How an Insurer Can Succeed With Professional Claims Handlers
Read the full article here: http://zalma.com/blog/wp-content/uploads/2023/04/EXCELLENCE.pdf.
The Need for Change
The insurance business must change—this time for the better—if it is to
survive. Insurers must rethink the firing of experienced claims staff
and reductions in training to save “expenses” recognizing that the
expense to train, educate and maintain a staff of professional claims
handlers, is a small part of the money that flows out of an insurer’s
coffers. The major expense is the cost to pay claims. When inadequate or
inexperienced adjusters pay claims the insurer did not owe, refuse to
pay claims it did owe, or pays more than is appropriate, the potential
for an insurer to make a profit is reduced much more than is saved by
reducing the expense incurred by paying a professional claims staff.
Insurers should, if they wish to succeed, adopt a program to promote
excellence in claims handling. Only with a staff of claims handlers
dedicated to excellence in claims handling can insurers promptly, fairly
and in good faith keep the promises made by the insurance policy and
avoid charges of breach of contract and the tort of bad faith in both
first and third party claims.
Insurers must understand that they cannot adequately fulfill the
promises they make to their insureds and their obligations under fair
claims practices acts without a professional, well trained and
experienced claims staff. An insurer must work vigorously and
intelligently to create a professional claims department or recognize it
will lose its market and any hope of profit.
A Proposal to Create Claims Professionals
To avoid claims of breach of contract, bad faith, punitive damages,
unresolved losses, and to make a profit, insurers must, in my opinion,
maintain a claims staff dedicated to excellence in claims handling. They
must recognize that they, as representatives of the insurer, are
obligated to assist the policyholder and the insurer to fulfill all the
promises made by the insurer in the wording of the policy. An insurer
can create a claims staff dedicated to excellence in claims handling by,
at least:
If any experienced claims professionals exist on the insurer’s staff,
the insurer must cherish and nurture them and use their experience and
professionalism to train new claims people.
If none are available, the insurer has no option but to train its people
from scratch using available materials produced by the National
Association of Insurance Commissioners, the State’s Department of
Insurance, Insurance associations, and professionals who have – for a
reasonable fee – the ability to properly and effectively train claims
personnel.
(C) 2023 Barry Zalma