Loss adjusters – how to forge trust, Risk managers should trust loss adjusters and take them into their confidence, according to a leading practitioner

Loss adjusters - a question of trust.

In the most recent Airmic News roundtable, loss adjusters came in for some criticism. They were described by one speaker as often favouring insurers and are sometimes even seen by policyholders as an enemy. In this article, Phil Hill of Cunningham Lindsey says risk managers will benefit from forging a strong relationship with their adjusters.

The term ‘need to know’ generally describes the restriction of data which is considered sensitive.  It is a mantra enshrined in many corporate cultures – and often for very good reasons.  Under ‘need to know’ restrictions, even if you have all the necessary official approvals to access certain information, unless you have a specific need to know i.e. necessary for the job you have been assigned to, access will not be granted.  If, for example, you are manufacturing a nuclear warhead, you do not want too many people to know how the initiator works or where the nuclear pill is stored.  There are exceptions, of course.  Loss adjusters and risk managers need to know everything.  In the case of the Loss Adjuster, not everyone shares that view!

When an incident is significant enough to cause damage or disruption or deemed dangerous, there will be an investigation into the root cause.  Those involved have many different agendas.  It can range from who is to blame, should anyone be sued, how can we prevent it happening again, do we need to change the maintenance / inspection regime, is there criminal culpability, to will we lose business and, of course, can we make a claim?  Those at the heart of the incident and immediate management can go into clampdown mode for self-preservation purposes and, more understandably, to control the release of information until they know what the real issues are.  Quite rightly, they need to prevent misinformation and rumours alarming the various parties involved.  An adjuster going into such a situation can be treated with suspicion and put in the ‘need to know as little as possible to get the claim paid’ category.  Inevitably, this delays resolution of the claim, in extreme cases by years, and it can also prevent the real cause being identified.

This is not to suggest that loss adjusters are better at establishing the cause than the business / industry experts, but some parties can be too close to the incident and consequently side-tracked by pre-conceived ideas.  One can ask what appears to be a stupid question with the reply given that the scenario in question is impossible, only to discover weeks or months later that this is exactly what happened and was discounted because everyone in the know thought it was not possible.

In a corporate environment, the adjuster is rarely there to investigate fraud or potential policy violations, so is a useful impartial observer who can often see inconsistencies and unexplored avenues of enquiry missed by those closer to the action.  The adjuster is also experienced in dealing with many other incidents with possible similarities.  So how can we maximise the benefit of the adjuster’s input to insurers and the business itself?  It is simple: tell them what they need to know as quickly as possible!

Fundamentally it is about developing mutual trust.  Above all, both business and adjuster share the objective of getting to the root cause of what really happened.  The adjuster needs to understand the sensitivities and priorities of the business whilst being able to trust what they are told.  Similarly, the business needs to assimilate the importance of an adjuster’s involvement.  It is surprising how often the adjuster can appear to be asking an awkward question (diplomatically of course) that the business has been avoiding asking themselves when the answer actually ends up helping their case.

The risk manager is the catalyst to all this.  S/he needs to know everything so the business can be insured and the risk managed.  S/he will also know the key individuals within the business who can facilitate the flow of information.  So it is vital for the adjuster and risk manager to forge a strong long-term working relationship to develop the trust and understanding that’s mutually beneficial to both parties.  These relationships need to be open and constructive, so that views can be shared freely.  This way, the expectations of insured and insurer can be managed, nasty surprises are avoided months down the line and the most important part: lessons can be learned for the future.

Phil Hill is Principal Specialist - Building and Construction at Cunningham Lindsey

Phil Hill
of Cunningham Lindsey