Canadian Underwriter

Expanding horizons for independent adjusters

July 1, 2000   by Vikki Spencer

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It is fair to say that Paul Hancock has made a career of thinking big. And, as incoming president of the Canadian Independent Adjusters Association (CIAA), he is ready to put this philosophy in action to ensure the industry’s growth and the association’s future viability.

Personally, Hancock has never been content to rest on his laurels. Following graduation from the University of Western Ontario and then Sheridan College, Hancock “just fell into a position” with claims managers Morden & Helwig in Toronto. After two months in the telephone unit, he moved to their Etobicoke office. Less than three years later, he was put in charge of the company’s Bracebridge office, before moving up to the head-office. Despite his rapid rise at what would become Cunningham and Lindsey, Hancock was ready for a new challenge and in 1995 joined Shumka, Craig and Moore, which was planning to expand its operations across the country. “There was an opportunity to get in on the ground-floor of what was going to be a large company,” he says. “In the five years I spent there, I did everything from handling files to putting out the garbage, to marketing, to mergers and acquisitions. It was the best training I could have had.”

But, in February of this year, Hancock found himself returning to Cunningham & Lindsey, seizing “the opportunity to grow with a worldwide company”, as vice president of operations. His rise through the ranks of the CIAA was similarly meteoric. Having served as president of the Ontario region for two consecutive years, 1995-1997, Hancock moved up the national ranks “a little more quickly than anticipated”, a move he says “explains both the fear and excitement I go into this [presidency] with.” His excitement, he hopes, can be spread to the rest of the association, to encourage new members and deal with CIAA’s number-one challenge, keeping members involved. “I know we’re not the only ones dealing with this [problem],” he says. “We’re all being pulled in a number of different directions…there’s fewer and fewer people doing more work.” Getting young members involved will be one key to encouraging volunteer work for the association.

Weathering the storm

Adjusters are facing big challenges at the moment, including the impact of e-commerce, merger and acquisition activity and changes in the way insurance companies are handling their adjusting business. The cost and energy of joining the technology push are something being experienced by all adjusters, regardless of the size of the firm. Similarly, the impact of m&a activity is being felt by all. As insurance companies merge, “the pockets are getting deeper, but there are fewer and fewer pockets to go to. We’re losing business as a result of that.”

The cyclical nature of adjusting means that insurers tend to swing between outsourcing their work to independents and keeping their adjusting needs inhouse. Unfortunately, Hancock notes, the trend is to inhouse adjusting and it is a downturn that has lasted longer than expected. “That tendency is reducing what we [as independents] can do.” And he is concerned by the magnitude of claims companies are keeping inhouse. “They’re doing bigger claims, they’re having service suppliers become more involved in their claims. As a result, we have differently trained people involved at the claims level that are now taking claims away from independents.”

Adjusting firms are taking a “lean and mean” approach in response to these forces, using technology and streamlining operations. Hancock notes that although costs have risen, he has not seen a significant increase in adjusters’ fees since he came into the business 16 years ago. “The margins are running pretty thin. If you don’t have one person doing two jobs, you’ve got a difficult time maintaining profit margins.”

Marketing members

The answer to this rests, at least in part, with the CIAA. Hancock says the association must promote the image of independent adjusters, much in the same way the broker associations are doing for their members. “We have to get back as an association and stress the expertise and professionalism that we can bring as independents.”

The campaign to promote independent adjusters is already under way. Hancock is excited by the release of the association’s new directory, which he calls “a real information tool” for the insurance industry, and by the impending launch of the CIAA website. The site will not only be a source of information and claim generation for members, but also provide companies with links to adjusters’ own sites.

But the project that should get the attention of adjusters is CIAA’s ongoing effort to secure agreements with provincial governments for natural disaster claims handling. The idea came as a result of the 1998 ice storm and the Ontario government’s dissatisfaction with the claims handling process, which was carried out by a local adjusting firm. “The government has come to CIAA and requested, from an Ontario standpoint, how CIAA can better handle a natural disaster.” CIAA has already controlled the claims process of several natural disasters, including the 1997 Winnipeg flood and the Barrie tornado of 1985. Through the Ontario discussions, Hancock hopes to initiate “generalized contracts with the governments for each province”, with CIAA being the venue for claims handling in the event of natural disasters. “The opportunity for members of our association is if we can push this to a national level.”

The project is not only a chance to market the association externally, but also to “stress the benefits of membership” to adjusters. “One of the goals I will have for the year is to go out and sell those benefits [to members],” says Hancock. The other will be to entice members with the association’s educational programs. CIAA is currently working with the Insurance Institute on joint education efforts, and currently has a program on the Privacy Act in the works.

100% membership

A stumbling block to mass marketing the association is that it does not have 100% membership, Hancock notes. Although CIAA represents about 80% of the industry, the incoming president hopes that regulatory changes can be made to boost this percentage. Self-regulation, he says, is the key. “It’s still a huge issue and one of the key issues to our survival as an association. If we can get self-regulation nationally, then the government is saying we’ll have 100% membership, that you’ll have to be part of this body to be included in regulations.” Self-regulation would also play an important factor in the association’s push for continuing education for adjusters.

CIAA is already at the table with respect to regulatory changes across the country. Hancock sees the Alberta Insurance Act rewrite as a potential benchmark, including its provisions for claims handlers. “It’s a great opportunity for us as adjusters…to have claims outsourced as a result of this type of licensing [because of the greater responsibility placed on insurers to ensure their agents are qualified]”. How the Alberta legislation is interpreted could provide a regulatory example for the rest of the country, he predicts.

And, within the year, the Canadian Council of Insurance Regulators is expected to finalize its definition of “adjuster”, a process in which CCIA has been involved. Recently, an arbitration ruling from the Financial Services Commission of Ontario (FSCO) brought the definition of who qualifies as an adjuster into question. A man licensed as neither an adjuster nor a lawyer was allowed to act on behalf of claimants in the arbitration process, a scenario that confuses and concerns Hancock. The case could set a dangerous precedent for adjusters, he says, if unlicensed individuals are allowed to represent claimants. “There’s going to be an appeals process and we hope to be included in that.”

Between regulatory battles, marketing campaigns an internal promotion, it promises to be a busy year ahead for Hancock, who will take the reigns at the end of September. But he is confident that the association will be able to stretch its influence and ride out the trend to inhouse a
djusting. “There isn’t anyone better to handle claims than the people we have in the association. It’s just a matter of getting the opportunity to prove that.”

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