What claims adjustors look for when assessing insurance liability

US-PDGov

Insurance claims adjustment is a process of determining how much compensation a policy holder is entitled to via contractual terms. A publication from the University of Northern Iowa describes the claims function as existing to “fulfill the insurer's promises to its policyholders...” and in “establishing an insurer's relationship to its policyholders.” Legally and on paper, the insurance claim process is designed and supposed to be fair, in practice this is not necessarily always the case. Nevertheless, the following things claims adjustors look for should help in arriving at an equitable solution.  

Background

The U.S. Department of Labor states claims adjustors include claimant background information when an examining the viability of a claim. This helps confirm identity and determine the possibility of fraudulent intent. For example, adjustors have access to criminal history if any, and previously filed claims. Convictions and patterns in previous claims are indicators of how the claimant might be approaching the claim being examined. 

Testimony

Testimonies, witness statements and recorded event details are also sought by claims adjustors because they help corroborate the factuality of the claim, and any embellishments of truth that influence the outcome of the claim. Furthermore, according to A.M. Best, interviews are accepted practice for acquiring testimonial statements. When inconsistencies between recollection of events occurs it is the claim adjustors responsibility to find the most likely occurrence. Physical evidence, police reports and other official documentation also assist in verifying claims. 

Cost

Cost is an important factor in the claims adjustment process. Since cost affects the price of both insurance policies and profitability of the insurer, unreasonable claims in particular are closely reviewed. To illustrate, in the State of Rhode Island, claims adjusters may lawfully seek the opinion of a damage appraiser in order to justify their evaluation. However, according to Donna Freedman of MSN Money, claims adjusters are also known for using manipulative statements to seek out early settlement and lower their costs.

Regulation

Numerous state and federal regulations exist that claims examiners must abide by. If the cost to the insurance company is considered worthwhile, adjustors may or may not be encouraged to objectively undervalue a claim at the expense of the state or legal system. For instance, in California, the Office of Risk and Insurance Management or ORIM adjudicates disputed claims adjustment for the purpose of obtaining settlement out of court. This settlement process follows different rules than the claims adjustment process, however state expenses such as these are avoided via effective regulation that protect both the state coffers and consumers. 

Despite regulations that protect consumers, the claims adjustment process is still a for-profit venture. This means ensuring complete customer indemnification, satisfaction and compensation is quite possibly not a priority over insurer objectives. Gray areas of actual damage costs, interpretation of legal terminology, and misuse of a system that is better known to insurers than the insured is realistic to expect at some level. For this reason, there is an important element of consumer awareness that should help the insured better handle their insurance claims and potentially yield a more accurately approved insurance claim.