Because the risk manager and the adjuster dealt with this potential $30 million difference up front, they eliminated the possibility that the plant owner would replace all 50 stanchions only to discover later that the policy would not reimburse the cost.
3. Avoid blind parallel studies.
On many major claims, two groups of engineers study the damage. One group represents the insured; the other, the insurance company. Without comparing notes, these two groups often grow farther and farther apart on their damage assessment. As time goes on, positions get solidified. Areas of potential disagreement broaden. Instead of such blind parallel studies, try working together with the insurance company’s team. Frequent joint meetings can bring to the surface differences early and avoid unpleasant surprises later.
4. Establish a reporting system.
Establishing a reporting system between the adjuster and the departments in your company that are critical to the investigation can help. Usually these departments include the financial, accounting, and operations departments.
Also make sure to set up a thorough system and procedures to capture all the expenses associated with the claim. Have the adjuster review these expenses every 30 days so he can alert you to any that may not be covered. You don’t want your settlement to be less than it should be because some expenses were not properly documented.
5. Encourage cooperation, not antagonism, with adjusters.
Unfortunately, it’s true: some claims get nasty. Risk managers sometimes feel that “the insurer has collected our money for years. We’ve never had a claim and now they’re trying to nickel and dime us to death. These costs should be reimbursed.” Taking such a stance can prolong the claims process. And it could hinder your ability to get an advance on your claim settlement. The pain intended for the other side usually gets evenly spread over everyone involved. In contrast, everyone wins when communication is open and cooperation the norm.
6. Look for signs of impartiality.
Independent claims adjusters are professionally bound to accurately reflect and give an opinion on your claim. Although the insurer pays the adjuster’s fees, independent adjusters must conduct impartial investigations.
At the plant explosion in Mexico, the adjuster had several project teams working. He also hired someone to conduct a survey of peripheral damage to the plant’s offices. The survey found a million dollars in small incidental damage in chairs, desks, and office supplies. Somehow, this survey’s results were not submitted in the claim.
The independent adjuster called the broker and the broker was able to include the additional damage in the final claim. A professional claims adjuster wants to be fair and help you receive every legitimate claim dollar.
7. Provide resources.
Once the adjuster has a good grasp of the situation, he or she should sit down with both the insured and the insurer and explain what resources are needed to manage the job. The adjuster might need to hire an independent engineer or an independent accountant or industry experts. Assembling the right team can make everyone’s life easier and make the claim adjustment process work smoothly. Remember, a big part of the adjuster’s goal is to get your company’s business up and running again as soon as possible. Doing so ultimately reduces the insurance companies’ exposure because it reduces what they must pay you for business interruption.
8. Realize your policy may not cover all risks.
Many risk managers don’t fully appreciate all of the risks facing today’s companies, especially in an increasingly global marketplace.
Several years ago, a large semiconductor facility burned to the ground in Japan. The fire created a ripple effect in the industry that caused many companies to suffer large contingent business interruption losses. The industry depended on material from Japan to build products for their own customers.
9. Avoid an over-reliance on computer programs.
Technology can make loss assessment quicker, but sophisticated computer pro grams are not the answer to thorough loss assessment. Computer programs can plug in unit costs for materials, equipment, labor, etc. and generate an estimate for the repair cost. They’re good tools for rough evaluations of losses, but without a professional claims adjuster, effective major loss adjustments, negotiations, and settlements are not possible.
You may not be able to find a contractor who can do the necessary work for the amount the software says it should cost. Or, you may not want to rebuild your facility in exactly the same way. The adjuster can analyze the situation to determine what is and isn’t covered.
10. Give peace a chance.
It’s natural for risk managers to see the claims adjuster as a potential adversary. You may think the adjuster’s goal is to minimize the claim. In fact, the adjuster is not there to cut claims in every possible way. The adjuster’s main goal is to verify damage, make sure everyone realizes the full extent of those damages and make recommendations. Doing so enables the insured and the insurer to make good decisions at the earliest point of time.