When your claim is denied or underpaid, it can be hard not to be angry with your insurance adjuster. However, the more policyholders I represent, the more insurance companies I sue and the more adjusters I depose and cross-examine, the more I come to the conclusion that the problem with most claims is not a renegade adjuster but a system that increasingly gives adjusters less training and authority and then incentivizes them to minimize payments to other human beings who are suffering. This dynamic can leave adjusters burned out and unhappy.
Heavy Workloads
Adjusters are often forced to work extremely heavy loads that can involve hundreds of claims at any time. As a result, the time they can spend on any one claim is limited. Workloads have increased as insurers like State Farm have decreased the number of claims representatives they employ.
Declining Training
Decades ago, the major insurers prided themselves on the amount of training that they provided to new claims representatives and required as much as six months of training before a representative had the authority to handle a claim on their own. Now, this training has been reduced to a few weeks if it occurs at all.
Less Authority
Traditionally, experienced adjusters have been given broad authority to settle claims. This meant that they could make the decision to settle a claim without having to get approval from anyone. For example, they might be able to settle any claim involving less than $100,000. This $100,000 figure was called their “authority.” However, insurers now provide very little authority and make claims adjusters request permission to settle claims over amounts as low as $25,000 or even $10,000.
Less Interaction with More Experienced Adjusters
COVID accelerated a trend of closing physical claims centers and having adjusters work from home. This trend takes away from the ability of younger adjusters to learn from older adjusters in the office. Before this trend, a new adjuster could walk down the hall or to another cubicle and ask an experienced adjuster about how to handle a situation or what resource to consult. While this is still technically possible, it is more difficult and as a practical matter cannot happen as much.
Pressure to Limit Claims Payments
Beginning with the now infamous “From Good Hands to Boxing Gloves” report that McKinsey & Co prepared for Allstate, insurance companies have been hiring consultants and managers have been digging through claims data to find ways that they can reduce claims payments. Sometimes these programs come to light and result in headlines (see this interesting article from the Huffington Post) and other times they exist behind the scenes to shave dollars from claim payments. We’re investigating one possible example of this involving State Farm and roof claims now.
The Human Toll
Many, if not most, of the claims people that I have deposed have been normal people with friends and family that they love and who care about other people. As part of their jobs, they often work with people, families and businesses who have lost everything. They are aware of the tremendous anguish that many policyholders experience after a loss and how the insurance company’s denial or underpayment of that loss leads to even more anguish and sleepless nights. Denying and low-balling claims takes an emotional toll on adjusters as well.
Less Money
To top it all off, adjusters often are underpaid for the amount of work that they do and are minimized by the large insurance companies who want to replace them with AI anyway. A survey of executives indicates that insurance adjusters are on a list of fastest declining jobs.
What Does This Mean For the Policyholder?
When you have an insurance claim, be professional and courteous with your adjuster. Treat them like human beings. If you do experience rude or unprofessional behavior, make sure to document it through witnesses, recordings, or in writing. Also, don’t be afraid to politely request to speak with a manager and ask for a new adjuster.
If you hire legal help, a good policyholder lawyer will look beyond the adjuster and will dig into the claim files, claims guidelines, and analyses performed by the insurance company to determine whether the company is acting in bad faith by attempting to put its interests ahead of yours. The focus should be on the company as a whole and the systems that they have in place as well as on the claim. The focus should be on determining whether the insurance company is focusing on its own financial well-being in ways that have nothing to do with the merits of your claim.
If you need help with an insurance claim, contact us. If you are a current or former insurance adjuster and want to share your perspective, please reach out to us also. We also consult with former adjusters from time to time and welcome chances to broaden our network of policyholder advocates.