(This information came from Mike Cerf (prairielaw forum))
The Claims Game and what is the obligation
03/01/2000
As I have pondered recent postings regarding, " Bashing Allstate" I have reflected on the broader subject of just what is the obligation of the adjuster. I use the adjuster as the focus of my musing today, since it is the adjuster who at the end of the day delivers the product, that being " Solve the Problem of the Insured"
To start with as I muse today, I also recall the many cases I have testified in as an expert witness in claims. So often I am asked, " well, Mr. Cerf, is it true that all carriers must do, this type of investigation?" The question being more specific, such as scene photos, etc.
My observation is that the obligation of a claims department is to ensure uniform delivery of claims service to their insureds that creates resolution of problems and does not ensure that conflict in fact is the end product. You must first keep in mind that claims departments are very good at the management of conflict, and conflict is not unprofitable for the carrier.
There are two inherent powers that flow from conflict in claims (1) the power of delay and (2) the power of money, or in short delay and compromise. These two powers when abused will in fact create conflict and that conflict can and is a driver of profit. For example, just take property damage claims, then lets say they are third party and there is no injury claim. You have a book of business with $20,000,000 in paid loss on a monthly basis, save 10% and look what you have. If you delay then you compromise, say only 10% you save $2,000,000.
Back to duty and obligation, the insurance carrier in essence is a quasi public institution, without their backing to ensure financial stability, the public at large suffers great harm in terms of peace of mind and financial well being ensured. Yet, what has occurred in the market place is a driving interest, where the interest is not the insured or the claimant/plaintiff rather it its the economic interests of the carrier that is first and foremost. Therefore the powers of delay and money are used in support the finical incentives of the carrier. The claims game in essence is played not for what the fundamental purpose really is, to solve the problems of the insured, the customer, rather it is played, to create problems that in turn play to the power of delay and money, which in turn equates to more profit for the carrier.
It is also difficult for a well meaning adjuster, and there are many, to ensure that the obligation they owe is in fact delivered. The average adjuster lacks experience, has to many cases, has to little authority, is over supervised by supervisors who lack experience, many do not understand their product, the policy and the claims process of investigation, coverage, evaluation, medical and settlement.
In turn we see a mechanized approach to issues, if your evaluation is 5% over the target settlement, you are rated poorly by your supervisor. Or if you cannot reach a targeted settlement, set in advance. Then let it go to litigation.
Also keep in mind carriers despite their obligation to create resolution will create conflict it has become inherent in the way of business and will not improve in the future. Therefore seminars that deal with a uniform approach of how to deal with this issue will become more important as time goes by.
So often I am asked to speak to trial lawyers about this, I tell myself, it certainly must be a driving issue for trial lawyers and their clients. I am hopeful that it will get better, but as I look at the cases that are referred to me as an expert I then say I doubt it.
Mike Cerf
Expert Witness Insurance Claims
Sherwood, Oregon
mcerf@teleport.com
Truth and Justice will prevail! Promote it for all you are worth, or your worth will be nothing!
PR CRAP!Please don't believe "You're in Good Hands", or that "A Good Neighbor" will deliver "A Piece Of The Rock", if you buy their Insurance!
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