Essentials of Loss Adjusting C110

Chapter Four  – First Notice of Loss

The claims handler who takes the first report of the claim from the insured does an intial check of policy coverage. What are the three coverage questions to be asked?

Which policy applies to the property of incident?

Does the policy period cover the loss?

Is the cause of loss covered?

Briefly outline the loss adjusters role in the claims process.

·         Overview of the claims process:

1.    analyzing the policy to determine if a loss is covered

2.    investigate the loss to gather required information to determine what occurred

3.    evaluate the amount of the damages

4.    negotiating and agreeing upon the value of the insured damages

5.    settling the loss

·         it is the adjusters responsibility to exercise control over the distribution of the insurers funds

Define Loss Adjuster.

Identify two other terms used to denote a loss adjuster.

How does legislation define an adjuster in legislation applicable to the common law provinces?

Who is exempt from the definition of adjuster in legislation applicable to the common law provinces?

What is a loss Adjuster?

·         Salaried employees or independent professional (independents are hired when special expertise is needed)

·         Only in Quebec, New Brunswick and Newfoundland are they required to be licensed

·         Also called an adjuster, a claims adjuster, claims rep.

Licensed Adjuster – a person who on behalf of an insurer or an insured, for compensation, directly of indirectly solicits the right to negotiate the settlement of or investigate a loss or claim under a contract or a fidelity, surety or guaranty bond issued by an insurer, or investigates, adjusters or settles any such loss or claim

·         Claims examiners direct the investigations of staff adjusters and independent adjusters, review adjuster reports, and approve claim settlements

·         Types of evidence include:

1.    oral = describing the accident through interview

2.    physical = photographs to support the description

3.    secondary = reports from an expert that present an opinion

·         Special attention is given to fire claims, suspicious thefts, potentially fraudulent claims or claims with coverage issues

Exempt from the definition

            A barrister or solicitor acting in the usual course of his or her profression

            Trustee or agent of the property insured

            A salaried employee of a licensed insurer while acting on behalf of such insurer in the adjustment of losses

            Person who is employed as an appraiser engineer or other expert solely for the purpose of giving expert advice or evidence

            Person who acts as an adjuster of marine losses only

Introduction to Loss Adjusting

• peace of mind gained from the insurance promise
• loss is reported sets in motion the claims process

Loss adjusters

• investigate reported losses
• acquire technical insurance knowledge

Losses are investigated by:

• gathering information
• interviewing witnesses
• taking statements
• coverage is verified
• nature of the loss is determined

Loss Adjuster

• may be salaried employees
• might be hired as independent professionals

Insurers hire independent adjusters when staff adjusters are not available.  
Independent adjusters are subject to provincial legislative requirements.

Statutory definition of a licensed adjuster

on behalf of an insurer or an insured, for compensation, directly or indirectly solicits the
right to negotiate the settlement of or investigate a loss or claim under a contract or a fidelity,
surety or guaranty bond issued by an insurer, or investigates, adjusts or settles any
such loss or claim... 

Many types of positions related to the loss adjustment process

·         adjusters-may operate exclusively on the telephone to resolve claims

·         staff adjusters-may meet claimants in person

·         claims examiners-review adjuster reports

Evidence can be used to determine how a loss was caused or it can be used to establish the value of something

Evidence
Oral= a witness to an accident can describe how an accident happened
Physical= (1) a fitting from a leaky dishwasher or (2) photographs of the scene of the accident to demonstrate how a loss occurred
Secondary= reports from an expert that present an opinion on the value of something or causation

Adjusters assess and evaluate the amount of damages to reflect the terms of the policy

Overview of the Claims Process
insured reports the loss
claims handler records preliminary information with as much detail as possible
initial claims handler may advise an insured promptly when the loss is not covered adjuster will investigate the loss; verify the policy coverage; evaluate and assess damages; negotiate as necessary or deny the claim arrive at a settlement; and recommend payment.

Overall the adjuster's responsibility is to exercise control over the distribution of the insurer's funds.

Outline the skills and knowledge needed by a loss adjuster.

Why would an insurance company hire an independent adjuster to handle a claim.

Insurers hire independent contractors when it is corporate policy to outsource this function, when staff adjusters are not available to handle claims, when the insurer feels that the claim requires expertise only available through a particular independent adjuster, or in any other situations where the insurer feels it is necessary.

Knowledge and Skills for Adjusters

·         Adjusters must have general and specialized knowledge in the field they are representing (home/auto)

·         Adjusters must have clear thinking, ability to communicate, and the ability to solve problems

·         Have knowledge about the law that governs them (civil, common), and the companies protocol for claims handling

Knowledge and Skills for Adjusters

• loss adjuster who deals with damage claims for buildings must know about repair techniques in construction
• adjusters must develop good communication skills
• claims requires clear thinking and ability to solve problems
• knowledge base includes the civil law
• must be familiar with the company protocol for claims handling

Give an example of provincial legislation which a loss adjuster must be familiar with.

Loss adjusters require knowledge on contract law, tort law, the regulatory environment, consumer protection legislation, privacy legislation, and other relevant government statutes.

Why must the claim handler take note of who reports the claim?

It may not be the insured that reports the loss but someone else who will benefit from the insurance policy. The initial loss report should record who actually reported the claim, the relationship of the person reporting the claim to the insurer must be determined. Is it someone who has authority to report the claim, or has an interest in the outcome of the claim? When someone other than the insured reports a first party claim, it may signal a problem. A policy cannot be assigned to another party without the insured’s consent.

A broker must be familiar with the course of action prescribed by the insurer for that particular type of claim. For example, upon the report of an automobile collision claim, what are two courses of action that may be prescribed by the insurer for the broker taking the claim report.

One may refer the client to a choice of body shops the other to a specific one.

 

Supporting services are used by the insurer in order to settle a claim. For example an appraiser is used to assess damages. Name other support service providers.

Supporting Services

·         These include:

1.    appraisers, estimators

2.    restoration contractors, body shops

3.    accountants

4.    police and fire services

5.    lawyers and, medical professionals

·         supporting services may be involved to:

1.    assess the damage

2.    determine the cause of loss

3.    estimate the cost of repairs

4.    supply products or services

5.    assist in resolving claim disputes

Discuss ways to communicate with the insured when the loss is reported.

What is the recommended response to an insured who is very upset about a loss event?

What must temper the use of soft skills in claims handling?

Why must care be taken in the choice of words to acknowledge the insured’s feelings when a claim is reported.

Why is it best to avoid using phrases that imply coverage when a claim is first reported.

What is a common question posed by an insured upon reporting a claim?

 

Introduction to Notice of Loss

·         A loss reported must be routed to the appropriate person

·         All losses must be acted on promptly

·         Managing expectations:

1.    convey a realistic timeline to the insured

2.    is there a coverage issue or a deductible to be applied

3.    policy conditions and limitations should be pointed out to the insured

·         Be direct with the insured to avoid misunderstandings

Acknowledging Feelings

·         When a loss is reported the initial response must acknowledge the insured’s feelings

·         Use of tact and diplomacy can reassure and calm an insured

·         Sympathy should be expressed but no promises as to what the policy covers

·         Nothing must be said or done to waive any policy provisions

·         Distraught feelings must be addressed first even when it is not known how a policy will respond

·         Careless dismissal of feelings can create barriers between the adjuster and the insured

·         Before adequate details about the policy and loss are know, all casual remarks that imply coverage for the loss should be avoided. They could turn out to be problematic if there turns out to be no coverage.

Active Listening – as a principle of relationship building is an excellent means of developing rapport with customers and improving communication levels. Active listening involves

1.    listening to what is being said

2.    interpreting how it is being said

3.    processing non verbal cues

4.    questioning what was not understood

5.    confirming what was heard and understood correctly

·         Active listening encourages the adjuster to hear what is really being said

·         Active listening demonstrates respect even though feelings and views may not be understood or shared

·         Suspending judgement by being neutral is a key component in maintaining control over a situation – approach that permits for greater flexibility in accepting people as they are and regain focus on the needed information

·         Neutral acknowledgement validates feelings

·         Sympathy may cloud objectivity – sympathy engenders a feeling of loyalty to another person and the loss of objectivity

·         Be flexible in questioning – unusual circumstances may arise

·         Adjusters must link an insured’s feelings logically to a conscious and thoughtful process

·         Active listening includes patience – timing plays an essential role

·         Sympathetic approach is appropriate to sad circumstances – while others may entail ignoring or listening

Common questions from the insured.

            Is the loss insured under the policy?

            What do I do next?

            When do I Get paid?

Introduction to Notice of Loss

Insured has many questions

• Is the loss insured?
• What do I do next?
• When do I get paid?

claims handler must be alert to identify when advice must be given

Example
Immediate action can be taken to assign someone to appraise the damages
sustained in an accident. This might include various activities:

     Assigning an appraiser to estimate the damage to a vehicle
     Assigning a contractor to estimate the cost of building repairs

• all losses must be acted on promptly

To manage the insured's expectations expectations must be made clear from the outset

·         convey timelines

·         explain deductibles

·         point out relevant policy limitations

·         be direct with the insured to avoid misunderstanding

Acknowledging Feelings

• utilize soft skills
• use of tact and diplomacy can reassure and calm an insured
• choose word carefully not to imply coverage
• recognize everyone reacts differently to a crisis
• do not ignore feelings because this might create barriers
• recognize that the issue is not about what should be felt, but rather about what is felt

Active listening involves:

• listening to what is being said
• interpreting how it is being said
• processing non-verbal cues
• questioning those parts that were not understood
• confirming that what was heard was understood correctly
• demonstrates respect for the person even though feelings and views may not be understood or agreed with
• patience

1.     use skills of observation

2.     neutral acknowledgement validates feelings

3.     sympathy may cloud objectivity

4.     be flexible enough to go beyond filling in the blanks when a situation demands it

What is involved in triaging a new claim report?

When claim first reported, route it to the appropriate person, similar to triage in a hospital.

An assessment is made on policy coverage, the seriousness of the claim, what must be done immediately, and who should be assigned the loss.

All losses must be acted on promptly.

Initial Loss Triaging

• assessment must be made in terms of coverage
• how serious the claims is
• what must be done immediately
• and who should be assigned to handle the loss

 

Identify the types of information to gather when a loss is reported.

Describe the insured’s role in the claims process.

Discuss the duties of an insured that arise from policy conditions when a loss occurs.

Explain the four duties an insured has when a claim arises under a policy.

What does it mean when a claim is prejudiced?

Obligations Arising from Policy Conditions

·         From the first notice of loss it is essential to understand the rights, duties and obligations of the insured and the insurance company as outlined in the policy conditions

·         If an insured has breached a policy condition, coverage benefits may be in jeopardy

·         Insured must report the loss as soon as reasonably possible to the agent

·         If a delay in reporting the loss affects the ability of the insurer to properly assess the damages and conduct the investigation the late reporting prejudiced the insurer and the insured may loose the ability to be indemnified

Prejudice – is a disadvantage or detriment, in this instance to the insurer, who has been deprived of a legal right without just cause

·         Insured must protect the property from further damage – property cannot be abandoned

·         Insured must provide the details of the loss – including probable cause, the nature and extent of the damage

·         Any other policies in effect must be disclosed – and the insurance company may have a right to allocate part of the loss settlement to another insurer

·         Insured has a duty to cooperate (summary pg 18)

·         Insured should report the loss to the police if a crime is suspected

·         If a risk was misrepresented to the prejudice of the insurer, the contract is no longer in effect as to any property in relation to the misrepresentation or omission – changes within the knowledge of the insured must be reported to the insurer promptly

·         Assessment of the loss must wait until the investigation is complete

·         If the claim is for property the insured must have insurable interest in the property being claimed when the loss happens

Obligations Arising from Policy Conditions

• essential to understand the rights, duties and obligations of the insured and the insurance company as outlined in policy conditions
• when taking the initial notice of loss, it is important to record information relevant to the policy conditions

Rights and duties and obligations of the parties to the contract after a loss?

• insured must report the loss to the insurer as soon as possible

Example
Ron waited a week before reporting a fire loss. During this time, evidence relating to how the fire started was destroyed before the insurer could have it examined by an engineer.

Prejudice is a disadvantage or detriment, in this instance to the insurer, who has been deprived of a legal right without just cause

• insured must protect property from further damage
• must provide details of loss
• insured must advise of any policies
• insured has duty to cooperate

Review the summary of information an insured may be asked to provide

Insurer

• must review the risk to determine whether the information was collected at the time of the application was correct
• has a right to ask what changes occurred in the property since the policy was issued
• has the right to void the contract under misrepresentation or concealment of relevant acts

Outline the broker or agent’s role in the claims process.

When a claim is reported why does the insurer have the right to ask whether any changes have occurred in the property since the policy was issued.

Who is the first party in an insurance contract?

 

 

 

Framework of Relationships in Loss Adjustments

First Party                   Contract                      Second Party

 

                                    Intermediary

                                    Third Party

·         Insured is the first party of the contract

·         Insurer is the second party in the contract

·         Claimant in a liability loss would be the third party

·         Intermediary is the broker/agent

Loss Reporting Process

·         These must be complete, prompt and accurate

·         Generally reported to the agent/broker by the insured or the insurer directly

·         Front line people accept calls from insured’s

·         Identify who reports the claim – is it someone who has the authority to do so?

·         The insured must notify the adjuster of premiums due so that the outstanding amount may be deducted from the settlement

The insured must disclose all changes to the risk, was the rick misrepresented, the insured must have an interest in the property. Material changes that have occurred without notifying the insured could cause a  no coverage issue, or could change the premium.

 

Framework of Relationships in Loss Adjustment

First party  Contract     Second party

First partyIntermediary     Second party

First party Third party Second party

• The insured is the first party of the contract
• The insurer is the second party in the contract
• The claimant in a liability loss would be the third party-a party outside of the contract
• The intermediary is the broker or agent

Loss Reporting Process

• loss reported by the insured to a broker or agent
• brokers and agents aware of the necessity of transmitting claim reports to insurers promptly
• identify who reports the claim
• notify adjust of any premiums due
• match loss report to applicable policy
• preliminary report will be sent usually within one week to the insurance company

Loss report must be complete, prompt, and accurate

Broker is an advocate for the insured