Of the 600,000 people working in the Property and Casualty (P&C) business in the US, a few thousand are claim advocates who work for brokers. Advocates have no direct authority to decide coverage or pay anything. Advocates' value is our ability to influence those who do. We persuade in conversation and correspondence, using terminology that advocates and decision makers both understand.
Best interest
When a policyholder files a claim, the claim advocate acts in the claimant's best interest to have the claim paid out. In doing so, advocates help fulfill the promise underwriters makes in the policy when they write "We shall pay..." — a promise for which clients pay good money.
Many great Liability and Property insurance adjusters highly value claim adjusters' fiduciary responsibility. When there's a truly grey area, the best claim advocates find a reasonable way to do what's in our client/insured's best interest.
Hard days for an advocate are the days when an adjuster reads something into the policy that's not there or overlooks a phrase that is there.
Best practice
As for all lines of work, people who work in insurance strive to follow the best practices established for the profession. Yet sometimes claim communications or claim processes go off track. In that case, a claim advocate might choose to use a forceful phrase that they take care to not to overuse: "[This] is out of compliance with your company and industry best practice."
Asserting non-compliance with established best practices is the last effort before escalation.
Claim
"Should client report this matter? What should client tell the insurance company?" Here is an opportunity to get back to basics. The reply is another question. "Is someone asking for money?" Often the answer is no. As broker or advocate, we hear of many situations. None of them is a claim until someone asks for something.
There's nothing to report to the carrier until someone makes a claim. It's all right to report as a matter of record.
Client/insured
There is much common ground for adjuster and advocate, yet we are not in the same role. The words client/insured keep focus on who is most important. If adjuster and advocate are not aligned, we need to step away for a moment to realign our thoughts with the client/insured's best interest in mind.
Compel
To compel is to set something in motion. Sometimes, the claim advocate uses a rebuttal to compel an adjuster to reconsider a decision. Rebuttals must be so well crafted and well grounded that the adjuster is obligated to reconsider.
Claim colleagues at the claim department or third-party administrator (TPA) work at it just as hard as an advocate. Always be respectful when trying to compel an adjuster to reconsider or when you escalate a claim beyond the adjuster.
Concession
The ability to get a concession from a claim department hinges on the language of the insurance policy. Clients might argue, "Why is this not covered?" or "The underwriter knew our intent" or "We place a lot of business with the carrier!" But claim advocates can only apply the black-and-white of the insurance policy when reviewing a claim.
There are times the policy says something different from the understanding at inception. Neither advocate nor adjuster can change what is black-and-white. Coverage exception decisions rest with underwriting management. A claim advocate will help frame the issue and offer suggestions on how to approach underwriting, but don't expect the claim department to make a coverage concession.
Entrench
Once an adjuster takes a coverage or liability position, the adjuster usually becomes entrenched and won't budge from the position. If coverage counsel is hired, entrenchment is inevitable.
To avoid reaching the point of entrenchment, a preemptive call to the adjuster when a misunderstanding is foreseeable should help the adjuster appreciate the insured's point of view. The alternative is to let the claim run its course — then, if the adjuster's decision is in error, the advocate prepares a compelling rebuttal.
Escalate
Everyone's job has limitations. Everyone in claim has a boss. Someone has more authority than the last person did. It helps to let the person I am currently dealing with know that the difficulty may be heading to escalation.
Sometimes this is enough to get the matter back on track. Other times, follow-through may be necessary. Work with adjuster colleagues as much as possible before escalating a claim to the next level. No one wants to be bypassed or second-guessed. Claim business is a close business — we will cross paths again. Always be respectful.
Loss allocation
A charge to the balance sheet is the single most important strategy to redirect a negative claim trend. Making real change always involves motivating management. Give management a line item on their business unit's balance sheet that they can influence. Deduct actual losses from the balance sheet and management will be more engaged. The loss trend will reverse.
Negative claim trend
When aggregate claim costs are trending in the wrong direction, folks frequently look to adjuster and advocate wondering what we will do about it. Cost containment, best practices and claim reviews help but are not enough to turn a trend. Advocates and adjusters control the claims give us. The better strategy is to not have claims in the first place.
Suppressed reserve
An adjuster sometimes feels pressure to suppress or hold down reserves. Some believe they should wait and wait because they don't have all the facts. Two or three years go by, and what was foreseeable comes to fruition. An overdue reserve increase puts my risk manager and CFO in an untenable position.
Businesses have annual budgets. When the books close on the year of the claim, the loss fades in the rearview mirror. Set and hold the right reserve and it stays in the headlights. The hardest insurance conversation with a client by far is informing them a long-forgotten claim is going to take hundreds of thousands of dollars out of this year's budget. Neither adjuster nor advocate wants to have this conversation. Far better to have the hard conversation earlier than later.
Valuation
When a reserve notice or settlement authority request comes in, the advocate gives the client feedback. Adjuster valuations are largely on target, but there are occasions to disagree. The advocate lets their clients know what they think. Volatile claims are the hardest claims to value.
Volatility
My client needs a clear and forthright valuation but value is rarely well defined. Most of these thorny ones involve social inflation. Liability or compensability may be favorable to the client but the event or the injuries engage potential jurors emotionally. The days of "exposure times liability equals value" have passed. Today it is "exposure times liability adjusted for volatility." When a claim person says volatile, they're also saying unpredictable. This implies it is best to settle the claim early.
