Adjusting to the Conditions: Catastrophe Claims

In the last issue, Education Forum looked at when and how catastrophe response services are set up. In this issue, we consider catastrophe claims issues of safety, claims-handling practices and response evaluation.

Safety issues

The investigation of catastrophe claims can pose a range of safety and security issues. While adjusters are accustomed to certain occupational hazards, they may need additional training, equipment and awareness to cope with the particular hazards of a catastrophe.

For a start, it may not be physically safe for loss adjusters to enter the catastrophe zone directly after an event has occurred. A disaster site will be littered with debris, making it dangerous to be in the area. Buildings may be unstable, weather conditions may be hostile and drinking water may be contaminated. When adjusters do enter the zone, adaptations may be necessary:

• The precarious state of buildings and other structures may call for the use of hard hats and steel-toed boots on the job.
• If very cold winter temperatures are expected, appropriate clothing and accessories will be required.
• If the local water source becomes contaminated, loss adjusters should be informed about the risks of drinking the water; given instructions on how to treat the water to make it safe; and told about the symptoms of water poisoning and what to do if they become ill.

Another factor is human behaviour. The chaos that results from a catastrophic event may lead to vandalism or looting. In addition, some neighbourhoods might have had a high crime rate even before the catastrophe, or problems with gangs or violence. Loss adjusters unfamiliar with the area should be briefed on these dangers and made aware of gang characteristics and features so that they can identify them – and also so that they can maintain neutrality in their own clothing choices.

Individual policyholders can sometimes pose a risk, as well. Faced with insecurity, personal loss and the strain of experiencing scenes of mass destruction, policyholders can become emotionally drained and fragile. Under such trying circumstances, anyone perceived to be bearing bad news may be vulnerable: stress may find an outlet in aggression against the loss adjuster. Adjusters should be aware of these risks and pay attention to their own safety. If adjusters wear identifying company clothing on the job, they should change into street clothes after their last appointments each day.

Maintaining professionalism

Loss adjusters are conditioned to dealing with tough situations. In the extraordinary conditions of a catastrophe, they must draw deeply on those wells of experience in order to maintain their focus on professional claims handling and successful interactions with policyholders.

Adjusters must deal with the stress of being far from home and possibly working under dangerous conditions. Catastrophe claims team members, working closely together over long hours, are often a source of support to each other, helping one another through the tragic circumstances faced daily. Different people react in different ways to such stresses; and respect and tolerance for each individual must be maintained and encouraged from all concerned. Humour can be an excellent way to relieve pressure.

The catastrophe coordinator may suggest a curfew for loss adjusters. This could be related to a government-imposed curfew, or it could be an acknowledgment that the hectic pace maintained by catastrophe loss adjusters must be tempered with rest to prevent burnout.

Catastrophe claims handling practices

Through sheer necessity, loss adjusters investigating a catastrophe handle many more claims in a short period than they would under normal conditions. Ordinary claims handling standards may be modified somewhat to meet the needs of the situation, and some documentation standards may be somewhat relaxed. However, claims must still be proven by policyholders, and adjusters must ensure their documentation practices remain adequate.

Adjusters need to manage policyholder expectations about how claims will be settled and to communicate the parameters of the insurer’s responsibilities with respect to any other activities. To do so, adjusters need to know about any measures undertaken by the insurer to streamline the claims process, and about any other initiatives the insurer has implemented to provide value-added services.

Although consistency in claims handling is always a goal, it is particularly important in a catastrophe situation. Policyholders affected by the same sorts of catastrophe damage often compare their experiences, including how much money they received from their insurers and what kinds of property were included in the calculations. To ensure fairness and consistency, adjusters must identify a range of allowances that qualify for the insurance settlement, use this range as a template to ensure that areas of likely damage have been considered, and document how settlements were negotiated.

Once the immediate needs for safety, shelter and security have been met, restoration activity may begin. Local contractors will be in great demand, resources will be strained, and prices are likely to be high. Ideally, adjusters will have a list of pre-approved local service contractors who have agreed to work on hourly-based contracts to do specific work on the spot. As with any other property claim, salvaging whatever can be salvaged will offset some losses.

Evaluating the catastrophe response

Some time after the event, insurance companies and loss adjusting companies may evaluate how the insurance companies’ operations fared. Adjusters may be invited to participate in information sessions to share their thoughts on what worked and what didn’t. Loss adjusters’ experiences in handling catastrophes have sometimes led to the development of new insuring agreements and endorsements, such as the mass evacuation policy endorsement.

Information may also be gathered to measure the outcome of customer service. For example, a company may analyze the length of time taken to issue payment on claims or the number of complaints received about loss adjustments. The operating expenses of managing the catastrophe operation must also be analyzed. This will include exercises like comparing expenses incurred for the operation to the volume of claims handled.

The results of such a catastrophe response evaluation can then be used to strengthen a company’s catastrophe response plan.

This article is based on excerpts from the study material in the Claims Professional Series of applied courses – a core of the CIP Program that helps adjusters learn the functional knowledge and skills required of their profession.

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A local source of information, such as a broker, agent or other contact, may help to identify hazardous conditions, risky neighbourhoods and other problems that loss adjusters may encounter.

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Settling catastrophe claims

• In most catastrophe scenarios, loss adjusters retain the same claims-settling authority they have in settling everyday claims, and larger claims may be subject to review by a more senior person.
• In some circumstances, insurance companies may authorize independent adjusters to issue loss payments to policyholders on the spot.
• Insurers may provide adjusters with field cheques or permit hand-written drafts to be used.
• Insurers may require adjusters to prepare a letter to accompany each cheque written, to provide documentation for the file and the policyholder.