Insurance and claim reporting are similar. A headline might read, “Man Bites dog.” The lead could read, “Attracted by a roast beef sandwich in a paper sack, a neighbor's dog knocked down John Jones as he was heading to work on the morning of Tuesday, August 3, on Fifth Street, and Jones subdued the beast by biting it on its ear.” Then come the details, “Jones, of 213 Fifth Street, was familiar with 'Rex,' an overly friendly bulldog, but when the dog pounced at the sack with the large sandwich inside, Jones was knocked down, but not bitten. He struggled to prevent the dog from demolishing the sandwich and bit it on its ear until it gave up and licked Jones's face instead.” End of story. Too many claim reports simply give the headline (“the insured rearended the claimant”), but leave out the lead and details that might suggest alternative liability or coverage factors than the headline suggests.

In insurance, the headline might be “Personal Auto Policy,” and the lead is the declarations, listing the insured, where the auto is garaged, what kind of auto is covered, for what amounts it is covered and what perils are covered, along with the policy period and premium. A computer can figure all that out. But then come insuring agreements, exclusions, definitions and conditions. That's the heart of the story: what happened to the insured's auto, whether that event was covered, and whether or not the insured is liable to someone else. It is the adjuster's job to figure out if the coverage applies to the loss. These factors require serious thought, study and understanding, and training alone may be insufficient to teach such skills. It is one thing to investigate, another to evaluate and make correct determinations. Computers don't do that.

Adjusters handling National Flood Insurance Program or federal crop insurance claims have even stricter requirements, usually including actual classroom study of the coverage and testing of proficiency on the computer software used to estimate damage. Since claims involving flood often also involve windstorm insurance, accurate coverage decisions are mandatory.

The Claims Education Business

Clearly many adjusters are lacking good claims education, otherwise there would not be the hundreds of insurance litigation cases clogging the courts each month, with attorneys arguing what some adjuster or supervisor should have known in order to avoid the lawsuit. Litigation is usually a result of adjusters just being trained, not educated, plus a lack of quality experience. For example, in the May 1, 2014, issue of Insurance Litigation Reporter (Thomson Reuters West) the lead story discussed how an earlier claim within the “claims made” policy period established coverage for a later class action. In another, the Alabama Supreme Court ruled that an owner's claim for defective workmanship constituted an “occurrence.” Then there was a gas leak pollution dispute in Wisconsin, and an Indiana Supreme Court decision regarding underinsured motorist coverage reduced by a workers compensation award. Each involved decisions on whether the coverages applied, things that adjusters need to know and understand, or seek guidance on before issuing a denial. It takes more than just knowing how — adjusters also need to know what and why.

A good multiline property and casualty adjuster needs to know not only coverage, but how various courts have interpreted coverage issues. Therefore much of what is in the Thomson Reuters West texts involve court decisions on coverage issues. Courts frequently take differing positions on coverage issues. For example, what is considered a “pollutant” in one state under the policy definition may not be considered a “pollutant” in the adjoining state. Sometimes education requires research. The easy way out is to ask a local lawyer, but a good attorney is going to do some research before answering.

What is Education?

The dictionary suggests that education is the process of developing knowledge, especially by formal schooling. It involves teaching and training, development of the mind, character and ability, and systematic study of methods and theories. It is on-going.

Every day there are ads on television for commercial colleges that will “train” students in a variety of fields: medical home care, computers, business, bookkeeping, etc. “Come on in and sign up for a student loan. You can graduate to the career you desire with an Associate Degree.” These are all good goals, but they may not necessarily represent real education. Education is not the end goal, it is just the beginning, the instilling of curiosity about everything else: literature, science, art, the world. All graduation may bring many such students is a world of debt that will hamper them for decades, forcing them to hold two jobs and never give them the opportunities to really obtain that broad educational background discussed in Part One of this series. They will, perhaps, learn some basics, and that may be enough to get a job, but not necessarily a vocation. Employers will want to do things differently from what is taught in a classroom.

The Need for Common Sense

One thing that neither training nor education will instill in someone is common sense. Sometimes the smartest people fail to see the most practical solution. Generally, common sense does not result from either training or education; it is innate, a natural wisdom that may not earn any continuing education units, but which helps to make a good adjuster. Next month we shall look at the required study in adjuster ethics.