Posts tagged: insurance

I was recently involved in a strategic analysis of the insurance industry. As part of that analysis it was necessary to understand the competitive environment of independent claims adjusters and, particularly, the technology that is currently being used and that is available. The analysis is below:

Independent Insurance Claims Adjusters

Associations
There are several associations and fee-based organizations that provide services to independent insurance claims adjusters. Most notably the National Association of Independent Adjusters and the fee-based services from E-claim.com. A more comprehensive list is provided in Table A below. There are many smaller regional associations that represent independent adjusters but do not seem to provide services like advertising and claims-assignment to members. The fact that these regional organizations exist indicates that independent adjusters are organized and are viable meaning they are making money without being employed by the larger adjuster service companies or an insurance company. These adjuster organizations large and small, regional or national give even a small independent adjuster the necessary exposure in the industry. The independent adjuster can advertise, keep up with industry trends and find additional resources to do their job through these organizations.

Technology
The services currently available to the independent adjusters allow insurance companies and others that need claims services to assign claims to independent adjusters on-line and allow the adjuster to receive the information in a short period of time. I can’t determine to what extent the client organizations are currently making use of technology to get information to the adjuster, however, the ability to use the internet to find a suitable adjuster, contact the adjuster and send at least minimum information to the adjuster on-line is allowing many independent adjusters to do business and compete with large adjusting firms. It is a small step from there for the client to e-mail, e-fax or otherwise electronically transfer additional information to the adjuster. When the adjuster has completed the claim his work can be sent back to the client over the same medium.

With a simple website and a minimal amount of software and hardware an independent adjuster could easily provide the portal for a client to upload information about the claim as well as download the finished claim material from the adjuster. This information could include legal or industry forms, digital copies of contracts, digital signatures and even large digital photographs. E-claim.com provides these website services, in fact, any competent website designer could easily design and host this kind of website for a few hundred dollars using open source software. This kind of minimal web presence could allow a client and adjuster to communicate and share information real-time.

Barriers to entry
There are few barriers to entry into the insurance adjuster field. An applicant has to be 18 years old, reside in the state, be trustworthy, show that they have “experience, specialized education, or training of sufficient duration and extent regarding the handling of loss claims” and pass a test (Texas Constitution and Statutes, Insurance Code, 2009, Sec. 4101.053). There are several education providers that teach courses that meet the education and training requirements and will teach the applicant what they need to know to pass the test. There is a $65.00 fee from the state to take the test and a $50.00 fee for the license.

Specialization
Information from the Insurance Information Institute says that “many commercial insurers concentrate on certain types of businesses or insurance coverages or both. They may target firms in the energy or transportation fields, for example, building contractors or financial services institutions. They may be specialists in directors and officers liability insurance, medical malpractice liability insurance, surety bonds, crop insurance or workers compensation, sometimes covering other incidental risks as well. It is easy to see how an independent adjuster with this kind of specialized knowledge could carve out a niche market.

The American Society of Professional Estimators educates and certifies construction estimators and even provides an online list of estimators by region. These construction estimators offer consulting services that include cost analysis, participation in dispute resolution, expert witness testimony and claims negotiation. As described above, an estimator with this kind of specialized knowledge could easily comply with the requirements to become a licensed insurance claims adjuster in Texas. Likewise, experts in other fields such as aircraft engineers, commodities traders, accountants, civil engineers, environmental engineers, architects, jewelers and home builders could use their specific knowledge to analyze insurance claims.

Specialization may explain why the small independent adjusters (Mom and Pops) are succeeding because there may be few individuals who have specialized knowledge of a certain risk or insured technology/industry. These specialized individuals may have worked years to get this specialized knowledge and need only take a class to get licensed to become an adjustor. On the other hand, an adjustor can’t just take a class to get the same specialized knowledge.

Summary
In summary, if you combine the resources that are available to the independent adjuster through the adjuster organizations with cheap, off-the-shelf communications technology (cell-phone, laptop, PDA, digital camera, web portal), cost effective internet-based advertising and low barriers to entry; an independent adjuster has everything he/she needs to do business.

Table A

Adjuster Associations
National Association of Independent Insurance Adjusters [naiia.com]
- Offers claims-assignment services to its members
California Association of Independent Insurance Adjusters [caiia.org]
- Provides a member search for members in cities and area codes.
New York Association of Independent Adjusters [nyadjusters.org]
- Provides a member search for members by region.
American Association of independent Adjusters
- Members include some apparently large companies including:
GAB Robins
Gallagher Bassett
and Sedgwick CMS
- Also represents CL and the NAIIA as “Associate” members.
- Seems to be a PAC for the industry.
American Society of Professional Estimators [aspenational.org]
- this organization represents construction estimators.
- It appears that these estimators also hire out their services to
estimate losses for insurance companies.

Fee-based Adjuster Services
E-claim.com [e-claim.com/claims-portal.com]
- Offers claims-assignment services to its members.
Casualty Adjuster’s Guide [cagworld.com]
- Provides adjuster search feature by region and claim category.
Claims [claimsmag.com]
- Provides advertising for claims adjuster.