More often than not, a large property and business interruption insurance claim turns into an “us vs. them” scenario, creating a rough process for all involved. Not unlike a football game, someone is trying to win - at any cost. As a forensic accountant for over twenty years, specializing in quantifying business interruption losses and documenting property claims for policyholders, I’ve seen the good, the bad and the ugly. The problem is that the process is designed to focus on disagreements.
We’ve heard the concerns from our clients and the insurers, and we can understand both perspectives. Policyholders accuse the adjuster of being unreasonable - trying to stick it to them at every turn. Insurers accuse policyholders of trying to take advantage of the claim in an attempt to get more than they deserve. The battles can become very heated, even on a personal level. Once during a claim meeting on a large loss, the discussion between the parties intensified until an executive, from the insured, ordered the adjustment team to “get out of my building!”
Disagreement in the course of a property insurance claim is an anticipated part of the process, but there are ways to keep it civilized and productive. It is possible to come to a fair representation of the loss without all the aggravation. The fix is really quite simple but will require the insured and insurer to take responsibility for their contribution to both the problem and the solution.
Here are some ways insurers can improve the claim process:
Take time to understand the insured’s business
Too often the adjuster wants to appear to know it all. It is better to listen first and try to understand the insured's position. Understanding your customer is common business sense.
Adjusters should have superlative people skills
A big part of an adjuster’s role is to coordinate with experts needed for the situation. These are management and organizational skills. In other words, the adjuster does not need to know all the technical aspects of every loss and would be better served knowing more about how to manage people and deal with customers. Whether it’s from retiring baby boomers or cost cutting, there is a lack of well trained and experienced adjusters.
Give the adjuster more control
Even the best adjusters are impaired by the current claim process. Adjusters seem to have limited authority to make decisions. Policyholders find it pointless to explain their issues in great detail, when the real decision maker is somewhere in the background. When pressed to make a decision, they just throw their hands up. It’s difficult to make any progress, when the adjuster has to get every little decision approved by their superiors. To the insured, it just seems like it’s a delay tactic to put off payment, and only adds to feeding mistrust.
Here are some ways policyholders can improve the claims process:
Give the process a chance
While there are many times you will experience some of the problems mentioned above, the process can work with the right people involved. Communicate with the adjuster and their team. Be responsive to all requests that are reasonable and appropriate. If otherwise, ask for clarification and then address your concerns right away.
Maintain good relations with realistic expectations
Set realistic expectations for what you want, like advance payments and resolution of differences. Though insurers are not obligated to finance a rebuild project, they should be willing to advance money to stay ahead of the cash expenditure. By maintaining good relations with the adjuster, they’ll be more open to working with you rather than against you.
The best defense is a good offense
Be prepared and organized on your end so that you can require the same of the insurance company. You cannot withhold information until the last minute and then demand resolution and payment. The faster you answer questions and requests, the faster they can review them. Often times it takes them longer to review the support you provide because they review the information in a vacuum. Don’t assume they understand what to ask for or what has been presented. Promote frequent meetings and discussion to make sure misunderstandings are not made part of their reports to underwriters - once it is on the record, it is harder to change.
Escalate when needed
If issues start to arise that cannot be resolved, rather than letting it fester, escalate it to the markets involved. It is no different than speaking to a manager at a restaurant. It’s better to deal with decision makers when action is needed. This should only be used as a last resort to avoid litigation.
The insurance claim process has it's flaws. I don’t think it’s intentional, but rather a result of how it has evolved. The best approach to improving the process is by recognizing the challenges with an “us vs. them” mentality and finding a way to work cooperatively through the claim. Both sides need to help to fix it, so that more claims get resolved as they should.
Published 2-1-16: InsuranceThoughtLeadership.com