Property/Casualty 360, National Underwriter Company's on-line news service, recently reported on an annual J.D. Powers survey of insurer satisfaction with their own insurance companies. I remember similar reports back in the 1970s from Consumer Reports. Back then — and now — it was always the same insurance companies that were rated best by their customers. A California reciprocal exchange was generally first, and only a few of the insurers whose ads are seen regularly on television were in the top ten — but inevitably they were the same top ten. I recall one survey in the late 1960s that said that over 60% of the American public viewed their insurance companies favorably. Today that number is well below 50%. Insurance adjusters rank somewhere around where the public ranks used car dealers. Yikes!

What has happened in the last half century? For one thing, during the Depression Years (1930-1942) those who were fortunate enough to have a job, a home and a car kept them insured, and were very reluctant to make a claim for fear of being dropped. Today companies advertise that they have “accident forgiveness.” Is that what adjusters do? We forgive our insureds for making us do what our employers, the insurance companies, have contracted to do? “We'll forgive you this time and not raise your rate, but you'd better not let it happen again!” What are we? Judge and jury? What the hell do insurers think their customers have paid premiums for? They, and we as their adjusters, are in the claims business, resolving losses under the terms of the policy, not just the business of collecting premiums. No wonder the plaintiff's bar thinks we're a bunch of crooks!

Another thing that happened was World War II. When those thousands of GIs came home they needed education and they needed jobs. Back then an undergraduate degree was not always required to get a Bachelor of Law degree. (Today it is, and a law degree is a Juris Doctor designation.) Hence a lot of men (and maybe a few, but very few women) got law degrees and looked for work. That work (like Pat Magarick's) often was for an insurance company. Therefore, adjusters in the late 1940s and through the early 1960s were often law school graduates, and many were also members of the bar. There was a quality to their work.

When I became an adjuster in the mid-1960s many of my supervisors and managers and those at the insurance companies I represented were attorneys. The basic principle of insurance that was being taught in the 1960s was that insurance was a fiduciary relationship — one of utmost good faith. Now it is just a plain “good faith and fair dealing” relationship, and we no longer see ourselves as fiduciaries, being trusted with the valuable interests of others.

Another factor that changed in the 1960s and 1970s was the types of adjusting that occurred. There were, of course, thousands of adjusters who worked for an insurance company and handled only that company's claims. Major property claims were generally handled for those companies by a claim adjusting bureau owned by the insurers, primarily the General Adjustment Bureau, Underwriters Adjustment Bureau or some similar association service bureau. But in the 1940s the idea of independent adjusters who handled claims for any insurance company that did not have a local office arose. By the 1950s there were perhaps hundreds of such firms, some local and some nationwide. These adjusters handled any kind of claim from truck wrecks and fires to store falldown claims and burglaries. It was about the same time that the Insurance Institute of America designed the Associate in Claims designation for multi-line adjusters.

Adjusters or Claim Administrators?

A regular report in Best's Review always puzzles me. It shows employment statistics from the Bureau of Labor Statistics on various insurance industry jobs. For years the numbers for “claim adjusters” has been declining, a percent or more a month, while the numbers for “third-party administrators” has gone up. The salaries for adjusters are always shown as higher than for the administrators. But how does the Labor Department define these jobs? I researched that question a couple of decades ago; some states license adjusters in one way, but license those who administer health-related claims (medical insurance or workers compensation) differently. Yet many claim adjusting firms seem to present themselves as “TPAs” (third party administrators) rather than as multi-line insurance adjusters. Why is that? By calling an adjuster an administrator does it mean that they can pay the person less?

How can we ever become proud of being adjusters if we're looked upon by the public as simply claim processers? Is that what adjusting has become in the 21st century, someone who “processes a claim”? What about that difference between a claim and a loss that was discussed in the first column in this series? Do we no longer investigate or evaluate or even negotiate? As far as I know, claims don't come with a bar code that has the value pre-set in a computer somewhere for scanning, Colossus notwithstanding. Do we simply pay claims without much investigation and forgive the insureds for making us do it? Perhaps that is how it looks if we think of adjusting as “just a job,” and not as a true professional vocation.

More Complex Than Ever

While perhaps many of those companies that did not make J.D. Powers' top listing just sell a few personal lines of coverage, for those of us who see a future in the field of claims adjusting, the world of insurance is becoming ever more complex. Coverages that would have been considered science fiction fifty years ago (cyber war, solar storms, malware) are vitally necessary insurances for businesses today. Adjusters are no longer just “local;” they may handle multi-state claims, or may be assigned to a catastrophic loss in a far distant state. Prior to the creation of the National Flood Insurance Program there was, except for automobiles, no flood insurance. We did not think in terms of Global Warming as creating bad weather-related losses, or of religious fanatics doing acts of terrorism. Yes, we knew all about war, but it was “war” of a traditional nature, not the guerilla strike and run variety of Viet Nam and Afghanistan. We can't even say what the enemy looks like in modern warfare – he's not wearing that other side's uniform. He might even be wearing our own uniform!

Since the Southeast Underwriters case of 1941 reversed Paul v. Virginia and the McCarran-Ferguson Act of 1945 returned regulation of insurance to the states we have had increasing encroachment of the federal government on the insurance industry. Now, with implementation of the Patient Protection & Affordable Care Act, the states are supposed to be back in control of health insurance, but only seventeen states elected to follow the law, so by the time this sees print, the federal government will be even more deeply involved in our industry. What effect the PPACA will have on casualty insurance lines like bodily injury liability, workers compensation and medical payments coverages remains to be seen. But the point is that even insurance regulation is changing, and as claims adjusters become more multi-state as well as multi-line, that is likely to continue.

If those of us in the loss and claims adjusting industry really care about our professional vocation, we need to make our employers aware of it. Instead of the claims department being “out back and down in the basement,” it should be, along with the underwriters, the most prominent office in the company, and we should be proud to say, “I'm an adjuster!” That can happen if we, like those early marine underwriters, insist on ethical integrity and the making of knowledgeable decisions based on education and an utmost good faith relationship with our clients — the insureds.