The Work of Loss Adjusters

Loss adjusters are engaged by insurance companies to help find the answers to certain questions, including the following, in the event of a claim:

1. Am I (the insurer) liable?2. If yes, how much?3. If not, why not?4. Is there someone else I could make a claim against?5. Is there another insurer that will share the loss?

The loss adjuster’s first duty is to ascertain whether, and to what extent, the insurance company is liable under the insurance policy. In other words, the loss adjuster will have to comment on whether the loss has been caused by any of the insured perils under, say, a fire insurance policy or whether any of the exclusions apply under an all risks policy.

The loss adjuster will also enquire into other aspects which would affect an insurance company’s liability, such as the operation of conditions, warranties or limits under the insurance policy.

The loss adjuster plays a crucial role, particularly at the outset of the loss. Many loss adjusters either directly or indirectly provide damage reclamation services. These range from independent technical advice, through expert guidance on loss limitation opportunities, to specific options to recover and restore damaged property, thereby preventing wastage. At the initial stage, procedures are agreed by the loss adjuster with the policyholder for the repair or replacement of property, and the continuation of the business to limit any claim for loss of profit, thereby enabling the policyholder’s business to return to normal in the shortest possible time. For goods that will have to be written off, a loss adjuster will have the skill to dispose of them at the best salvage value, thereby mitigating the damage.

The loss adjuster reports to insurers immediately after the initial visit, particularly on the loss reserves to be created so as to enable insurers to fulfill their statutory obligations. Thereafter, he will ensure that insurers are kept fully advised. His reports will incorporate facts, opinions and recommendations when appropriate.

The loss adjuster will advise the insured that it is the latter’s duty and not the adjuster’s to submit a claim and to provide full and prompt information and supporting papers, eg repair estimates, invoices, receipts, proof of ownership and value, etc.

When the claim has been presented, the loss adjuster will check it for quantity, description and pricing and, after agreeing on any necessary adjustments with the claimant, the loss adjuster will present the final report to the insurers recommending settlement.

An Acceptance Form confirming the amount of the adjusted loss will usually be issued by the loss adjuster for the policyholder to sign. The form will make it clear that the proposed figure is subject to the insurers’ approval under the terms and conditions of the policy.

Another main task of the loss adjuster is to consider whether someone else may have been responsible for the loss and, if so, he will obtain statements and physical and photographic evidence to use later in negotiations when recovery of the insurers’ outlay from a third party is sought.

As part of his initial enquiries, the loss adjuster must satisfy himself that the policyholder has an insurable interest, and that the risk is anticipated by insurers.

The loss adjuster will also check whether there are any other policies which may be brought into the apportionment of loss and, if so, he is the expert for apportioning the loss to each policy.

It is the tendency for some claimants to inflate their claims, as they may have the notion that insurers will never pay in full. The policyholder will often perceive the loss adjuster as the agent of the insurer with a single purpose — to avoid paying the claim or some part of it. It is not, however, the brief of a loss adjuster to ‘chop’ claims and insurers do not engage the services of loss adjusters for that purpose. The loss adjuster will endeavor to win the confidence of the policyholder at the earliest opportunity. It is, however, the loss adjuster’s duty to see fair play where there is doubt over values or some other aspects of the claim. He is expected to discern the merits or demerits of the point in issue and report to insurers accordingly. In other words, the loss adjuster needs to develop the skill to match human optimism.

The need for loss adjusters is often highlighted at the time of a major loss or catastrophe. Whether the loss arises due to a large fire outbreak or flooding or a major environmental incident, the loss adjusting profession has resources available to respond within hours to meet claimants’ needs. This may involve working unsocial hours, often in dangerous circumstances but, nonetheless, Chartered Loss Adjusters are used to providing both a rapid and professional response on both a national and international basis. It is common for loss adjusters in Singapore to travel to many countries on behalf of insurers. Several of our loss adjusters have, in fact, worked abroad on hurricane, earthquake and riot claims.

While a new instruction is just another job to the loss adjuster, it is likely to be a disaster for the policyholder. Loss adjusting is, in essence, concerned with people and, furthermore, people in times of crisis. Half of the job is done for the loss adjuster if he shows regard for the feelings of the claimants at the outset. There is therefore a critical need for the loss adjuster to hone his ‘people skills’. He will endeavour to establish a rapport with the policyholder given that the loss adjuster will normally have been introduced to him after the loss has occurred. The claimant is usually in a state of shock after, say, a fire or break-in, and he is further confused as to why a loss adjuster and not

his insurer with whom he has the insurance contract, has shown up. It is thus important for the loss adjuster to communicate his role to the policyholder and to spend some time in ‘breaking the ice’ rather than to rush right into obtaining the cold facts of the case. The time spent by the loss adjuster on this ‘soft’ approach will thus reap dividend.

In the event of fraud, the claimant will lose the goodwill of the loss adjuster who will, in the course of natural justice, side with the victim.

The role of a loss adjuster could be, perhaps, best summarized by quoting from someone who has left the profession:

To be an Insurance Loss Adjuster, one must be courteous, diplomatic, shrewd, persuasive, an expert jollier, of an equable temper, slow to anger, a Sherlock Holmes, up to date, good looking, with honest eyes and willing hands, a good memory, good cigars, acute business judgment and the embodiment of virtue, but with a good working knowledge of sin and evil in all its forms.

An Adjuster must understand insurance, electricity, chemistry, mechanics, physics, bookkeeping, banking, merchandising, selling, shipping, contracting, law, medicine, real estate, horse trading and human nature.

He must be a mind reader, a hypnotist and an athlete. He must be acquainted with machinery of all types and materials of all kinds and he must know the current prices of everything, from a shoe-string to a sky-scraper. He must know all, see all, and tell nothing, and be everywhere all at the same time.

He must satisfy the insurance companies, the Claims Manager, the Claims Examiners, the Underwriting Department, the General Agents, the Local Agents, the Lawyers, the Insured, the Claimant and the Insurance Commissioner’s Office.

Having heard of only one man with the above qualifications and finding out that he was crucified some 2000 years ago, and though some, in their daily lives, try to emulate him, I now feel that it is impossible for me to ever reach that state of perfection. So without further ado, and to the benefit of all, I herewith relinquish all rights, claims and titles, past and present and future, as a Loss Adjuster.

Loss Adjusters Working with the Legal Profession

Many insurance claims have been settled without legal recourse as insurers were able to rely upon the loss adjuster’s skills to negotiate fair settlements and to provide information to support the proposals made.

Having said that, it is never the loss adjuster’s role to usurp the function of legal counsel. In fact, in the event that a claim is fraudulent or in cases where there is doubt on policy liability because of the possible application of a warranty or an exclusion, or

where the policy coverage is open to interpretation, a loss adjuster worth his salt would not hesitate to recommend that insurers obtain legal advice.

I have had the privilege of working with several reputable members of the Singapore Bar on many occasions involving complex and dubious insurance claims and, together, we achieved considerable success in protecting the interest of our mutual clients and also of the innocent insuring public.

The main roles of the Loss Adjuster are to ;

a) visit the site of a loss to survey and assess the damageb) Record details of the loss with photographs if possiblec) ensure that the site is secure after the loss by having doors and windows boarded up. This is vital to prevent any further losses occurring which might increase the claim still furtherd) Recommending local repairerse) Advise the policyholder and the insurance company on the most suitable way to carry out repairs by issuing a full reportf) Investigate and suspicious claims by inspecting records to establish that the property being claimed for existedg) Liaise with other insurers to negotiate the spread of liability

Gross NegligenceAn indifference to, and a blatant violation of, a legal duty with respect to the rights of others.

Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both. It is conduct that is extreme when compared with ordinary Negligence, which is a mere failure to exercise reasonable care. Ordinary negligence and gross negligence differ in degree of inattention, while both differ from willful and wanton conduct, which is conduct that is reasonably considered to cause injury. This distinction is important, since contributory negligence—a lack of care by the plaintiff that combines with the defendant's conduct to cause the plaintiff's injury and completely bar his or her action—is not a defense to willful and wanton conduct but is a defense to gross negligence. In addition, a finding of willful and wanton misconduct usually supports a recovery of Punitive Damages, whereas gross negligence does not.