Storms blew part of the roof off an appliance company’s 300,000 square foot warehouse in Holland. Several thousand refrigerators sat in two inches of water. The good news was that the boxes were damaged but the refrigerators weren’t. The bad news was that the facility was just a distribution point for goods manufactured in Italy. With no facility to re-box the refrigerators, the company faced a very costly business interruption period.

But, an independent property and casualty claims adjuster devised a plan. With the appliance maker’s approval, the independent adjuster rented a spare warehouse about 25 miles away in Germany. The independent hired work crews and salvage companies. Working from 5 p.m. to 2 a.m., the crews transported 6,000 refrigerators to the German facility and re-boxed them. When the storms first hit, the company estimated the damage, including business interruption, would top $12 million. By keeping the refrigerators moving to market and avoiding business interruption, the independent claim adjuster settled the loss for $2 million. Both the appliance company and the insurance company were elated.

Who May Need An Independent P&C Adjuster

The case above illustrates one of the main reasons some companies rely on independent property and casualty claims adjusters. Independents excel at larger, complex losses. They often handle property and business interruption losses caused by natural and man-made disasters, other catastrophic losses, and environmental contamination. These cases demand a high level of expertise and great blocks of time. Independent p&c adjusters tend to have at least 20 years of experience. They also carry a relatively small number of clients so they can dedicate more time to the companies they represent. And, independents tend to specialize.

But, what exactly is a complex claim? Complex claims, like the one the appliance warehouse in Holland suffered, usually involve business interruption. The bulk of the cost in these claims is in the lost stream of revenue the company suffers. The company in Holland anticipated xxxx weeks in which they would not be able to ship any refrigerators from their damaged warehouse. Each week represented $xxxx in lost revenue. After just xxxx days, the independent claims adjuster got the warehouse back on track and the revenue stream continued.

Industries and manufacturing plants tend to work with independent adjusters. Industrial claims are more technical than professional business claims. An investment company with real estate holdings across the country has risk exposure to fire and natural disasters, but that exposure is fairly easy to define. However, a chemical plant that deals with hazardous or dangerous materials and processes represents a much higher, more complicated risk. An accident could close the chemical plant down and cut off its revenue for as long as the plant stays closed. Having an adjuster who is knowledgeable about the chemical business in general, knowledgeable about that particular plant’s operation, and knowledgeable about the facility and location oftentimes proves invaluable. Such a plant needs a plan in place to keep capital flowing through any shut down and to get the claim and damage taken care of quickly. An independent adjuster is much more likely to have the experience and the time necessary to work closely with such a company.

Companies with significant liability such as school bus companies or major environmental concerns (oil, gas, mining, etc.) often turn to independent p&c claims adjusters. For example, a utility company in Indiana uses an independent adjuster. Just one of their transformers costs $5 million to replace. Knowing how to investigate the loss of costly electrical equipment and get the pertinent information is critical to the financial viability of this utility.

Companies who have frequent claims, perhaps 20-30 a year, may also benefit from using an independent property and casualty claims adjuster. In such cases, the insurance company often nominates an independent as the adjuster of record in the insurance policy. The frequency and magnitude of projected claims may be more than the insurer wants to handle.

Companies that feel a need to evaluate their claim procedures, seek efficiencies, or build a more proactive relationship with their claims adjuster, often call on an independent. Independents can help tailor-make the kind of claims procedures and services a particular company needs or wants. They frequently develop claim programs directly with the company’s risk manager covering all the potential areas of concern (what will our reporting procedures be? what happens if we have a loss on New Year’s Eve? etc.)

Many independents sit down with the risk manager and the company’s insurance broker to discuss where they’re likely to have their larger losses and how to devote the appropriate resources to those areas. The independent will usually appoint an account coordinator who will be available to the company virtually 24 hours a day. Companies develop more of a personal relationship with the claims adjuster this way.

Good Independents Work Well With Insurers

Although insurance companies have claim staffs, there is little overlap or conflict between those internal staffs and independents. Internal staffs excel at handling routine claims. Sometimes they go beyond the routine and offer some specialized claims services. However, insurance company claims adjusters have much larger case loads than independents and usually get involved only when a claim has been submitted. In special circumstances, outside the realm of their own claims adjusters, insurance companies rely on and recommend independents.

Independents are fiduciary agents of the insurer. They help protect the rights of the insurer. They also depend on insurers for recommendations and must establish good working relationships with insurers so they can provide good service to their client companies.

How To Hire Independents

If you think your company should consider an independent, ask your p&c insurance broker for a short list that will pass muster with the insurer. Your insurance company may or may not be in the selection process, but the insurer always has the first right of refusal if they feel the independent is not right for the situation.

Call in several independents for face-to-face interviews. One important criteria is the relationship. Your company should feel comfortable with and communicate easily with the independent. If you talk with a large independent, find out who your claims adjuster will be. You don’t want to choose an independent based on the experience and the demeanor of one person in the firm and later discover that person will not be involved in the day-to-day activities of your account.

Interviewing Independent Adjusters
What To Ask What You Want To Hear
Tell us about your experience adjusting claims Many years of experience
Experience in your industry or a related industry
What do you know about our industry Basic knowledge of your industry
and our company? Evidence that the independent did
some research before meeting you
If we hired you, who would be the The lead adjuster should be present
lead adjuster for our company?
How many other accounts does he or she handle? Evidence that the adjuster will have adequate time to work with you
How will our claims be processed? A well-planned, easy-to-use system
Tell us about some of your current clients Names of companies you can call for
assurance of the quality of the independent’s work
Independent should speak positively
about clients and know their needs
What insurance companies do you deal with? Make sure independent has good working relationships with insurers,
especially your own

When An Independent Is Not A Good Choice

For many companies the insurer’s internal claims adjuster is the best choice. Insurance company adjusters know their company’s claims procedures, they may have readily access to training, and can get things done quickly because they are part of the insurer’s internal staff. If a business has infrequent claims, has no special needs and receives good service from the insurer’s claims adjuster there’s probably no need to involve an independent.

Multi-location clients are not good clients for an independent. No independent can handle a company like McDonalds well. Such companies, with hundreds or thousands of outlets distributed over a wide geographic area, are best left with the large insurers who have offices throughout the country.

Professional businesses -- a law firm, a real estate company, a medical care organization -- often have few claims and those they do have are relatively standard. The chances a professional business needs an independent claims adjuster are slim.

Independent p&c claims adjusters work well with companies that have complex claims, frequent claims or special needs. They can provide a high level of expertise and accessibility to companies that desire a close working relationship. Ask your insurer or your insurance broker about independents and whether one might be right for you..