Inside view on claims

Turner's Tips reprints an article written by Ramy Dasuki. Ramy is a broker who has worked for the insurance side in underwriting and claims. Here is the "inside view" of what to expect from a well-informed and attentive broker when you purchase insurance and then have a claim.

As insurance brokers, we are often characterized by the size of the portfolio we manage—the larger the portfolio, the more successful we are considered to be. However, with an ever changing customer demographic and an unpredictable economy, maintaining and expanding that portfolio is becoming quite challenging.

Our customer base is more knowledgeable, more prone to asking more questions, and not afraid to challenge us with concerns, such as price and coverage needs. Loyalty is a thing of the past, and the question, “What can you do for me?” is becoming more and more prevalent. In order to combat these growing pressures and strengthen our portfolios, we must go back to basics of our business and ask ourselves: What are we really selling?

The essence of our business is the transfer of risk in lieu of a premium —we are selling nothing short of peace of mind. That peace of mind is put to the test when a cliam is filed. Yet, most of us spend so little time discussing the claims component when in the middle of a sale. We’ll talk in detail about the company; its merits; payment plans; coverage and price, but too often we neglect the core of our business and the reason why most people buy insurance in the first place: claims service.

Having little formal training in the area of claims, many brokers assume the file will work out once the insurer is notified of a claim, or they simply avoid this area all together— prompting other industry professionals, such as adjusters and service vendors, to step in as client-facing representatives of the industry.

Having worked as a claims professional, before becoming a commercial broker, I learned what is involved throughout the entire lifecycle of the purchase, premium and claim process. This experience has been extraordinarily useful as I have used my experience to help explain to what to expect to my clients. The benefit of this type of communication was obvious—my client retention was through the roof, and this was during at a time when many clients were jumping ship to save a dollar.

This profound loyalty, to me as the broker, was due, primarily, to the fact that I had taken the time to explain to clients what they were actually paying for and what they could and should expect.

Here is how it works:

1) Client Reports Claim to Broker
Your client finds out he needs to make a claim. He’s unsure of what to do and what should happen, so, naturally he calls you first. Think of yourself as the first responder on the scene, from an insurance perspective. It’s your job, as the broker, to reassure your client that they are going to be looked after to the best of your abilities and that you will act as their liaison to the insurer.

At the same time, it’s very important that you gather as many details about the claim. The event is fresh in your client’s mind, and they are probably anxious to tell you what happened—so hear them out; ask them questions. The goal is to gain a clear picture of what happened, in case you need to act on your client’s behalf. After that initial call, send the insurer a loss notice.

2) Claim Notice Received and Assigned by Insurer
Once the client reports the claim and you send in the loss notice, the insurer will assign a customer service person to review the case. This customer service person will, more than likely, call you or the client to gather more information. Once complete, this person will dispatch an adjuster to handle the file. The adjuster is chosen based on a number of factors, some of which include:

  • Type of claim (i.e. auto, property, liability, etc.)
  • Circumstances of the claim (i.e. possible fraud, claim in remote location, fatality, etc.)
  • Size of the claim (i.e. large total fire loss vs. small break and enter)

3) Coverage is Validated
Once an adjuster is assigned she will need to determine whether or not coverage applies in this particular situation. In order to do this effectively, there may be an exchange of phone calls or even face-to-face meetings between the adjuster and the insured.

Once this is complete, all of the information is processed against the coverage on the policy and validation is complete. Some of the key issues here are as follows:

  • What limits of coverage are on the policy vs. what is being claimed?
  • Who has interest in the claim and are they insured on this policy?
  • Did the insured breach any of the conditions of the policy or misrepresent what really happened? If any of the above occurred, the claim is usually denied at this point.

4) Claim Settlement / Repairs Commence
Depending on what happened in the claim, there could be a number of ways this portion of the insurance process gets handled. Generally, the insurer will begin by repairing or replacing damaged property or by reimbursing the insured.

In repair or replacement cases, the insurer may refer your client to a preferred vendor. These vendors are chosen based on reputation, workmanship and the ability to handle a large volume of work. If your client is being reimbursed, steps are taken to put a value on the property that was lost or damaged. For example if a client has his vehicle stolen And, after going through all the steps with the adjuster, the vehicle still hasn’t been recovered. The insurer will need to research the marketplace to determine the appropriate pay out to the client. Price adjustments are then usually made either way for the condition of the insured vehicle, compared to what the market average is, and a final value is determined. This final value is the amount the insured is offered for his lost vehicle. If a third-party was involved and had damages or injuries, your client’s insurer would take much of the same steps as those outlined above to rectify the situation. The most important aspect of this process, however, is that the policy is not intended to exceed or diminish your client’s financial position. The policy is there to reimburse the amount lost, thereby restoring an client’s financial position as it was prior to the loss—not more or less.

5) Payout /Completion of repairs
Once the client agrees to a settlement, the insurer needs to bear the expense. An insurer may ask the insured to sign a final release or proof of loss if the client is being reimbursed directly—this is to ensure no legal consequences can arise from future disputes on how the claim was handled.

Once these forms are signed, the cheques are cut and provided to the respective parties.

6) Underwriting Notification and Claims Closure

At this point, the adjuster notifies the underwriting department of the claim. If necessary, the underwriting department will flag the file (at renewal) to be re-rated accordingly. It’s important to communicate with your client that rates can increas if a client has made a claim. At this point, the claim is then closed and a notice is sent to your brokerage with the details.

Knowledge Benefits You and Your Client
Having a greater appreciation and some knowledge about the claims process adds value to the relationship you have with your client.

The best and most effective way to get involved, and be of service to your client, is to simply call the client and ask how their claim is going. Ask them if they need any guidance. Using your new skill set, you can inform them of necessary steps and help manage their expectations of the process.

If your client is not happy with the claim settlement or process, let him/her know that they can always call you for assistance.

Over the course of my career as a commercial broker, I have intervened a few times and helped clients, if they are confused to why a claim is settled a certain way; I’ve also helped clients get fairer settlements by helping them realize the full value of their loss. For example, one client had a major accident that destroyed their vehicle; after going through the claims process he was offered a sum of money, but was unhappy with the settlement figures. I simply went on to a nationally recognized used vehicle trade Internet site and searched for similar vehicles. Then I called the adjuster with the client in my office and asked for more money based on the info that we had found. The adjuster complied.

Another way you can get involved as a broker is to ask the insurer to send the final release documents and the cheque to your office for pick up instead of directly to the insured. This gives you the opportunity to recap the claim and gives you more “face time” with the client. Keep in mind that your visit stands between your client getting their settlement cheque, which means they’re more likely to remember and appreciate your service.

We must always bear in mind that we are the professionals and that we need to give our clients what we’d expect if we were in their shoes—great service. This starts by knowing the product — particularly how and when it is used. By taking a small amount of time to explain the claims situation to your clients, you are showing them that you not only care about the insurance sale, but that you also care about their long-term business. This simple, yet powerful, approach to doing business will seal the deal with most of your clients and help you increase your retention levels.