One consumer myth that many adjusters confront is the idea that claim people get paid by how much they “save” on a given claim. As if adjusters get a commission if they can settle a $20,000 auto or homeowners claim for, say, $10,000.
Although this fantasy always seemed farfetched, some insurance companies do link adjusters' incentive compensation to broader financial goals that the company wants to hit. In such arrangements, an adjuster's base compensation may be fixed, but the claim person earns extra incentive income, depending on the company or claim unit's ability to meet certain financial targets.
Say that an adjuster's base pay is $50,000 per year. An incentive comp plan might pay adjusters an extra 15 percent bonus if the claim department drops its loss ratio from 79 percent to 74 percent, or achieves a 10 percent reduction in loss payments from the prior year. If adjusters meet these goals, they will get an extra $7,500 in contingent or incentive income for the year. That is enough to get the attention of many claim people.
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