February 28, 2011 by Suzanne Sharma
2010 was a catastrophic year for insured losses. Weather-related events and man-made disasters cost the global insurance industry $36 billion (US), an increase of 34% from 2009, according to Swiss Re. Adjusters dealing with these losses faced the added challenges of staff retention and rapidly changing technology used in their work.
In Canada, Hurricane Igor out east, the Leamington tornado in Ontario, and the Calgary hailstorm were a few of the storms that kept brokers, insurers, and adjusters busy.
“While we haven’t experienced more claims overall, we are seeing claims coming in bundles due to unforeseen weather events,” says Louis Heroux, deputy senior vice president of claims at Intact Insurance. “After the Calgary hailstorm in July, we handled more than 10,000 claims in one day.”
These types of natural catastrophes are virtually unpredictable, and the surge of claims due to weather-related events requires all hands on deck, according to Fred Plant, president of Plant Hope Adjusters Ltd.
For adjusters, the random schedule of such events makes maintaining optimal staff levels year-round a major challenge, says Plant. “If you cut back too much when things get slow, then you can’t handle the increase in claims when a problem arises,” he says.
Experienced staff is a must in order to deal with the influx of claims that come as a result of various exposures. However, according to experts, staff retention is an ongoing challenge because many employees are set to retire in the coming years.
“Our industry continues to be in the position where there’s a shortage of trained, educated adjusters for current and future needs,” says Larry Shumka, president and CEO of ClaimsPro.
“One of the biggest risks over the next three to five years is to ensure that we continue to access these resources.”
Mary Charman, president of the Canadian Independent Adjusters’ Association (CIAA) agrees that the issue of attracting and retaining employees has become difficult for companies.
“The market is very competitive in certain areas and the retention level is very slim,” she says. “The industry needs to determine what it is that employees are really looking for. Is there a clear career path for employees and what is it that will attract them to a firm?”
Natural catastrophes and weather-related events aren’t the only areas that require skilled adjusters. Recent legislative changes around accident benefits in a few provinces have also created significant demand for experienced and knowledgeable claims-handling employees.
“Companies have had to tap all resources that are available to try and manage the case loads, the legislative changes, and the demands of that particular exposure,” says Albert Poon, senior vice president of business development at Cunningham Lindsey.
“There’s a lack [of adjusters], so we need more people that are experienced in these areas. A lot of companies have called out for placements, and a lot have outsourced their book of accident benefit claims.”
Staff retention is affecting insurers as well. Heroux says Intact has regional and national catastrophe plans in place. “To accommodate claims volume for the Calgary hailstorm, for example, we transferred employees from other provinces such as Ontario and Quebec.”
Adjusting firms that do manage to find new employees also face the challenge of finding the financial resources and time to educate and train them, but it’s something that can’t be ignored, says Charman. A comprehensive training program includes education on how to avoid or reduce litigation, claims leakage, and identifying subrogation or recovery issues.
Another emerging issue that adjusters are becoming aware of is that some insurers are resolving claims issues without sending an adjuster to inspect the claim. Plant disagrees with the practice, noting that it has the potential to affect the insurer-broker-adjuster relationship and ultimately result in reduced customer satisfaction.
“Adjusters have an eye towards claims and are experts in that area,” he says. “They must be present to examine the claim in person. Anytime there’s a drop in human contact, there’s a drop in customer service level.”
Brokers at the front end of the line are in charge of managing client expectations. They can help facilitate communication by preparing and advising clients on the processes and next steps, involve insurers as quickly as possible, and advise customers that diligence enables the insurer to settle claims quickly, thus improving the consumer experience, says Louis Heroux, deputy senior vice president of claims at Intact.
Adjusters relate how the claims process is evolving
Effective claims advocacy isn’t solely a broker’s job. It takes a three-tiered relationship (insurer, adjuster, broker) to manage and handle client claims, according to Albert Poon of Cunningham Lindsey.
“In order for us to provide great service, the three of us have to be aligned and ensure that we’re communicating with each other,” he says.
Many adjusters already provide after-hours claims reporting systems online or via telephone, and this allows brokers to offer enhanced service to consumers because they can report a claim immediately.
Poon notes that more adjusting firms are working harder to assist their broker partners by developing product lines or services such as 24-hour reporting, which will help expedite claims processes and increase customer satisfaction.
Implementing new systems is top of mind for the team at ClaimsPro. Recently the company was able to cut down the life cycle of a claim, improve service, and control costs through the use of technology. “We’ve developed software to meet the various insurance needs, business principles and operations of our clients including underwriters and brokers,” says Larry Shumka of ClaimsPro.
ClaimsPro’s iAdjust, for example, is a web-based application that allows claims to be reported and processed in real time.
Traditionally, the claims process was to create a report, submit it to the examiner and wait to hear back from them, says Shumka. The claims-reporting process could essentially take days, or even weeks in some cases.
Now, iAdjust allows adjusters to create a report electronically, even at the scene of a claims investigation using a tablet computer, submit it online, and the insurer can respond almost immediately using the secure web-based module.
Insurance is becoming more complex because consumers are demanding more claims services for the premiums they’re paying, and they expect a higher level of technical aptitude from the experts that process claims, adds Shumka.
This story was originally published by Canadian Insurance Top Broker.