What is a Loss Adjuster?
Loss adjusters are independent claims specialists appointed by the insurer (insurance company or underwriting agency) to investigate the larger, more complex or contentious claims on behalf of insurance companies or underwriting managers.
What is the role of the Loss Adjuster?
The role of loss adjusters versus insurance brokers is very often misunderstood. The question is often raised as to why, where a loss adjuster is involved, a particular claim takes so much time to be settled.
Let’s look at an example:
The back ground to the claim was a disruption of electricity to a huge part of a complex. Reputable engineers found that the problem was a damaged main cable underneath a particular section and that the probable cause of the damage was deterioration, an excluded peril in terms of the insurance policy.
To be able to prove this, the floor of the section would have to be opened to get to the damaged cable. In so doing, we are looking at two possible costs factors:
(i) The actual material damage, and
(ii) The cost of accommodating the owner elsewhere until the material damage has been repaired.
In view of the enormity of the claim, the insurers appointed a qualified loss adjuster to investigate the incident. In view of the controversies around this particular claim, it is necessary to note the following:
Loss adjusters are:
- Appointed by insurers, not by insurance brokers.
- Remunerated by insurers and are therefore obliged to report to the insurer, not to the insurance broker.
- Expected to visit the site of the loss to survey and assess the damage and record details of the loss with photographs where possible.
- Expected to investigate all matters pertaining to a particular claim which includes calling upon advice from qualified experts in a particular field relevant to the claim.
- Expected to call for appropriate quotations and advise the policyholder and the insurance company on the most suitable way to carry out repairs by way of a full report .
- Expected to consult with all parties relevant to the policy of insurance, i.e. owners of sections, trustees, managing agents, etc.
- Expected to investigate causes and investigate suspicious claims.
- Expected to liaise with other insurers to negotiate spread of liability.
It is therefore clear that a loss adjuster takes over all aspects relating to a claim and, until he reports to the insurers, which may take some time, the insurance broker, like the insurer, is obliged to take a back seat so that the Loss Adjuster has the space to perform his/her duties.
Where does the broker then fit into this picture?
The role of an insurance broker is to advise on the financial product and to facilitate the claim, i.e. submit the claim to the insurer and monitor progress until settled or rejected. In this case and despite all the efforts of the loss adjuster, it was virtually impossible to ascertain the cause of the damage without huge costs involved. Traditionally, in terms of insurance practice the onus to prove that a loss is a valid claim in terms of the insurance policy rests with the insured party. The trustees were not prepared to spend the huge amount involved in doing so and the insurers were not in a position to entertain the claim.
Author: Rian Pienaar
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