Why mutuals partner with independent adjusters

Small insurers or mutuals may decide to partner with independent adjusting (IA) firms as a way of providing them with flexibility on costs and full-time staff.

On May 30, Contractor Connection, a service line of IA firm Crawford & Company (Canada) Inc., announced that it was partnering with Peel Mutual, one of the largest mutual insurers in Ontario. Contractor Connection, a global Crawford service line and a managed repair provider for property repairs after an insurance claim, said that the program will help drive “timeliness, quality in workmanship and overall insured satisfaction.”

Lorri Federick, president of IA company ClaimsPro, said that ClaimsPro does have arrangements in place with some mutuals. She said that mutuals may be assessing their business and claims management needs and see if it’s easier for them to manage without as many full-time staff.

Frederick and other sources in this article were not commenting specifically on the Contractor Connection-Peel Mutual partnership, but on the issue in general.

“Would I be better off to have one full-time [person] and then do a partnership with an IA firm to get another half person?” Frederick asked, saying that the mutual may not need two full-time adjusters, but rather “one-and-a-half.

“It will also help me when this one person goes on vacation or is off sick and then I have this partnership arrangement,” Frederick said. “It’s hard to hire a half adjuster,” she said, adding that ClaimsPro also has people that may work two or three days a week with mutuals, then work on their other files for other clients.

Skip McHardy, director of catastrophe response, Canada, with Catastrophe Response Unit Inc., agreed that some companies may decide to partner for financial resources. He noted that there are companies in the United States that will also “outsource” to an IA firm with third-party administrator capabilities. “It’s a model of cost containment that carriers are beginning to use,” he said.

Monica Kuzyk, vice president of Curo Claims Services and president of the Canadian Independent Adjusters’ Association, told Canadian Underwriter earlier that the industry is facing intense competition and every stakeholder is looking for growth through effective connectivity with their customers. “One way to do this is through strategic partnerships that can deliver a customer-centric, focused claims experience,” Kuzyk said. “For small insurers, that can mean pursuing ‘limited’ partnerships that fit with their focus and niche.”

For many years now, insurers large and small have contractually partnered with IA firms, said Marie Gallagher, branch manager with Kernaghan Adjusters. When she started in the industry more than three decades ago, most IAs “shared a little piece of the pot, so-to-speak,” Gallagher said. Insurers would disseminate claims to the IAs who they felt could do the job best.

At some point, though, insurers began to focus more on pricing and it became “commonplace for insurers to ‘partner with’ large national firms with the objective being that in exchange, the insurer would receive a discount on pricing,” she said. “With the severity and frequency of storm claims having increased exponentially over the years, insurers today recognize the need to strategically partner with enough IA firms so that when a cat does hit, they have a number of IA firms committed to helping to service their needs.”