General Practice, Solo & Small Firm DivisionMagazine

Volume 17, Number 7
October/November 2000

The Proper Protocol For Working With Claims Adjusters

By Clinton E. Miller

If you want to be extraordinarily successful in negotiating with adjusters, return the adjusters’ phone calls, acknowledge and answer questions in the adjusters’ correspondence, and contact the adjusters at least once every 30 to 60 days. These three areas cover about 90 percent of most adjusters’ complaints about lawyers. If you can eliminate these complaints, your settlement success rate will skyrocket. Negotiations are very much like courting: you must communicate, be receptive, be available, and be perceived as trustworthy and cooperative. It is how the adjuster perceives you, rather than who you are, that makes adjusters feel warm and secure.

Keep your ego in check. Yes, you’re a learned person. Yes, you went to college. Yes, you make more money than most adjusters. Adjusters know this. Some adjusters resent a lawyer’s prestige, money, and power of litigation. Never give the impression that you are doing the "little people" a favor with your presence on a case. Be humble. Most adjusters already perceive you as equal or superior, whether consciously or subconsciously.

Invest some time in getting to know the adjuster before negotiations begin. Get to know who and what your adjuster is about—for example, there’s the rookie adjuster, the old pro, and the "dot the ‘i’s and cross the ‘t’s" type of adjuster. Most adjusters have huge pending caseloads plus a constant influx of new cases. They have to move cases or they will drown in an ocean of work. Help the adjuster move your case to a conclusion. Keep your case near the top of the stack. Otherwise, your case can get "lost" in the hundreds of cases assigned to the adjuster you’re dealing with. Most adjusters really want to move their caseloads. Most adjusters care about settlements. Help the adjusters help themselves.

You get only one opportunity to make a first impression with the adjuster. On first contact, get the adjuster’s full name. If appropriate, ask the adjuster what her friends call her and ask if you may address her by that name. Likewise, provide your nickname or first name. This personal touch is money in the bank. Learn the adjuster’s title—adjuster, claims representative, senior claims representative, specialist, consultant, supervisor, manager, regional claims supervisor, or regional claims manager. Titles are important. Use them. Always use the adjuster’s title in correspondence, and make sure correspondence is formal and informative. In the event that any correspondence becomes an exhibit in litigation, you want to look professional. Never put anything in writing that you would not be proud to read on the front page of the evening newspaper.

All insurance companies appreciate the use of captioned headings at the tops of correspondence. Ask the adjuster what type of captioned heading his company prefers. The captioned heading may include, at a minimum, the name and title of the adjuster; the insured’s name; the claimant’s name; your client’s name, who may also be a first-party claimant; the claim number; the policy number (if necessary); and the date of loss of the event. Without this information, your correspondence could easily end up in the unmatched mail file for a long time. An alternative is to send the correspondence (usually the settlement package) to a specific adjuster that you are dealing with, by U.S. mail, return receipt requested.

Keep letters to a minimum length—no more than two pages is the best rule. Adjusters dislike (and usually do not read or read thoroughly) five, six, or seven pages of correspondence. Also, use subheadings in the body of your correspondence. After your introduction paragraph, outline by subheadings what your letter is about (for example, medical bills, lost earnings, repair estimates, medical reports, or medical records). This approach helps you get organized and allows the adjuster to skim the letter to understand its purpose. If one caption heading (usually the first) is a settlement offer (avoid the word "demand," because this word has a negative connotation), your letter will catch the eye of the adjuster and, usually, your file will rise to the top of the adjuster’s stacks of claim files.

Remember that the adjuster has monthly, quarterly, and annual production quotas that affect his or her career path (promotions), salary increases, and with some insurance companies, profit sharing. Also, insurance company management usually sets "objectives" (suggested average settlement figures) or "targets" (dates when a claim should be resolved) for an "average paid cost" of each line of coverage. For example, "average paid costs" could be in the range of $6,500 for physical damage claims (collision: first-party claims; property damage: third-party claims), $2,100 per person for medical expenses, and $8,900 for the average bodily injury settlement (including UM and UIM claims: first-party claims). Usually, if your claim is above an "average" claim amount, your claim will be reviewed more closely and by more adjusters, supervisors, and managers. Insurance companies have come to follow the IRS format of analysis: If your settlement offer falls outside of the predetermined parameters of a given event or claim, then you can expect your case to be reviewed by more senior personnel.

Finally, when you phone an adjuster, ask, "Is this a good time to talk"? If the adjuster is on the way to lunch or to a meeting, your words may go in one ear and out the other. What you want from the adjuster is quality time in which to discuss the matter.

Presentation and Packaging

You should know all the facts of your case. Do your homework. Don’t send a bundle of medical bills and/or medical records to the adjuster and expect the adjuster to figure out what the bills are for, why the bills were incurred, or why the bills were sent to the adjuster in the first place. Help the adjuster to help you process your claim.

Settlement packaging and presentation are critical. Proper packaging and presentation accomplish two important tasks. First, they force you to get involved in what the case is about. Second, they lay out the case in a nice, neat, coherent presentation for the adjuster to understand quickly. Remember that you are just one of about 200 to 300 parties that are placing demands on an adjuster’s limited time.

The foundation of a good settlement package is the presentation of your facts, legal theories, and damages. A settlement package offer to a busy adjuster should include a complete, captioned heading so that the settlement package will reach the correct adjuster. Some claims departments have 20 to 30 adjusters. Never address anything simply to the insurance company, the claims department, or the claims manager. If you don’t know who is in charge of your file, pick up the phone, call the insurance company, and ask for the name and title of the person in the claims department who should receive your settlement package. At the least, you should find out what area of the claims department handles your type of claim and the name of the manager or supervisor of that area. When you do know who is handling your case, it is a good idea to call ahead and let the adjuster know that your settlement package is on its way. If you show an interest in the case, usually the adjuster will, too. That way, at least in theory, the adjuster will be on the lookout for your settlement package.

Outline Your Claim

Next, utilize an outline style in the body of your short letter. This outline may include:

I. Facts of the case.

II. Legal theory of the insured’s liability (negligence is the preferred theory of liability because most insurance companies usually resist claims of willful or intentional allegations against the insured).

III. Damages, outlined by subcategories:

A. Loss of earning capacity: past, present, and projected future lost earnings.

B. Medical expenses: past, present, and projected future medical expenses.

C. Physical property damages claims.

1. Eyeglasses, hearing aids, clothing worn during the event that led up to the claim (torn or bloodstained), vehicle damage.

2. Personal property:

(a) Cellular phone.

(b) Portable computer.

(c) Luggage.

(d) "Loss of use" claims; for example, loss of use of a vehicle.

(e) Loss of the enjoyment of life activity claims; for example, claimant is no longer able to swim, hike, work, travel, play with children or pet.

(f) Pain, suffering, discomfort, inconvenience claims (also known as general damages). This category should not be confused with category (e) above. The loss of the ability to perform a certain activity is not the same as the pain, suffering, discomfort, and inconvenience of recovering from a certain injury. The recovery from a medical or physical disability is not the same as the l oss of an activity after the claimant has reached maximum medical recovery.

For example, if a claim deals with an amputation of a leg, and assuming liability is not an issue, that claimant would be entitled to payment for pain, suffering, discomfort, and inconvenience, for the loss of and recovery from the amputated leg. Beyond the pain, suffering, discomfort, and inconvenience of the lost leg, the claimant would be allowed compensation for what the loss of the leg means economically (lost earning capacity) and what the loss of the leg means socially and recreationally.

Other Considerations

Litigation is expensive and time-consuming for you and your client as well as for the insurance company. Before filing a lawsuit, ask yourself and your client if mediation or arbitration (binding or nonbinding) may be more economical than full-blown litigation.

Moreover, do not overstate the facts, the law, or your damages. If you have developed a good rapport with the adjuster, ask the adjuster to step into the shoes of the claimant for a moment and ask what the adjuster would accept as a settlement. Adjusters, like juries, are repelled by claimants that are not within the parameters of "reasonableness." On serious claims, a videotape of a "day in the life" of the claimant can have more impact on an adjuster than cold records of medical bills and medical reports. Your objective should be to optimize a settlement without pushing the envelope.

If an injury deals with plates in the claimant’s skull, legs, or arms, for example, submit as an exhibit to the adjuster a sample of an actual plate. Explain what impact the item will have on the claimant every time the claimant goes through a metal detector in an airport or a courtroom. If surgery was an element of the bodily injury claim, find out if the surgery (external or internal) was videotaped. If so, get a copy of the videotape and share it with the adjuster. A picture is worth a thousand words.

Help the adjuster help you in optimizing a fair settlement. The more ammunition you submit to the adjuster, the easier you make it for the adjuster to get the funding to settle your claim.

Friendly, Fair, Firm

Negotiations are 90 percent preparation, 5 percent presentation, and 5 percent education. Educate the adjuster by giving her the ammunition necessary to justify to herself and her superiors that they should pay your offer of settlement. This includes making the adjuster feel comfortable about the settlement. Most adjusters request reasonable documentation of your client’s damages, which are subject to verification, analysis, and the reasonableness of your offer to settle.

A reasonable amount of time should be extended to the adjuster to digest your settlement package (five to 20 days for many cases). If the adjuster needs more time, he may communicate to you why more time is necessary or simply request an extension of time in which to respond to your settlement offer. As is the general rule in many jurisdictions, if an insurance company fails to accept a reasonable offer within a reasonable period of time, then the insured’s policy limits are nonexistent. There are no longer any policy limits. Therefore, the insurance company could face the significant exposure of having to pay the full value of a bodily injury claim, irrespective of the printed policy limits on the declaration page.

If hard feelings have evolved during the courting of the adjuster, the adjuster can retaliate by doing nothing and forcing you into litigation, subject to claims of breach of contract and bad faith. Lawyers are better off working with (not against) claims adjusters. Remember the three "F" words: friendly, fair, and firm.

Clinton E. Miller, J.D., DABFE, FACFE, DABDA, is a nationally recognized insurance consultant, published author, and lecturer. He has extensive experience as a qualified trial expert witness in state and federal courts in both civil and criminal cases nationwide. His areas of expertise include "bad faith" allegations; coverage disputes; coverage interpretation; and insurance industry standards, customs, and practices.

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