To cut costs, carriers have made the shortsighted decision to shorten or even cut training programs. This has impacted the entire industry.

Before the current crisis, new recruits were put through a rigorous training
program that lasted anywhere from a few weeks to a few months. Exams were given weekly, and an extensive exam was required at the end of the training period. A grade of 85 percent or better had to be earned to graduate and, yes, there were failures.

Things have changed dramatically since then. The focus is on-the-job training, which usually boils down to sporadic and reactive guidance from overworked managers and peers.

The impact of minimal training of new claims adjusters is being felt even more acutely because a growing number of experienced adjusters are leaving the market due to burnout, leaving very few experienced adjusters to mentor new recruits. Some adjusters, in fact, move on to be risk managers.

To add to the burden, claims adjusters are being asked to handle bigger caseloads every year. The average caseload in 1993, for example, was about 150 cases. Now adjusters handle anywhere from 200-to-300 cases at a time.

With an increasing number of claims adjusters leaving the business, carriers need warm bodies just to put out the fires. Since replacements are not being adequately trained, the industry has become reactive rather than proactive.

Because many risk managers have a background in claims adjustment, they are often walking new claims adjusters through the claims process–essentially providing them with on-the-job training.

To make sure their claims are being proactively managed, risk managers are spending the bulk of their time on the phone, following up with claims adjusters. What's more, to deal with the constant changes in personnel, risk managers are being forced to document the entire claims adjustment process–just in case they need to educate a new adjuster who most likely will take over the case.

As a result, the role of the risk manager has also become much more reactive in nature. Rather than focusing on the proactive aspects of the job, such as insurance placements, identifying and analyzing loss exposures, examining the feasibility of alternative risk financing options, and loss prevention techniques, risk managers are getting caught up in more administrative duties.

The other part of the story is that the role of both risk managers and claims adjusters has become much more sophisticated in the past five years. Risk managers are now reporting to finance executives, and need to be able to advise companies on how to run their businesses more efficiently. They need to save money by identifying loss trends and providing the resources needed to prevent losses from occurring.

Because risk managers work hand-in-hand with claims adjusters to report on specific claims and identify trends that are driving claims, the claims adjustment job has also become more complex.

To provide the level of service clients and risk managers are looking for, today's claims adjusters need to be educated to identify areas of improvement, and to measure the impact of any changes they have suggested.

Since many claims adjusters are lacking this skill level, risk managers should choose a broker who can assist them by providing an experienced claims consultant to monitor the direction of their claims and ensure that claims are constantly reserved for a realistic outcome.

Rather than develop this core competency in-house, many brokers are partnering with consultants so they can offer this level of service to their clients.

On a larger scale, claims service organizations need to go back to basics and properly train adjusters, with programs that reflect the adjusters' changing role.

Carriers should consider the big picture and compare the amount they pay temporary employees to the cost of keeping a permanent employee on board. At the end of the day, an adjuster with time vested in a permanent caseload will have more ownership and integrity.
Cathy M. Divodi is vice president of ART Insurance Service in Walnut Creek, Calif.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 13, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.