COVID-19 sparks debate about U.S. adjuster use in Calgary

COVID-19 appears to be kindling proud sentiments about employing Canadian adjusters, after social media posts triggered an age-old debate about using U.S. adjusters to handle catastrophe claims in Canada.

Twitter was abuzz with comments after Global News posted a piece about more than 300 adjusters arriving in Calgary to respond to damage caused by a massive hailstorm June 13. One hundred of those adjusters were from the United States, as Adam Toy of Global News reported.

Underlying the sentiments expressed in the social media posts is that Canada and the United States have taken vastly different paths to re-opening their economies and social distancing.

To prevent the spread of COVID-19 in Canada, the federal government requires all persons entering Canada to self-isolate for 14 days and monitor themselves for symptoms subject to the Minimizing the Risk of Exposure to COVID-19 in Canada Order (Mandatory Isolation). The act has an exclusion for people who do not have COVID symptoms and are crossing the border for work — and for essential service workers (such as insurance professionals, including independent adjusters).

CRU Adjusters confirmed to Global News that it had called in adjusters from the U.S. to help adjust Calgary hailstorm losses. In a statement to Global News, the adjusting firm noted it had strict protocols in place for its adjusters to prevent the spread of COVID-19, the disease caused by the novel coronavirus.

Among them, the company adjusters are to stay in their hotel rooms as much as possible, wear masks whenever they leave their rooms, and practice social distancing at customers’ homes. Customers are to be contacted by phone and do not come out of the home for exterior inspections. When CRU adjusters have to go into the home, homeowners are advised to stay in different rooms during assessments.

Responding to social media commentary on the topic of U.S. adjusters in Calgary, the Canadian Independent Adjusters Association (CIAA) issued a statement questioning the use of U.S. adjusters when the association contended that there was enough capacity for Canadian adjusters to do the job.

“The concerns expressed in social media posts relate to whether deployment of U.S. adjusters to handle claims in Alberta was appropriate given the current pandemic travel and quarantine restrictions, and whether hiring adjusters to travel to Alberta from another country was appropriate given the current ample capacity within the Canadian adjusting industry to assist,” the CIAA said in its statement.

CIAA is the national voice of independent adjusters in Canada. Its mandate is to provide leadership through advocacy, education and recognized professional standards. The association’s statement goes on to note its reasons for what it saw as ample capacity of Canadian independent adjusters to handle the Calgary Cat event.

“Due to Covid-19, insurance claims activity in Canada has also fallen dramatically over the past several months, as normal business activity and motor vehicle travel, both large contributors to claims frequency, have declined leaving the Canadian adjusting industry with significant excess capacity to take on new claims work,” the association statement says. “With many adjusters either on temporary layoff or employed by firms who are being supported by various levels of government under the pandemic economic recovery programmes, CIAA member firms have the capability to respond to disasters across the country.”

But some within the Canadian claims community do not believe it’s a forgone conclusion that individual Canadian insurance companies will be able to round up hundreds of adjusters to respond to a specific Cat event at a moment’s notice.

For one thing, as sources have pointed out to Canadian Underwriter in the past, it’s not a sustainable economic model for insurers to keep hundreds of full-time adjusters employed on staff year-round to respond to what may only be two Cats in a year. The trick for insurers has always been to find the right number of people to handle the Cat claims in addition to keeping constant the number of people required to handle an everyday claims load.

Hypothetically, what happens if there aren’t enough Canadian adjusters available to go around?

One adjuster, who was granted anonymity to speak frankly about the issue, said he agrees with the CIAA that Canada’s provincial mobility rules and licensing restrictions have made it difficult to move adjusters around the country at a drop of a hat. And so, he said, bringing in specialists from the United States has been a legitimate and long-practiced option for Canadian P&C insurers who are heavily exposed to major Cat claims.

“One analogy I like to use is, if you are in the hospital dying, and the way to save you is to bring in a particular specialist, and if the only specialist available for that job happens to be from Houston, Texas, are you okay with people saying, ‘I’m sorry I can’t do that because he’s not Canadian?’”

The same source noted that bringing in adjusters from the United States is part of the trade agreement between Canada and the United States.

A letter from the Insurance Bureau of Canada (IBC), an association representing Canada’s home, auto and business insurers, can help Canadian insurers secure the temporary use of U.S. adjusters if required.

After the Calgary hailstorm, IBC confirmed the catastrophic damage required to bring in help from the United States. IBC has reported elsewhere that at least 20,000 insurance claims had been reported as of 11 days after the Calgary hailstorm. The current level of claims payouts is unknown, but one industry observer said he would not be surprised if the industry wound up paying $1 billion in damage.

In a statement to Canadian Underwriter, IBC clarified its role in producing the letter required to help Canadian insurers bring in U.S. adjusters. It noted that the association itself does not hire or bring in adjusters from other jurisdictions. “Rather, our role is to offer confirmation of the size and nature of these events to help insurers to gain approval from relevant authorities to bring adjusters in from outside jurisdictions to assist consumers in response to catastrophic events, if required.”

IBC said insurers are using as many in-house and local claims representatives as possible to manage the high volume of Calgary hailstorm claims. “We can confirm that the vast majority of insurers have been using Canadian adjusters,” the association said.

Some insurers will use third-party independent catastrophic adjusting firms during catastrophic events to ensure clients get help as quickly as possible, IBC noted. “Claims adjusters working on the industry’s behalf are required to follow federal and provincial COVID-19 protocols to maintain the health and safety of all customers and communities we serve.”

Feature image by iStock/Travel Wild

Other images by iStock/dan_prat,  iStock/Mitchell Wessels , and iStock/CristiNistor