups. If not there will be no basis for recouping.
Many loss adjusters typically behave like prosecution lawyers. They probe, “intimidate,” “harass” and impose themselves. Honestly, many people who come across them, including insurance brokers, see them as brash and annoying fellows. Loss adjusters are another very good reason why every potential policy holder needs to go through a registered insurance broker (RIB). That way, you get it right ab initio. At the inception of the policy, the broker will guide the insured to ensure that the policy he procures covers his needs. He will ensure that the insureds exercise utmost good faith. The broker will also highlight the extent of cover and excluded perils to the insured.
In the event of a loss, the proper claims procedure is followed. The loss is reported within the stipulated period and the supporting documents are properly put together. One area of potential disagreement is the repair or replacement estimates. Policy holders are advised to ensure that they get correct estimates to ensure they get full indemnity. But they should avoid inflating estimates because the loss adjusters will find out. They know the terrain more than the policy holders.
Loss adjusters also perform another vital function in the insurance chain. Sometimes policy holders knowingly or inadvertently underinsure their assets. If a claim occurs in an underinsured asset, the condition of average applies. “The condition of average is the insurance term used when calculating a payout against a claim where the policy undervalues the sum insured. In the event of partial loss, the amount paid against a claim will be in the same proportion as the value of the underinsurance.” To avoid this fate, insurance brokers advice their clients at inception and renewals of insurance policies to ensure that the sum insured is in tandem with the value at risk or replacement cost.
Many loss adjusters have multidisciplinary backgrounds. You have loss adjusters with engineering backgrounds and medical backgrounds. Some have also worked as underwriters, insurance brokers and in other areas within the insurance industry before berthing as loss adjusters. This gives them a wide ranging knowledge and makes them hard nuts to crack.
Loss adjusters are independent professionals, although they get their remuneration from the party that hired them. Normally, the insurance companies engage their services. On rare occasions, however, insurance brokers or policy holders might engage their services, especially for highly technical claims.
Loss adjusters perform very important roles in the insurance industry. All over the world, insurance fraud or attempted insurance fraud is prevalent. Loss adjusters have helped substantially in reducing incidents of insurance fraud. Loss adjusters are no different from trained police detectives.
They investigate claims requests; interview the insured and his staff, visit accident scenes, review camera footage and many more activities detectives engage in.
Their importance to the insurance industry notwithstanding, some practitioners still see them as irritants. Are they really irritants? Well it is very difficult for a loss adjuster to be a “good boy” and at the same time be a diligent professional. It is possible, though both traits do not always cohabit.