|Posted on Sunday, June 25, 2000 - 10:41 am: |
The latest "KATTS REPORT" shown as NEW on the Home page, June-2000. deals with these issues from the perspective of the Carrier the IA and the Cat Adjuster. You may wish to peruse it and offer some additional insight.
|Posted on Saturday, June 24, 2000 - 11:23 pm: |
rj may not be completely right. unless something's changed, some adjusting expense such as mileage, copies, phone, clerical, out-of-pocket expenses (as opposed to adjuster fees) can be "passed through"- at least in some states. it would be some help if the carriers and venders would let us bill more for pass-through expenses, since they arn't inclined to raise fee schedules.
|Posted on Friday, June 23, 2000 - 1:19 pm: |
"Leave us out in the Cold"???? Not bloody likely!
They've got their bottom line and so do we.
Should the suits not like what we do and charge for, then they simply do not belong in this business. For the suits to seek to eliminate the functioning of the most important element of the business, (the Claims department), all in pursuit of a fat quarterly profit, is beyond sick and edges into criminal territory. Since when has financial suicide become a fashionable trend?
Yes, I am fully aware of the trifling fee schedules out here that the small independent shops have been bullied into accepting. One Houston based shop is using prices straight out of the 1960's. He is truly embarrassed but feels he has no choice. As such, he must do as much of the work himself, for to find someone to work for him at the standard 60/40 split leave neither of them with anything but crumbs. This of course leads to the inivitable,'down in the sewer', work quality along with delays in Insured contact and inspection. For unless several claims can be grouped together, it is not feasible to go out on just one appointment.
You want the bottom line? Well here is how the cow is gonna eat the cabbage. The less is paid, the less is done, and the less your bottom line will be. This ancient adage applies to the suits as well to us field hands.
|Posted on Friday, June 23, 2000 - 2:09 am: |
The Bottom Line
While this phrase "The Bottom Line" may seem a little strange to some it is the driving force for everyone in this business from the carrier's Chairman of the Board to the janitors that sweep the floors.
You see most insurance carriers if not all are stock held corporations. As such the only things that interest the stock holders are the value of the stock & company earnings that pay them dividends. As long as the stock gains value & pays dividends everything else is immaterial to the average stockholder. This is the Bottom Line of reality.
Should the value of company stock go down & dividends are reduced the pressure to improve the company's worth on the company executives can be very sever. The chairman of the Board could be replaced by a vote of the stockholders if the company's performance takes a turn for the worse.
Unless the companies top executives have controlling amount of stock they are in constant fear of losing their jobs & if they do have controlling stock their net worth can change very rapidly in the event of catastrophic event.
With this stated let us now look at a simple layout of a typical carrier as it relates to the Bottom Line. An easy way to understand how every department effects the Bottom Line is to list each area either as a liability or an asset. Simply put the departments that are considered as an asset generate income and those that don't are a liability.
On the asset side of this equation we have the underwriting & investment departments and on the liability side is the officers & executives (their staff & expenses), buildings, equipment, utilities and finally the big one the claims department.
The claims department liability in any given year can effect the Bottom Line to either make everyone look good or bad in the eyes of the stockholders. In years of low claim activity profits are high and when a high level claims occur the profits go down.
Ok now you are probably wondering (maybe) what does any of this have to do with or effect us as independent adjusters. Well, every claims manager for every carrier has someone that he has to report to. Since his department may be the largest liability in the carrier effecting the Bottom Line, every decision the claims manager makes in regards to spending the carriers money is under high scrutiny. In short he is really driven by the Bottom Line.
When claims managers are negotiating with the vendors that hire us he does so from the company's point of view. What ever is paid to handle claims is not allowed as a pass through expense to the policy holders in the form of increased premiums or recovered by any reinsurance. Claims handling costs (fee schedules) are applied against company profits as a direct liability, therefore, have a direct impact on the Bottom Line. Increases in the paid claims to insured's are generally passed through underwriting to insured's in the form of increased premiums or recovered from the reinsurer. So the more carrots that the claims managers can wave in front of the vendors to increase the competition for business between the vendors the lower the fee schedules go. It appears that good quality adjusting just doesn't mean very much any more.
Unfortunately this system leaves us out in the cold. While higher claim amounts, that are being paid under the contractor repair programs & inexperienced adjusters, can be passed through the system with only minor temporary effects on the Bottom Line the fee schedules can not, therefore, unless & until the reinsurers & policy holders realize what is happening there is very little that we can do about the low fee schedules and THAT'S THE BOTTOM LINE.
As an independent adjuster I understand what is going on. I personally disagree with the extreme direction many of the carriers are headed in regards to our fee schedules. Regardless I will continue to provide the highest quality of service & work product as I expect all of us that make this our career will continue to do. I continue to do so with the hope that some day the carriers will begin to treat us with the same level of fairness & respect as we provide their policy holders.
In regards to the vendors they are only competing for business. However, if they are going to accept reduced fee schedules in order to sign contracts with the carriers they at the very least should increase the percentage of the fee schedule that goes to the adjuster and settle for less themselves. After all their income is multiplied by the number of total files assigned by the carrier where as the individual adjuster has to survive on his file count alone. Many of the vendors have been reducing the amount being paid adjusters so they can maintain their income levels. This isn't right but what the heck what is any more?
For those carriers & vendors that are not taking advantage of the independent adjusters I commend you. For you understand that good service & quality work product can not be done by taking short cuts and are still important to your image to your customer the policy holder.