Loss assessors versus loss adjusters – the big debate
Jeffrey Salmon explains why you should consider talking to a loss assessor if you’re making an insurance claim.
So, you’re making an insurance claim, whether it be for business interruption at the surgery or a burglary, fire or flood at home or work.
You have one of two decisions to make. Either ‘go it alone’ and deal with your insurance company’s representative yourself. Or do you hire a professional insurance claims negotiator (also known as a loss assessor) to represent you? The choice is that easy and there’s nothing to lose sleep over…or is there?
Negotiating insurance claims
Let’s start with the main question you may be asking yourself. I’m an adult, I’m more than capable of running a dental surgery business. I can more than negotiate with my insurers, and I don’t need any so-called ‘professional help’.
Of course, you don’t need to hire your own insurance claim negotiation expert to help you. Let’s not forget, the vast majority of insurance claimants represent themselves.
Over 95% of claimants are unaware of an industry of professional claim negotiators to help them. It is a little-known genre. Precisely because most loss assessors do not have unlimited funds to advertise their services.
So, what are the pros and cons of dealing with your insurance company directly and without any help?
You would not need to pay a small percentage of your claim for expert help. There are no other pros.
It is firstly important to understand the fundamental difference between loss assessors and loss adjusters.
When you make a large insurance claim, the very first thing your insurance company will do is to instruct a firm of loss adjusters to represent their interest. Not yours!
Claimants are often ‘blinded’ with the distinct impression that loss adjusters have been instructed by your insurance company to be your ‘knight in shining armour’ and to act entirely impartially, helping you prepare and submit your claim. That specific thought is perhaps the biggest misconception in the minds of claimants. What is inconveniently forgotten is the very fact that loss adjusters are not paid by your insurance company to represent you. They are paid to serve, represent and protect the insurance companies themselves and their shareholders.
The loss adjuster’s remit is to ensure that, at best, you are paid the minimum amount possible. At worst, your claim will be severely adjusted down or perhaps not paid at all.
Even the BDA in its very recent excellent email to the solicitors of the FCA commented they ‘…were troubled that members were accepting amounts lower than maybe they are entitled to, where some insurers are taking advantage of the cash crisis affecting them’.
They were and are bang on the nail. Loss adjusters seem to believe that after we have spent hours upon hours preparing a dental surgery business interruption claim, they can make us an offer of 15/20% less for the dentist to take the money and run.
On more than one occasion we’ve been told that if the dentist doesn’t accept the offer, they will have to send the claim to their forensic team which might add weeks to the settlement.
Let’s revert to the previous words ‘adjusted’ and ‘adjuster’, which may give you more than a hint at their remit. How often have you spoken to friends about an insurance claim that you or they might be making? Do you ever recollect any mention that the insurance companies ‘adjusted’ the claim upwards?
The very reason that insurance companies employ loss adjusters could not be more straightforward. They know their expertise is in the marketing of their policies to you and insurance brokers. It is not in the expert negotiating of insurance claims and thus the very reason they hire expertly trained chartered loss adjusters is to keep their claims settlements at a low.
You may (or might not) deem it sensible that if the insurers themselves have gone to the trouble of hiring expert representation, then perhaps you and your business should also balance the odds and seek your own expert representation.
But I hear you question that there’s no sensible reason why insurance company loss adjusters would act in anything other than your interest. Their Charter of Membership makes it clear they have to remain impartial.
Let’s do some role play and imagine yourself as an insurance company claims department head.
One day, you get in and on your desk are 10 insurance claims valued at £20,000 each. You decide to give five of those claims to loss adjuster ‘A’ and five of those claims to loss adjuster ‘B’. In a few weeks loss adjuster ‘A’ comes back to you and says: ‘Thanks for those five claims at £20,000 each. I’ve settled the lot, and you only have to pay out £85,000 instead of £100,000’. The same day, loss adjuster ‘B’ gets back to you and says: ‘I’ve also settled the five claims. One of them I didn’t have to pay out and the rest I’ve settled for £50,000’.
Here’s the conundrum; you’re the insurance company claims department head. Which loss adjuster will you likely be using again to settle your claims? Loss adjusters know what side their bread is buttered.
Here’s another thought that might hammer the theme home.
You are either the claimant or the defendant in a court case and let’s say that the money at stake is £20,000. The chances are that you would not consider going to court without expert at law – either a solicitor or a barrister, or both – representation.
However, what is it about the human psyche that makes the insurance claimant believe they can go it alone without any expert help when the amount at stake is an insurance claim for say £100,000 plus?
Who’s paying the fees?
Insurance companies are not daft. They are expertly represented. As Lord Hailsham, a previous Lord Chancellor, famously said: ‘A man who is his own lawyer has a fool for a client’.
If that doesn’t say it all, then let me also point you in a similar direction.
The former insurance ombudsman, Richard Haswell OBE, made an excellent speech specifically to insurance company loss adjusters at their annual conference. He said: ‘It’s easy to see why claimants are wary of loss adjusters. No matter how many times you tell them how independent you are, they know, deep down inside, that when there’s any doubt about the claim, it is always resolved in favour of those paying your fees, and that’s the insurance company’. That was the insurance ombudsman’s view!
In fact, one might reasonably expect that the Chartered Institute of Loss Adjusters (CILA) would give you chapter and verse as to why you should only instruct one of their members rather than a loss assessor to represent you.
In response to their million-dollar question: ‘Why should I appoint a chartered loss adjuster rather than a loss assessor?’, the CILA said: ‘Chartered loss adjusters are experienced claims professionals who have achieved the highest qualification in claims. They are members of the CILA and so expect to behave in accordance with the CILA Guide to Professional Conduct.’
Who are loss adjusters?
There is another unusual breed in the insurance claims industry. They are loss adjusters who solely act for claimants. They are a small percentage of the chartered loss adjuster profession. But they have been trained in precisely the same way as those same chartered loss adjusters acting for insurance companies.
They generally only employ chartered loss adjusters who have previously (or still are) worked exclusively for general loss adjusting firms, ie on behalf of insurance companies. They are typically paid an annual salary with perhaps a bonus if their employers have a good year.
So how are loss assessors paid? They earn just a basic salary but derive a commission from every claim they act on. In the writer’s opinion, (and be mindful he has an axe to grind), he suggests that it is preferable to be represented by someone whose has a financial incentive to ensure the ‘lemon is legitimately squeezed dry’ so that his own salary is maximised.
Of interest, every one of our dental surgery clients (and undoubtedly those of our competitors) knew they had/have the opportunity in their business interruption policy to secure the free-of-charge services of a default loss adjuster chosen by the broker themselves (and presumably sanctioned by the insurance company). For business reasons of their own they decided to independently pay for a loss assessor to represent them.
Ensuring a maximum pay out
Employing a loss assessor will allow you to do whatever it is that you do best. And that probably isn’t negotiating insurance claims. It will enable the loss assessor a free rein to do what they do best. That’s to ensure the maximum pay out on your behalf.
Loss assessors always work on a ‘no settlement – no fee’ basis.
Think of them as your own insurance claim expert mercenaries. Fighting the good fight against loss adjusters working for your insurance company. The bigger the settlement, the more they get paid. And the quicker they achieve that settlement, the faster they will receive their fees.
Jeffrey Salmon is the founder and CEO of Salmon Assessors.
For more information visit www.insuranceclaims.co.uk/covid-19-business-interruption-claims.