High quality loss adjusting talent is migrating to accountancy firms. Working increasinglyfor insureds, these adjusters will make claims control harder for insurers.

The role of loss adjusters used to be pretty clear-cut. Armed with clipboards and experienced eyes, they are among the first arrivals at the scenes of major insurance claims. They represent the interests of insurers with a brief to try to keep the lid on excessive payouts, without antagonising valuable clients.

But the profile of the profession is changing. Increasingly, loss adjusters are being recruited by large accountancy and consultancy firms that are determined to offer their clients the widest possible range of financial services. In these positions adjusters will inevitably find themselves working for insurance clients as well as underwriters.

"Over the past six months or so, there has been quite a lot of movement in loss adjusting," says Bev FitzGerald, an independent loss adjuster based in London. "Some very heavy-hitting loss adjusters have moved from conventional firms of loss adjusters into people like accountants or brokers."

Specialist advice
Well known names are among the migrants. Andrew King has moved from Crawford & Co to PricewaterhouseCoopers (PWC). Angus Tucker has gone from GAB Robins to Deloitte & Touche. Peter Salt has moved from Thomas Howell to Jardine Lloyd Thompson. Ian Fulton has moved from Miller Fisher to Jardine Lloyd Thompson. And Tom Heward has moved from Capita McLaren to Grant Thornton.

Tucker's appointment as Deloitte & Touche business development director highlights the direction in which consultancies are nowmoving. Deloitte & Touche business insurance partner Humphry Hatton says that Tucker's presence "will help us capitalise on the growing need for specialist insurance claims advice".

He says: "Our recent commercial claims survey revealed that 83% of the businesses surveyed were not satisfied with the management and outcome of their claims for major losses."

FitzGerald says alongside the major accountants, law firms and software houses are entering the insurance services market. By hiring loss adjusters, he says, these organisations "will change the whole dynamic" of the business. Loss adjusting, FitzGerald says, fits well within the management consultancy arms that the major accounting firms are creating.

"The skills that loss adjusters have are in demand," says a spokesman for the Chartered Institute of Loss Adjusters (Cila). "But the organisations that are using them are increasingly varied."

Business interruptions
One of the effects of the growing interdependence of businesses and processes is that insurance claims have become more complex. For example, a business interruption loss may be greater than the actual physical damage. Insurers have been known to use accountancy firms to help guide them through the intricacies of business interruption claims.

And clients with access to loss adjusting expertise are likely to fare better in their negotiations with insurers.

PWC London head of insurance claims services Andrew Gordon says the firm has been providing loss adjusting services for almost a decade. Over the last five years, Gordon says, PWC has been progressively expanding its loss adjusting team.

From an initial focus on policyholders, PWC is also carving out a role working for insurers. There is no intention to replace the loss adjuster. Rather, Gordon says, PWC can bring highly specialised expertise to large and complex claims. Gordon's own background is in accounting.

Heward has not found the transition to the consultancy side difficult. Formerly client services director at Capita McLaren, he is now client services director at accountant and consultant Grant Thornton. Heward, who has signed an agreement with his former employer not to compete in the area of loss adjusting until 8 July, says that loss adjusters are not unfamiliar with corporate clients. He points out that adjusters have worked for corporate bodies through their captive arrangements. "I don't think it's a big jump at all," he says.

Greener pastures
Whether an adjuster is working for the insurer or the client, Heward says, the priority should be on providing clear guidance as to what can be expected from a claim.

Heward's initial target will be existing Grant Thornton clients. But he also has his eye on brokers and insurance-oriented solicitors who might need litigation support.

FitzGerald believes that an underlying driver in the movement of loss adjusters to the consultancies has been the recent shift by UK insurers towards the use of tendering for loss adjusting work. This, he adds, has created downward pressure on prices and caused some top loss adjusting talent to look for greener pastures.

An unintended result of the underwriters' strategy, FitzGerald believes, may be that insurers will find themselves increasingly sitting across the table from people who once acted for them. "The insurers, in a sense, have shot themselves in the foot," says FitzGerald, who expressed concern that a squeeze on salaries may also deter talent from entering the profession.

Cila has taken note of the changes in the profession. It now welcomes loss assessors into its ranks. Assessors were previously outside Cila's preferred orbit because they were identified with the policyholder rather than the insurer. The Cila spokesman estimates that 10%- 20% of loss adjusters are now working for insureds in one way or another.

Crawford & Company London senior vice president Jonathan Clark says that there has been movement for some time by adjusters towards the major accountancy firms. These big accountants' organisations have shown an interest in building their skills in claims presentation. "Whether it's a discernible trend is difficult to say," he says.

Clark adds that presenting a claim involves "a different mindset" than dealing with one coming in. He notes that there is a different balance of proof between presentation and analysis. But he says the techniques of the adjusters are not likely to change much, even as they might move away from traditional employers.

One possible problem is the potential conflicts of interest for an adjuster working for a multinational consultancy with a far-flung client base that includes both underwriters and companies bringing claims.

"It's never easy to balance both sides of the activities," Clark says. "That's why adjusters have tended to act mainly for the insurer side of the market."

Intellectual quality
FitzGerald predicts that insurers will begin to differentiate between the relatively commoditised, bulk handling sector and top-flight loss adjusting. The first category, he says, will continue to yield to downward price pressure. But at the higher end, FitzGerald believes, the best loss adjusters will be sought out in the manner of high-priced accountants and lawyers.

FitzGerald says that the insurers will have to get used to the idea that loss adjusters will routinely switch from acting for the insurer to the policyholder and back again. He adds that improvements in technology have emphasised the intellectual quality of loss adjusters' work by allowing them to operate anywhere.

Salaries can vary. A basic loss adjuster might be earning £20,000 a year. At the higher end, salaries tend to be around £100,000. The interest from the high-fee consultancies is likely to push up salaries for the best people.

PWC takes great care to avoid being on both sides of the same case. Gordon says: "We have sophisticated conflict checking procedures because of the litigation-related work we do."

Accurate numbers
Loss adjusters who find themselves working for insureds can be expected to resist any temptation to use their skills to squeeze as much money as possible from the underwriters.

The real value of the adjuster, Heward says, is to stand beside the corporate client, to explain the process and to meet the issue of compensation in the most advantageous way.

Consultancies, with their varied operations, also take the long view. Gordon says that PWC, for instance, puts a very high value on its credibility. When presenting a claim on behalf of an insured, the firm strives to come up with the most accurate numbers.

"We have no interest in inflating our client's claim just to be knocked down by the insurer," Gordon says.