loss adjusting


David Toser


INDEPENDENT LOSS ADJUSTERS ASSOCIATION


“ The ‘dumbing ”


down’ has gone far enough!


Wherehave all the qualified loss


adjusters gone? T


he question as to the whereabouts of all the


qualified loss adjusters seems to have been echoed by Malcolm Harvey when asking how insurers are going to cope with future claim surges in ‘A Winter’s Tale’ (Insurance People June 2011). The answer probably is that most have either retired, or are working for smaller niche firms and have not been replaced by similarly qualified personnel. An example of the value currently placed upon fully qualified and experienced adjusting staff is evident from magazine articles such as one in which a major loss adjusting firm proudly announced that in order to meet the shortage, it has introduced a training programme for its liability claims staff to include two months’ on-the-job training in its complex loss team. Two months! Time was, not so long ago that ‘complex losses’ were dealt with only by qualified loss adjusters, mostly Chartered Loss Adjusters who were required to have passed the qualifying examinations and were obliged to show that they had completed at least five years’ experience with a chartered loss adjusting firm. The term, “if you pay peanuts, you attract monkeys” comes to mind. Of course insurers are looking carefully at their claims handling costs and by all events have gradually been reducing them year on year to the point where at


18 insurancepeople JULY/AUGUST 2011


least one “loss adjusting” firm is offering to deal with claims without charging any fee at all; safe in the knowledge that the commissions received from building contractors and other service providers engaged by them to undertake damage repairs and supply replacement items, more than makes up for the loss of a fee from their instructing principal. This business plan might seem attractive to insurers seeking to reduce their claims handling costs even further, but then they may not have heard that there is no such thing as a free lunch (unless it is one purchased for them by an impoverished loss adjusting firm seeking more business). The “commissions” paid are, of course, built into the repair or replacement quotations provided and approved by the employing “loss adjuster”, so that the net cost of the claim is effectively increased by the amount of “commission” paid.


Probably nothing wrong with that, I hear you say, if the commissions paid are transparent to all concerned. But how many insurers would be happy to pay a fee of 20% or 25% of a claim settlement of a hundred thousand pounds. For this effective fee they may be hiring the services of an unqualified loss adjuster who has perhaps had two or three months ‘on-the-road’ training, usually works out of his car or from home with a lap top computer, and is allocated sometimes little more


than half an hour on site inspection time, after having visited five or six other claims earlier in the day.


How is a loss adjuster, obliged to operate daily under these conditions, able to adequately look after the interests of his instructing clients, the brokers, and the policyholder, while providing an on-going efficient and professional service until the claim is concluded, sometimes several months later?


The recent formation of the Independent Loss Adjusters


Association seeks to address the ethical standards issue involved in the above developments. Members undertake to deal with claims in a professional and ethical manner, and have no financial interest in any party involved in the settlement of a claim. And, other than a fair fee from their clients, they do not accept commissions, benefits, or inducements from any other party that may call into question the independence and objectivity of the advice given to the client. See www.ilaa.org.uk


Independent Loss Adjusters Association


Just over a year ago a number of independent loss adjusting firms decided that the “dumbing down” of the loss adjusting profession had gone far enough and came together to form the Independent Loss Adjusters Association, in an attempt to promote the advantages of truly independent loss adjusters, and maintain ethical and professional standards among its members.


The first Annual General Meeting of the Association took place in London on 24 May 2011 at which members re-affirmed their opposition to the notion that loss adjusters should be free to accept any “commissions” paid by building contractors or other service providers which might affect the objectivity of their professional judgement on behalf of their instructing principals who pay their fees. We hope that this “unusual” idea catches on.


Membership is open to professional practices engaged in the negotiation and settlement of insurance and other claims on behalf of insurers, Lloyd’s underwriters, insurance brokers and others, including commercial and private policyholders.


David Toser


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