Pros and Cons of working staff adjuster versus independent adjuster positions

I find it fascinating that so many new adjusters are entering the catastrophe claim profession based on stories of six digit incomes they hear other independents make during peak storm seasons such as 04/05 with little understanding of the employment options as either a staff adjuster or an independent daily(non catastrophe) or catastrophe adjuster.

I ask new adjusters to give me 5 pros and 5 cons of being a staff adjuster and 5 of each as an independent adjuster. Having taught a Fundamentals of Claims class now to over 100 adjusters in the past year, I have found very few that can answer this question. I have also learned that there are many common misconceptions about the freedom an independent adjuster actually has.

If your considering a career in claims and do not know which way to go, here are some things you may want to consider:

Staff adjuster Pros

Regular reliable salary

Paid training

Health benefits

Possible company car for field adjusters

Computer equipment and estimating software provided free

Travel expenses paid for or reimburseable on expense account sheets

Temporary housing on catastrophe assignments is located and paid for you

Cellphones provided and charges covered by carrier

Carrier keeps you up to date on claim news

Carrier holds your CE classes for you and makes sure you are up to date

Carrier handles your licensing issues and differences in emergency adjuster licensing rules

Carriers often pay continuing education such as AIC designation, CPCU courses, college courses

Retirement benefits

401K plans

Errors and Omissions coverage

Defense costs of counsel paid by carrier should you be sued for claim file handling

Great seminars for training by attorneys, experts and hot topics provided

Field training mentors provided to you for ride-a-long field training 

Independent Adjuster Pros

Freedom to purchase type of equipment and software you like to use

You have the right of refusal of an assignment to a location you don’t want to go(city,etc)

Possibility of earning more GROSS income than a staff adjuster based on fee schedules on cat

Assignments are temporary so you don’t have to stay long term with boss you don’t enjoy

Freedom to decide which adjusting firm you are better suited to work for

Freedom to choose where you house during a catastrophe assignment

Freedom to choose if and when you have room mates at seminars and conferences

Freedom to decide which carrier you like to work files for

Freedom to decide which firm you will work for based on carrier fee schedules

Freedom to use estimatic software you prefer by aligning yourself with an adjusting firm who uses the one you prefer

More employment options since adjusting firms do not require college degrees but hire you based on adjusting experience and adjuster training levels

Adjusting firms pay on fee splits so you can quickly earn the same fee split as experienced adjusters

Many of the more complicated files are moved to staff to complete such as coverage issues so you can be more productive

Independents generally have more down time for vacations between assignments

So then..what are some of the Cons for these positions?

Staff Adjuster Cons

Often don’t have freedom to reject a catastrophe assignment

Constant reorganizations and possible required relocations to maintain employment

Often assigned room mates at seminars, schools, conferences (non management)

Druggery of yearly performance reviews even good employees dread each year

Politics of corporate environment

Long tail on promotional opportunities- some carriers as long as 3-5 years to progress to claim specialist level

Carriers often require a 4 year degree which many independents may not have

May be deployed to catastrophe assignments if you are on a cat team longer than you prefer

Sometimes hard to transition off a catastrophe team to regular claim positions as departments at home are downsizing and scaling back or moving to claim central environments

May be “on call” for 24/7 customer service claims for field adjusters

Dealing with an unpleasant boss long term

Often required to train new adjusters slowing down your work

Often salary and much overtime required to handle files timely (lots of case law on this issue)

You can’t walk away from the bad files with long tails- they are yours to completion

Short vacation allotted -usually 2 weeks for first few years

Guess who handles the problem files when the cat teams depart?

Independent Adjuster Cons

Costly training for seminars, conferences, seminars

Required carrier certification tests for multiple carriers to work their files

Expensive equipment costs for computers, ladders, miscellaneous equipment and cat logo clothing

Estimatic software expenses since you must provide. Especially difficult if adjusting firm working for multiple  carriers using different software programs

Expensive temporary housing for catastrophe assignments you must pay

Difficulty finding reliable information on the reputation of adjusting firms for payment of adjusting fees, adjuster support in the field, forms and endorsements, and other important details

Navigating Independent contracts to protect yourself before you sign independent firm contracts

Expenses of defense costs should you be sued if your E and O policy does not cover

Errors and Omissions cost to provide your own if the adjusting firm does not provide

No guarantee of work

Transportation and maintenance cost of your own vehicle as well as insurance cost

Handling your own CE requirements- costs of courses

Complying with the non resident emergency adjuster requirements and fees on your own

Obtaining a mentor to help train you in the field is very difficult

Keeping up with important developments in claims if you are not a CORE adjuster with an adjusting firm. This year alone we have about 5 states with new licensing developments as an example.

No clear cut path to recovery of your adjusting fees should a vendor not pay you

Very long tails to receive adjuster payments-not uncommon to be 60-90 days before you see your first payment on a catastrophe if you are working for a firm who pays after the carrier pays

Extra layer of management since you report first to adjusting firm manager who then moves your closed file to staff management for closed file review.

Misconceptions I often see in response to the question about the pros of being an independent adjuster center around the expectations of an independent. We get answers such as less file quota, less paperwork, freedom to turn down files in a territory you don’t want to go to if it’s out of your assigned territory, no management, loose dress codes, bringing in assistants, freedom to turn down adjusting firm assignments for a firm you are considered a core (regularly assigned) adjuster and many other false assumptions.

You need to understand if you accept an assignment as an independent that you are working in a carrier’s world. They have the same high standards set for you as they do for their staff adjusters upon arrival at their cat assignment or acceptance of their files for daily work.

The same time service requirements, timely inspection and closure of files applies. You will be required to use the same report forms, pattern letters, and good faith claim handling standards that a staff adjuster must abide by. Your production numbers and quality of file documentation must still meet carrier directives and matches the same file standards for a staff adjuster. This is in addition to specific guidelines your adjusting firm may have for submitting documents for invoicing the carrier.

We hear many comments from adjusters who know the ropes…… ” how independent are you really” ? If you look at many states case law on determining if you are an independent or are you an employee……you do have to wonder in spite of the fact that most adjusting firms deploy independents on a 1099 basis. There is little room for working on your own once you arrive on assignment. All of your actions are directed by those we serve to include the adjusting firm and the carrier. You do not have the choice of what software you use in most cases, what forms you will use, what closing and inspection requirements are,etc. You do have the same freedom as a staff adjuster to set your inspection appointments and schedules but don’t be naive to think your numbers will not be monitored to be sure you are meeting customer service standards.

These partial lists of pros and cons should help you decide which position best meets your background, preferences, and pocketbook. Feel free to add to the list if you have additional thoughts to add to these pros and cons!