Are Adjusters Fungible Units? Are Independent adjusters a dying breed?

August 2, 2007

Hmmmmmmmmm an interesting concept!

First, let’s define fungible and fungibility for those who aren’t familiar with these words which have become quite  amusing  for some lawyers as shown by the tee shirts and mugs available here regarding their own affectionate term for themselves as Fungible Billing Units. Adjusters also often bill on time and expense billing keeping up with their billable hours on a claim file so this could apply to us too….or does it?

From Wikipedia, the free encyclopedia

Fungibility is the property of a good or a commodity, that its individual units are capable of mutual substitution: different instances / units of the same type of good, make no difference

http://www.thefreedictionary.com/fungible

Fungible, Fungibles fun·gi·ble play_w(“F0364400”)adj.

1. Law Returnable or negotiable in kind or by substitution, as a quantity of grain for an equal amount of the same kind of grain.

2. Interchangeable.

n.

Something that is exchangeable or substitutable. Often used in the plural.


[Medieval Latin fungibilis, from Latin fung (vice), to perform (in place of).]

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Rumsfeld referred to our American troops as being fungible units while discussing an extension of their deployments to Iraq. You can view an  interesting article here referring to that comment. I particularly refer you to  comments made in this 2004 article:

“His vocabulary seems to reveal the mindset of a corporate efficiency expert, focused in an era of “downsizing” on reducing the “head counts” of “full-time equivalents” and their pesky benefit packages.”

Does this properly describe the way staff adjusters are feeling in a world of corporate downsizing of field operations with movement to claim central operations? How about independent adjusters who are sorely missing personal relationships with some adjusting firms and carriers as they are replaced by the in office fungibles with little to no training by comparison to the months and years of  training experienced adjusters were formerly given?

More importantly, how is our most important commodity- the insured- feeling about the team adjuster concept as insurers require a homeowner discuss various components of their claims (building damage, personal property damage, additional living expenses, and more) with a multitude of adjusters versus the  experience of face to face personal field inspection by adjusters fully competent to handle ALL aspects of their claim? You say this is nothing new “we’ve been doing this for years on the auto side of claims”. This is NOT the same as the practice in auto claims where the property damage to the car was handled by a property adjuster and the bodily injury claims for the person they hit were handled by the BI unit. In those cases there were 2 entirely different parties involved in the claim-not just the insured as far as the “damages” were concerned.

Is 24/7/365 service really better serving our customers when the quality of the service is reduced? Ahhhhhhhh….. customer service that never sleeps but when will we wake up to the fact that  more is not always better and that 24/7/365 is harming  our independents and employees and the families who deal with poor health issues of their loved one as they suffer the many  negative implications of shift work. This article explains the aftermath of shift schedules on one’s health in the long run. Imagine if shift work can cause  such health issues what the consequences  must be for adjusters working 7 days a week for a minimum of 12 hours per day as required on storm assignments and the damage done to the quality of life for the members of our community. All adjusters  in this industry have shared the experience of a carrier requiring they work  Thanksgiving and Christmas and most major holidays with no time for rest or time with family during catastrophe operations although relationships and health suffer as a result. We have also experienced the cycles of change as we move back and forth between phone service and field service to our customers. We know your customer service findings may show satisfaction with this service but that is NOT what we hear in the field as the face of the insurance company.

Author Jonathan Stein, JD discusses the lack of training and experience in this excellent article shared by Roy Cupps in the Articles section on his site at www.catadjuster.org. Don’t you think this says it all? This article further points out it’s a myth that adjusters are leaving the industry which we further discussed  here in our blog earlier this week while talking about the number of emergency adjuster licenses issued in FL and independent licenses in TX. With these large numbers, are we getting the experience level we need or just adding to the quality service problems by not properly training new adjusters entering our industry? How could we be needing “warm bodies” as adjusters often comment with numbers such as these? When you require 3 years of experience to send in independents during a crisis, why are you handling a large portion of your losses with  claim central adjusters new in the field driving experienced adjusters out of this business?

Experienced field adjusters know they aren’t a fungible commodity and there is no fungibility or mutual substitution of services between claim central operations and field personal services. We would just like to know when the carriers will wake up to this reality. We’ve all experienced the “measure to the inch” mentality of carrier reinspection departments for field adjusters while at the next assignment  in claim central environments we hear the in office adjusters comment  ” let me round that up an extra few feet to be sure it covers your expenses”. What are they thinking? All insureds and all claims need to be handled equally by qualified experienced adjusters while also providing for training opportunities for trainee adjusters both in the independent and staff adjusting fields. You can’t treat insureds within the same carrier differently depending on whether it is a phone settlement or a physical inspection. You can’t replenish retiring independents your firms count on when you do not allow newer adjusters to train with field  independent personnel or cross train with your personnel.

This CPCU poll shows the number one concern CPCU’s have is that the  insurance industry will soon be facing massive retirements of the baby boomer generation leaving us with a shortfall of qualified personnel. If we want to be proactive we can’t just talk about this but should join our endeavors to replenish the field through mentoring programs like ours at ClaimSmentor  for online assistance or field programs like the National Association of Catastrophe Adjusters (NACA) apprentice program. It isn’t enough just to offer mentoring within your carrier offices although it is commendable and encouraging to see some of the many programs like this mentor effort by Gail Soja of Chubb Custom Insurance in NJ.This 2007 Women to Watch article can be found at www.BusinessInsurance.com .

What else can be done to help those newly licensed adjusters outside of your offices to open opportunities and encourage their development? As adjusters, our concerns are not with your community bike rodeos, basketball tournament sponsorships, and car race sponsorship ads. Our concerns are with development and treatment of both staff and independent adjusters. Invest in us. We are a major part of your customer service program. We study your summer intern programs for college students but why not include the adult changing career fields? There are independents out here who are licensed, have Xactimate and other software classes, have taken many carrier certification exams to work your cat losses as well as other valuable training yet you continue to hire trainees with no license while these folks with an interest in beginning carrier adjusting careers can’t get their foot in the door. Why do you not advertise to appeal to them when you need entry level adjusters instead of the campus career fairs?

Adjusters are worried they will be replaced by the use of technology like aerial photography discussed in these articles here  and here. While their experience tells them it takes an adjuster to count the hail hits and an adjuster to meet face to face to handle coverage issues versus an unlicensed estimator, they see the writing on the wall that tools such as this can be used by carriers with claim central operations, estimators, and preferred contractors.

Do  studies reflect the change from field operations to claim central operations is reducing the cost per premium dollar to handle claims further reducing premiums for policyholders nationwide? Not based on any news articles we are reading about rate increases due to the storm seasons of 2004 and 2005! If so, point us in the right direction to review the current studies so we understand your position. How do your yearly average settlement figures per cause of loss compare today under these claim central operations to average settlement figures per cause of loss with your former field operations? We’d like to know and we are sure the average insurance consumer would also.

It would be great to see improvement in the independent community as well. Independent adjusters we speak with no longer feel like “core” adjusters for many firms. They are tired of the fee based conference  circuits and expenses in the yearly spring rounds to get noticed only to be herded into rooms with massive numbers of adjusters and placed on rosters without the first personal conversation with some firms before being activated. They want to gain the education and dedicate themselves as core adjusters to your firms but no one is committing to them in reverse because you cannot. The carriers haven’t committed to you and in cases where there are established relationships between carriers and vendors, there are no guarantees on file assignments or which order they stand  among the many firms the carrier is contracted with. Is there any wonder why there is such a duplication of names on adjusting firm rosters? This leaves the adjusting firms in a quandry each  and every storm not knowing who they can rely on to actually deploy since adjusters are on multiple rosters because they have no personal relationship and open dialogue with you. As your HR personnel changes, so do the contacts the adjusters have with your offices so even core adjusters in many cases aren’t the ones getting “the call”. New adjusters are amazed to learn their resume listing their experience is not shared with the carrier and do not understand when they are sometimes told not to disclose those experience levels with anyone at the carrier. Adjusters are also forbidden by some firms to ask any questions of a carrier staff employee but rather to go to the adjusting firm for answers. There are great reasons to do so if there is someone available for help at your firm but other times it would  more efficiently serve the insured to get a prompt final answer rather than go through the levels of command via the adjusting firm to carrier when they could simply make one call to the carrier and resolve a pending issue.

Together… staff, independents, and carrier executives need to study these issues and help preserve the quality of  customer service in our industry.

Then again ….. we can sit back and just wait for the newly announced Senate Panel Cat Issues Commission to tell us what those of us with first hand experience can address better.  See the announcement here.  How about the new federal recommendations on the 2007 Multi Peril Act?

Are we all following the discussions about seperate adjusters being discussed to handle the NFIP and wind loss claims versus adjusters managed by carriers in the house committee meetings causing havoc again with insureds required to deal with 2 adjusters leading to miscommunication on coverages? What has history taught us about this?

We all are well aware of the the reasons the single adjuster concept was developed to avoid the confusion for an insured having to deal with multiple adjusters. In fact, you can read  an example, the FL Condo Statute Chapter 718. This Statute shows who bears responsibility for various building components and elements  which now eliminates the mass confusion which used to be experienced by the insured when the Master policy adjuster differed in opinion with the unitowner adjuster or the by laws for the Association were not clear? Are we going to let these committees make decisions requiring we return to those days of misunderstandings between two adjusters creating delays for insureds on wind/water issues to resolve these kind of differences or move forward?

Let’s return to the Johnathon Stein, JD article  where he comments he is not speaking out about training and industry issues to create conflict but to “recognize a problem, open dialogue, offer possible solutions to try to restore the professionalism to adjusters”. We too are attempting to open much needed dialogue between our independent operations and your carrier plans. It is not enough to share this with your selected vendors. Share your goals and plans with the adjusting community at large so we know and don’t leave the industry if you plan to use us. Be more independent adjuster user friendly.

A great example of communication gaps with independents is the Citizens FL initative with the 45 selected vendors. While an independent can locate the announcement of the selections in a list on your purchasing link should they search hard enough, the list contained several incorrect adjusting firm names. Many adjusters following up for website and email addresses to apply for these jobs were told Citizens did not maintain such a list for independents although their task force committee and board meeting notes clearly say their intention is to use over 6,000 independent adjusters to handle their claims. This could have been simply handled by posting on the Citizen’s job opportunities on your website that you were looking for 6,000 independents and how they could apply with the 45 listed adjusting firms by posting this website and email information for each HR department at the adjusting firms. How about the possibility that Citizens could have accepted resumes through your system and sent a copy of each Independent applicants resume through a resume “rabbit” system which would have notified each vendor who then could contact the adjusters inviting them to meetings and for deployment opportunities. It also would have avoided mass confusion problems regarding the required pre-orientation meetings as adjusters are getting conflicting messages out here. We hope this is not a sign of what the now largest carrier in FL with 1.3 million policies is to deliver by way of claim service during storm season should a hurricane strike our state. Talk about needing a wake up call! What private insurer in the United States would ever be allowed to have a ratio like 60-70 staff to 6,000 independents? Will this not be a bad dream for all Floridians this coming year? Just visit the task force site and Citizens report here  for  these figures showing their current staff employee numbers.

See-it’s simple! We know we are not your employees but if you want to use us, each carrier can simply post this information and which vendors are serving you. Don’t assume adjusters know. Many do not. It would be impossible at this point for an adjuster to know which adjusting firms serve which carriers so they know where to apply. It’s not that the industry has “run out” of experienced adjusters. You just are not communicating your needs effectively to us as these examples show. We are doing the best we can trying to keep up with the many seminars and adjusting firms on ClaimSmentor for you but this should never have been necessary if it was clearly posted on the carrier website. If you want to build a complete puzzle, you need all of the pieces to put it together.

Carriers….have you considered using your marketing departments to poll independents who service your claims to get their anonymous input as to vendor feedback, training they are getting,  timeliness of adjuster fee bill payments,etc to put a stop to some of the poor practices in the independent adjuster field? Who knows better than the independents working with these vendors for a true picture of which adjusting firms should be used? It’s not uncommon to hear adjusters say “I just cannot believe carrier X is using adjusting firm Y “because they know the positives and negatives of each firm they have worked for. Ask for their opinions, they will gladly give it should you protect their identity so that are not run out of the adjusting community. The same goes with polling them about their experience while adjusting claims for your carrier. They can provide valuable input into the quality of claim handling instructions they were given, the treatment by your claim managers, and insight into issues they hear with your insureds on customer service out in the field.

Independent adjusters have no clear avenue for recovery of adjusting fee bills when they are not paid. Why do state insurance departments not post complaint stats for adjusting firms working in your state so adjusters can avoid these issues by not working for an unscrupulous firm to begin with?

Let’s make this a priority to save our industry before independents leave so we service customers the way we know it should be done. We don’t want to be considered Fungible Units  any more than the families of  troops appreciated those comments. What we do want to do is restore adjusters to valued members of the insurance community along with considering work/ life issues to enhance relationships at home along the way. Let’s walk the talk and move forward before these new government programs destroy our profession and service to policyholders. We know they are not better for the customer but we must band together and take action. Let’s “Make Things Happen” in the adjusting community to improve opportunities for valued members.

Postscipt 8/3/07: This Bloomberg article  just issued is an outstanding example of how we are being perceived by the public. The article discusses loss ratios, carrier executive comments on claim processes, and technology changes in the industry. See our earlier  blog on 2nd quarter results here which spell out why the loss ratio and profits may be higher as the number of claims received in the 2nd quarter of 2007 are the 2nd lowest received in a 2nd quarter in 10 years. If you have the time, there are several good video links at the top right side of the Bloomberg article to include a video interview of Robert Hartwig explaining from the carrier side of things why this article is wrong. Great stuff in both the article and the interviews!

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