January 20, 2019

“Where’s my adjuster?!?!” Internalizing Claims for Better Access

[This continues our series examining some of the reasons that clients – risk managers, self-insureds, etc. – bring the claims function in-house. This is not to “bash” TPA’s or insurer claim departments. We are simply recapping various motivations that drive clients to bring the claim function in-house, either totally or partially. In future posts, and in the interest of even-handedness, we will examine the DIS-advantages flowing to these same entities from internalizing the claim function.]

Risk managers often get frustrated in trying to connect with their adjuster handling a file. Phone calls are missed. Phone tag takes the place of genuine communication. Phone tag can even give way to email tag! The adjuster may be on the road, on vacation, at an offsite training session or otherwise inaccessible. With an outside adjusting service (or in dealing with an insurer claim department), all the client can do sometimes is keep on trying and waiting .. and waiting .. and waiting.

With in-house adjusters, however, the client has a greater degree of access to the claim staff when needed. To get an opinion regarding a case, to get a quick update or to make a request, one need only walk down the hall and ask the adjuster. Admittedly, in-house adjusters are not going to be around all of the time. Still, it is one thing if a client needs to get in touch with you, and another thing if your boss needs to talk with you.

To the independent claims adjuster, the client is really the risk manager’s entire company. In a sense each operating unit of the company is a client, with its own agenda. A company can benefit when individual managers have direct access to in-house adjusters.

This kind of ready access is less realistic when an outside adjuster is charging by the minute. Cost effective use of outside adjusting services requires that referrals be channeled through one person, rather than having each department make adjusting assignments willy-nilly. Sadly, the lack of direct communication prevents the type of give-and-take dialogue that often resolves problems. Such dialogue is more frequent with in-house adjusters.

Where I live in the Washington DC area, the lobbying industry is big business. Part of what clients get when they hire a lobbyist is “access.” In this context, it is access to the corridors of Congress and the top government decision-makers.

In the realm of risk, clients also seek access. Internalizing the claim function can enhance such access without the need to hire expensive lobbyists!

Internalizing the Claims Function – Release Your Inner Control Freak

“Control freak.”

This is a term, often pejorative, applied to a person who is detail oriented and who seems to want to call the shots on everything.

Being a control freak may not necessarily be bad, though. One reason why companies bring the claim function in-house is due to their desire to exercise more control over the claims process. It often boils down to a “make or buy” decision. Do you pay retail or wholesale?

Beyond that, companies find that they have more control over how their claims are handled by internalizing the function. Tighter control over the process can often lead to better outcomes as a result. These controls might include service standards relating to claimant contacts, completion of investigations or subrogation pursuit. Better outcomes represent “the bottom line,” both figuratively and literally.

As a client of an independent adjusting service, the risk manager is still one fish – often a small fish — in a big pond. He or she still competes for the time and attention of an outside adjusting staff. Sometimes clients may have “dedicated” adjusters. Typically, this means that the adjuster is handling only the cases generated by Client ABC. Realistically, the client needs to have a certain brisk volume of claims to make this cost-feasible for an outside claim service provider.,

Another way to define “dedicated” adjuster, though, is to say that only Adjuster X will be handling my claims. The caseload of adjuster X may be comprised of file assignments from other clients, but the distribution of caseload assignments from Client ABC will not be sprinkled amongst seven different adjusters.

With a wide range of adjusters handling claims for a particular client, adherence to a client’s claim procedures may be spotty. Inconsistency looms. From one case to another, the risk manager may not know which adjuster is going to handle a loss. Constant turnover of personnel is often epidemic among insurer or TPA claim staffs, frustrating clients.

Internalizing the claims process can often address these problems. Having the adjuster as an employee instead of an outside service provider can enable the client to exert a more powerful influence in getting the right things done, and getting them done right. Claims could be handled the way they should be procedurally, with greater accountability for results. The on-staff claim adjuster has no competing constituencies. He or she has but one client: the employer. The field adjuster working for an independent claim service is juggling dozens of demands from many clients. None of them sign the adjuster’s paycheck. Some take priority and others may go to the bottom of the priority pile.

When the claims staff is in-house, though, the client’s name IS on the paycheck. Through the power to hire and fire, through performance reviews, coaching, physical proximity and compensation systems, the client can better “mold” the claim-handling activities of internal adjusting staff.

While cost savings often drive the decision to bring the claim function – wholly or partially – in-house, control issues also often factor in.

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