The Conclusion of an Adjustment

How A Claims Professional Explains the Result of an Adjustment

Write the Captioned Report

Insurers are large organizations with varying levels of authority. The adjuster is the representative at the loss scene. He or she must report, in writing, to superiors with the authority to pay the indemnity required. Writing a clear and comprehensive report is an essential part of the adjuster’s job.

The captioned report should be written immediately after the adjuster’s first meeting with the insured on every file, no matter how small and then supplemented as the claims investigation continues until it reports on the conclusion of the claim.

The length and detail of the report should only be limited by the extent of the loss. The captioned report is written to explain to the adjuster’s supervisor all the adjuster knows about the loss so that decisions required of them by the insurer and the law can be made.

The captioned report should be detailed under, at least, the following captions:

Insurance

This should provide information about:

1. the company(ies) insuring the risk;

2. the policy number(s);

3. the term of the insurance;

4. the policy limits;

5. special limits of liability applicable to the loss;

6. the coverages available;

7. the deductibles;

8. the self-insured-retention (SIR);

9. the form numbers applicable;

10. if there is other insurance with other insurers, details concerning the other insurance should be listed; and

11. any unusual conditions, limitations, exclusions or warranties.

Insured

If the insured is an individual the adjuster must determine his or her:

• name;

• age;

• date and place of birth;

• Social Security Number;

• state driver’s license number;

• citizenship;

• marital status;

• names and ages of the spouse and children, if any;

• occupation;

• reputation;

• previous loss history;

• whether the insured had ever had insurance canceled, non-renewed, or refused; and

• the insured’s financial status, earnings and/or net worth.

The information detailed above may sound like exceedingly personal information that will be difficult to obtain. It is not. The insured wants his or her claim paid and will respond if the adjuster asks the insured fairly and as a matter of routine the information will be provided. It is the adjuster’s job to obtain all relevant information. Further investigation cannot be conducted without this information.

If the insured is a corporation, the adjuster must report:

1. the names of the officers;

2. where the corporation is incorporated;

3. its standing with the Secretary of State or other appropriate state agency;

4. the identity of the majority shareholder(s); and

5. its financial condition, net worth, and dividends or other profits paid to the shareholders.

If the insured is a partnership the adjuster must report:

• the identities of the partners;

• the type of partnership (general or limited);

• if a limited partnership, the name of the general partner;

• if a general partnership the names of all partners and the person acting as managing partner; or

• a description of all properties owned by the partnership, its net worth, and the financial condition of the partnership;

If the insured is an estate, the adjuster must report:

1. the identity of the administrator or executor (the adjuster must obtain copies of the official papers appointing a person as the administrator or executor of the insured’s estate);

2. the assets of the estate; and

3. the identities of those who will share in the assets of the estate when it is divided.

Origin

The adjuster must answer the following questions about the loss:

1. What happened?

2. When did it happen?

3. Where did it happen?

4. Where was the insured when it happened?

5. What was the insured doing when it happened?

6. Who were the witnesses?

7. Did the loss involve a fire of incendiary origin, mysterious disappearance, alleged theft, or was there evidence of third party involvement?

The adjuster should also cover in the report the use of statements taken by the adjuster from witnesses with summaries of the information obtained and comments about the information obtained and its relevance to the claim investigation.

Potential Fraud

The report must explain facts that lead to the suspicion of fraud. It should state whether reports have been made of a potential fraud to the local police, the Fraud Division or Bureau of Fraudulent claims if the adjuster’s state has one, or other official agency for the reporting of crimes.

A report of a suspected fraudulent claim is mandated by the Model Insurance Fraud Act of the Coalition Against Insurance Fraud, and various state statutes regarding the reporting of crimes.

For example, in Nevada the statute requires:

If an insurer has a reasonable suspicion that a loss to an insured may have been caused by other than an accidental or a natural occurrence, the insurer shall notify the Commissioner and Attorney General in writing of the insurer’s reasons for the suspicion.

Fraud Unit or Fraud Bureau Statutes have been enacted in California, Florida, Utah, Washington, Nevada, New Jersey, New York, Texas, and almost every state.

The adjuster must also report whether demands for documents have been made on the adjuster by arson investigators or police authorities. This is mandated by the Model Insurance Fraud Act, and various state statutes regarding the reporting of crimes. The adjuster must establish the requirements in the particular jurisdiction in which he or she works.

Note that more states have adopted arson reporting statutes than statutes concerning other types of insurance fraud.^[1]

The adjuster must also report whether a report has been filed with the Property Insurance Loss Register (PILR) which has been incorporated into the Insurance Service Office’s All Claims Data Base. There are various types of databases where subscribing companies can obtain a report on other losses reported by the insured as reported by other insurers, the National Insurance Crime Bureau (NICB), the INDEX System and ISO’s All Claims Database.

PILR or the All Claims database maintain a data base of property losses. It is not complete, but it can provide useful information. This is a register of losses that have been compiled by the American Insurance Association that amount to more than $500. The losses are for those incurred through fire and is used to determine any patterns to said losses. Some Surplus Line insurers either may not or do not submit information to the databases.