It’s Not Their Money

But you wouldn’t know it by the way they act.

Pay Day

Scott Wills via Compfight

I’m talking about insurance adjusters of course.  And the way that it seems that every claim is being paid out of their own personal bank account.

It wasn’t always like this, but longer I’m in the industry, the worse things seem to get.  I used to think that an adjusters’ main motivator was to close claims as fast as possible and move to the next.  My thinking has changed.  This is due in no small part to the fact that I’m now a licensed adjuster, playing in a game that I’ve ever only watched from the stands.

As a contractor, let’s face it, you take what you can get.  In the insurance “restoration” world it is commonly accepted that 1) profit margins are usually higher and 2) in exchange for item “1” you expect to “take one for the team” on occasion.  And by “take one”, I mean you do work at cost because an adjuster says so.  The unspoken rule used to be that you would be able to make up for your loss on the next one.

As a “program” contractor, you’re expected (by insurance adjusters with whom you have a “working relationship”) to do small jobs for little or nothing, in the hopes that a big job will come along with fatter margins. 

This game used to work. And it is still played out today, every day, across the nation, with every carrier and “program” contractor.  I say this “used to” work, because I’ve come to realize that the people who are paying for us to play this “game”, are also the ones taking it in the shorts; the homeowners and business owners who faithfully pay their premiums every month.

Last year I began advocating for consumers and non-program contractors on insurance claims.  I was promptly confronted by a stone wall of opposition and hostility, coming from the same people who I had previously considered colleagues and partners.  All of a sudden I was an outsider and a threat.  The “working relationships” that I thought I had developed over my years as a restoration contractor and insurance damage estimator had evaporated overnight.

Where did I lose my integrity?

Two years ago I wrote a large restoration and rebuild estimate for a bowling alley that had suffered a severe fire loss.  My estimate totaled over $400k.

I submitted my estimate to the owner and carrier.  The owner’s rep, part of a large property management company, about came unglued.  They had no idea the steps required and costs involved in a major fire.  They asked the adjuster, a large loss “general” with years of experience, if this was normal.  Do you know what he said?

“Yes, it seems to be in line with industry standard practices.”

And that was it. No grilling of me.  No second guessing. No second opinion.  At no point was I questioned about my qualifications or intentions.  I was also not asked how I was being compensated, which was the same as most project managers: salary plus commission.

I also wrote a demolition estimate to accompany the repairs using Xactimate, which allows a certain square footage charge for demolition.

That estimate was over $150k, and was paid within a week.

In the end, after supplements and CODE items, my repair scope exceeded $600k.  The claim was settled based on my estimating work and my employer moved forward with repairs.  Pretty smooth, right?

Fast forward to present.  I recently wrote a repair scope for a hotel which suffered a significant water loss.  My estimate totaled $215,000, and received a far less cordial reception than the with the bowling alley.

The adjuster, along with their “expert”, proceeded to willfully discredit my entire work product.  They questioned everything, including my motivations, compensation and integrity.  Every line item was scrutinized with impunity and in the end they rejected the entire estimate.

Instead of working with their insured (and her chosen expert) on the stated loss estimate, the adjuster insisted that their estimate ($175k) was the starting point of any negotiations, and it was up to me to “prove” where they were wrong.  This is exactly the opposite of how I’ve operated for years.

I wrote an emergency repair invoice for the hotel, which totaled $60k.  Once again I used Xactimate and documented the work performed, by room, down to the square foot.  I was quickly informed that “this is a commercial loss” and “that’s not how it’s done.”  Instead, the contractor who performed the work had to submit a T&M invoice with all kinds of backup.  Then the negotiations began (and are still going on).

The rest of the story

one-wayAnd here’s the kicker: both losses involve the SAME ADJUSTER.

So what changed?  Both were commercial losses involving the same adjuster.  All estimates were written in Xactimate with the same pricing database.  Both situations proceeded along normal lines right up until the point it was discovered that I am a licensed adjuster.

If one thought about it logically, wouldn’t being licensed actually make me MORE qualified to handle losses?  Instead of representing a restoration contractor (who stands to benefit from the claim), I represent an insured who… (wait for it), stands to benefit from the claim.

Why does that one change have to result in the entire claims process becoming an adversarial game of cloak & dagger?

What’s your motivation?

It has been a sobering experience being treated like a liar and thief.  People with whom I thought I had good relationships with are now telling my clients that I’m “not doing them any favors” with my involvement in their claim.lolly

So that brings us to the original question: what is the adjuster’s primary motivation?


I think we all know better than that.  Besides the few adjusters who are “on the take” (and on their way to prison), most adjusters make what most would consider a modest salary.  It’s the benefits and (relatively) stable employment that keeps people around.  And adjusters generally don’t make any kind of commission off what they “save” their employers. Can you imagine a world in which they did? OUCH!

Do adjusters seek prestige or status?  I’m not sure that adjusting is sufficiently glamorous for those who need their egos stroked.


Do some people become adjusters for the same reason others become cops; to bring the heat and throw their weight around?  Maybe.  There are a lot of control freaks out there.  Some are just looking for a reason to write a ticket or pull their weapon, others take every opportunity to deny a claim or reduce payments.  Because they can.

I’ve wasted many [un-billable] hours arguing with adjusters over small line items.  You know, those $100 items that you feel you’re entitled to bill for but the adjuster says, “we don’t pay for that”?  After the second phone call, or fifth email, it becomes apparent that this particular insurance adjuster has taken some kind of moral stance against your evil billing practices.

In the end, the one with the checkbook (power) wins.

And we live to fight another day.

Yes, needing control and power may explain the actions of some, but I don’t believe it is broadly applicable.

How about DIS-incentive?

I’ve slowing come to the realization that the majority of adjusters I deal with aren’t trying to do their jobs better; they are doing their jobs in Under Someone's Thumbsuch a way that they get to KEEP their jobs.

Money, power and prestige all take a backseat to the one thing that we all worry about: job security.

The current reality of the average insurance adjuster is based on rules, guidelines and quotas.  Browse the LinkedIn articles of groups like Claims Management or Insurance Claims Professionals and it won’t take long to find discussions bemoaning the current state of affairs in the claims profession.

Adjusters are given increasingly less autonomy with more rules and oversight.  Education is at an all-time low.  Consolidation of claims offices is at an all-time high.  The average age & experience level of field adjusters is falling dramatically and experienced “generals” are disappearing from the workforce – and not being replaced.

Oversight2The entire claims process is becoming automated and delegated to “programs” and TPAs at an alarming rate.  Carriers are handing the entire claims process over to outside companies whose sole purpose is to control claims costs.

Contractors are performing tasks which were traditionally done by licensed adjusters.  Some are inspecting, documenting and even recommending structure settlements without an adjuster ever setting foot on the loss.

Claims adjusters have told me that their bonus and pay increases were DIRECTLY tied to ratios like how many times they referred the “preferred” vendor.  Others said that they didn’t receive certain perks or benefits because their “re-inspections” showed too much “leakage”.

Can you imagine if, at any time, your closed files were pulled open and audited for “mistakes”?  There are actual positions at every major carrier whose sole job is to re-inspect closed claims and find leakage.  How would that affect your approach to your current files?

The goal of the property damage adjuster is no longer to “fairly and adequately” settle claims.

It is to process a claim file in such a way that it will pass an audit.  Is that right?

The claims process is more about control than indemnification.  Contractors’ jobs are more about proper documentation than physical repairs.  Getting proper coverage and being made whole has never been harder for homeowners.

How about a solution?

I was hoping as I wrote this article that an answer would present itself.  It hasn’t.

Do you have a solution?  That’s not a rhetorical question my friends, I’m all ears.

My current recommendation to my contracting clients is that they don’t play the game.  I have people ask me weekly about how they can getangry-girl on “programs”.  They all see the preferred provider programs as gravy trains, but in reality the fat has been trimmed and the tracks go in circles.  You can’t run a business by losing money on every claim and trying to make it up on volume.

As soon as you step on their court, you have to play by their rules.  So I say take your ball and go home. Find clients on your own. Do good work for fair prices.

When adjusters start in with their “we don’t pay for” routine, simply hang up the phone and refer your client to your contract and schedule of fees.  And their state’s Consumer Affairs Department.  You’re not an adjuster, you’re a contractor.  Stick to what you’re good at.

They aren’t the boss of you.