You can learn a lot by observing what others do. If they have a better way of adjusting claims, then it probably pays to imitate their processes. You should also pay attention to things that don’t work. Intelligent people imitate success and steer clear of failure.
Claim adjusting practices boil down simply to customer service. It is important not to create a sense of frustration in the policy holder during a claim. Aggravating the insured during a claim tends to lead to litigation. It also results in customers looking for other insurers for their future business. Granted, not everyone is going to be happy with the way a claim was adjusted, but it is important to aim for satisfaction.
A recent look at a handful of Oklahoma claims involving State Farm suggests a highly specialized approach to claim adjustment. For example, in a water damage claim to a commercial building, one file showed over 30 claim representatives had worked the file. Each part of the claim was broken into components such as structure, contents, business interruption, subrogation, etc. Specialized field adjusters wrote estimates. Inside adjusters reviewed and evaluated the estimates.
The adjusters were assigned to Teams. Each Team was led by a Team Leader. The Team investigated, evaluated and adjusted the claim. The work was done by the various claim specialists.
The intended benefit of tasking an adjuster with a limited segment of a claim appears to be efficiency. The assigned adjuster can move through the claim quickly, make decisions, and go to the next file. By having Teams, if the adjuster responsible for the file is unavailable, then questions, decisions, etc. are addressed by a Team leader. The Team members don’t need to time to review Oklahoma law, the Team continuously sees similar claims. No time is wasted by an adjuster having to think through the claim. The scope of adjusting is taken to the level of being a “specialist”. On the surface, the approach makes perfect sense. It is a highly efficient use of an adjuster’s time.
Just about everyone has heard of Henry Ford. He started Ford Motor Company. By focusing on the assembly of cars and using standard parts, Henry Ford made automobiles affordable to millions of Americans. Without his renown manufacturing concepts, most of us would not enjoy the luxury of owning a car. We would not be able to afford one. State Farm’s approach is remarkably efficient, but is it really a good way to adjust claims?
There is one distinction in manufacturing a product versus offering a service. Manufacturing requires focus on similarities. If you make a specific car, then it is always the same. The customer will buy the car if they like it. If not, the manufacturer will make changes or eventually discontinue the model if sales go down. With a service, the customer is anticipating someone meeting a need that varies from the expectations of the previous customer.
Much like a waiter at a restaurant promptly refilling your drink. You need more, but getting iced tea in your half full glass of Pepsi isn’t exactly what you call “service”.
Here are a few thoughts to consider:
- Service is meeting needs. Going back to the restaurant analogy, if you have to keep asking for a drink refill, the inadequate service will be reflected in the tip or the gratuity. Adjusting claims is about taking care of problems that usually weren’t expected. The insured didn’t plan for a tornado to strike, hail to pound the car, or little Jimmy to “play with the matches”. The day may have started off well, but now there’s a problem.
- Efficiency for the claim team may frustrate the insured. One expectation of a claimant is genuine communication. If the insured does not feel heard, there’s a problem. When an insurer has 30 plus adjusters servicing a claim, the insured has to repeat himself over and over. As each individual adjuster speaks to the insured, questions are naturally asked about the loss and what happened. Invariably some of the questions are the same ones already answered by the insured. People become angry when they don’t think an insurer is listening.
- Claim teams only work when there is responsible management. Communication must occur for a any team to effectively work. A simple example is a routine car accident. The insured sends medical bills to the Medpay adjuster. The same medical bills are important to the UM adjuster. The insured is not going to know the bills sent to one adjuster may not be available to the other adjuster. It doesn’t take a lot of foresight to see frustration if the Team doesn’t act as a “Team”.
- Bad Faith Claims are expensive. Every insurance company recognizes that bad faith litigation drains resources. Avoiding litigation has value and impacts the company’s bottom line. Bad faith lawsuits generally arise from unmet expectations. It is rare for a satisfied policy holder to go looking for an Oklahoma attorney.
Job satisfaction reports show people become bored with the mundane. State Farm employee satisfaction ratings reflect some employees aren’t pleased with the focus on efficiency.
With an average rating of 3.5, some claim representatives at State Farm are not satisfied with the job. Adjusters, just like other people, burn out when the perform the same receptive work and never experience a change.
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Management always has to consider the bottom line. Insurance is a business that needs to earn a profit. Undoubtedly, efficiency is important. But the insurance industry is also a service with responsibilities to its customers and also to its employees and staff. The greatest customer service satisfaction can readily be traced to the greatest employee satisfaction. Ultimately, the very best insurance companies learn the greatest profits come from happy customers and long term employees.
Our Oklahoma law firm has defended bad faith claims, coverage matters, policy disputes, pursued declaratory judgment actions and worked with thousands of adjusters. You can gain a lot of knowledge listening to others. If you pay attention long enough, trends become clear. We all want the same thing, respect, fair treatment, and thought that somewhere along the way we made a difference.