Many insurers have cut their use of loss adjusters to curb costs But Ann Hesketh says companies are realising they need to invest more in claims services.
Claims costs are one of the bugbears of the industry. And with insurers' efforts to save every penny they possibly can, loss adjusters are in danger of being labelled an additional cost, rather than seen as added value to either insurers or policyholders.
Unsurprisingly, loss adjusters are adamant that they do add value. Kevin Larman, director of client relationship at Cunningham Lindsey, says the role of loss adjusters is particularly important in household or business disasters. "Having someone who knows what to do, who is able to give advice and make appropriate arrangements, is of huge value to the person who suffered the loss. This also adds value to the brand of the insurer responsible for the claim."
He cites as an example the Carlisle floods. "Loss adjusters contributed not only with technical skills. We did organised repairs and replacement of damaged content. But we also got involved with the community, letting people know what was happening."
Over the past few years the role of the adjuster has changed. Whereas before a loss adjuster would see a claim from beginning to end, they are now more likely to work in partnership with other experts such as accountants, legal firms, engineers and surveyors. And, in some cases, loss-adjusting firms opt to broaden their business proposition to include other services such as risk management and back-office claims management.
Such change is partly a direct result of insurers' commercial decision to keep adjusters' fees down, a trend the sector has been trying to reverse, without any success so far. But according to Andrew Dear, director of technical services, at Ashworth Mairs Group, the market has now reached a breaking point.
"Fees have been driven down throughout the market but they cannot go any lower. You get what you pay for and some more forward-looking insurance companies are now recognising the value of technical expertise."
Dear believes companies that decided to diversify their offerings risk watering down their skills base. He says: "This is not our way. We wish to provide general traditional loss adjusting services to high standards."
Others, however, argue that loss adjusters are only adapting their services as a response to a changing market.
Larman says: "Some people assume you are diluting expertise. I don't think that's true. We still have very strong expertise within the business.
We have always had the ability to apply expertise, and now we are applying it in different ways."
The fact that some insurance companies have stopped buying the lower end volume claims services such as household from loss adjusters in a move to try curb costs has created an additional problem.
Stewart Steel, managing partner of Teceris, explains: "Some loss adjusting companies are left with a big legacy problem. They do not have the bulk of small work coming in and they are looking to do some claims management work to fill the void."
David Walker, UK client services director at GAB Robins, says that pure loss adjusting, in its traditional sense, still has a valuable part to play. But this is only one part of a menu of claims validation services that larger loss adjusters can provide.
He adds: "Insurers are seeking different solutions for different areas of their business and the loss adjusting profession has responded. GAB Robins regards itself as a provider of claims management services, spanning project management, surveying and valuation services, fraud investigation, supply chain management, claims consultancy and audit."
Despite conflicting views as to whether loss adjusters should concentrate on their traditional roles or provide additional services, everyone agrees on one thing - the next generation of top loss adjusters is at risk. According to Dear, there are currently around 1,800 qualified loss adjusters in the UK, none of whom is under 35, with only 16 being younger than 40.
The skills shortage could pose a real threat to the industry, when in five to 10 years' time most loss adjusters hit retirement age.
Changing practices
David Pigot, managing director of the major loss practice at Marsh, says the skills gap is down to two factors. First, loss adjusting practices have changed throughout the years and second, the money is not there in the same way it used to be. Lack of profits means talented individuals looking for a profitable career are put off, as firms cannot invest as much as they would like in recruitment and training.
"Years ago we were instructed to do adjusting from beginning to end," says Pigot. "At the very bottom we were given jobs such as small water damage claims and worked our way up to major losses.
"You learned through books but you also had on-site training. Nowadays this is more difficult. People doing on-site training tend to go to the site and pass the file back to someone in the office who will handle the claim."
Pigot says the pressure to drive down costs has resulted in fewer people coming through the business to take the roles required for more complex and major losses.
"This has already happened in the US, where the best adjusters are in their 60s and 70s. Here, the Chartered Institute of Loss Adjusters(Cila) is doing the best it can to increase awareness and promote training and qualifications."
Although the future does not look promising, loss adjusters could soon see things changing for the better. According to David Williams, claims director at AXA, over the past two years insurance companies have woken up to the fact they need to invest more in claims services.
He says: "There is evidence to show that insurers are investing more in claims than they did before. And while insurers are demanding more from their loss adjusting partners, they are still not prepared to pay for it. I don't think the industry has worked closely enough with loss adjusters to review the model we have.
"We need to control expenses but also offer good customer services, and the industry is only getting around to working out the loss adjuster model now."
Until the first move is made, loss adjusters remain sceptical. But a potential lack of expertise which would affect the whole industry may force insurers to rethink the loss adjuster model sooner rather than later.
Dear concludes: "I'm still waiting for the first insurer to increase its loss adjuster's fees. Any company that did that would attract the best loss adjusters, which would be a tremendous morale boost and help the industry attract new talent."
