SOLID AS A ROCK

In his 30 years in the insurance business, Arnold Pike has seen his share of change. And, as an East Coast adjuster, he says many of the forces shaping the industry to the west have already been experienced in Newfoundland.

“The sun rises here first,” observes Pike, and in areas such as adjuster licensing and even the recent “McNaughton v. Co-operators” debate on auto salvage, Newfoundland’s adjusters have been a step ahead of the pack. Pike says the case provides a good example of a high-profile issue in Ontario which is “old hat” in Newfoundland, where direction was given about 25 years ago saying that insurers do not have the right to retain salvage and charge a deductible. Pike hopes to bring both his personal experience in the business and that of the east coast adjuster to bear as he becomes president of the Canadian Independent Adjusters Association (CIAA) this year.

While Pike officially takes the helm at the CIAA’s annual conference to take place in September at the Deerhurst Resort near Huntsville, Ontario, he is already hard at work looking into the issues facing adjusters and the association. “I see some serious issues, but they are not insurmountable,” he says.

FACTS OF LIFE

Many issues are simply facts of life that adjusters are learning to work with, including the widespread introduction of technology into the claims process and the consolidation trend shaping the industry. Mergers and acquisitions are cutting into adjusters’ client bases, and the ownership of large adjusting firms by these same insurers is also creating havoc for smaller adjusters. “How do you compete with large adjusting firms that are owned behind-the-scenes by an insurer?” This is a growing concern being tackled by smaller firms. While theories abound about how smaller firms must grow their businesses to compete, Pike says that one thing remains true about adjusting, “service is the name of this game”.

On other issues, the association can provide a voice for independents, he adds. One example is cost cutting in claims, where companies are continually looking to reducing loss adjustment expenses (LAE) as a means of controlling claims costs. “Our own industry will readily acknowledge that the single biggest cost factor to this industry is fraud. By the same token, our industry focuses on LAE when it comes to cutting cost. It doesn’t seem to be focused on investment in adjusting.”

The common misperception is that claims costs can be significantly addressed by chipping a few points off the LAE. “It’s more than difficult to establish a correlation between LAE and an increase or decrease in overall claims cost,” Pike notes. In this respect, he wants to “deliver a message to the industry” during his term as president, that more focus should be given to investing in good claims handling to reduce fraud rather than attacking LAE to no effect on claims costs.

Another trend, the rise of class action lawsuits, is just beginning to take shape in Newfoundland, with the recent passing of class action legislation by the province. Ironically enough, it was the failure of Hiland Insurance that sparked the legislation, Pike notes. As yet, it remains to be seen exactly what the impact of class action growth will be on adjusters.

But, one litigation trend is affecting adjusters each and every day they head to the office, Pike adds. This is the threat of being named personally liable in a bad faith lawsuit. He notes that most employees cannot imagine having their personal assets attacked as a result of decisions made in the course of business, but this is the threat adjusters face.

And, there is no guarantee that the companies they represent will come to their defense in such cases. Pike says this issue will most certainly be looked into in the coming year. “Something has to be done to offer us a greater degree of protection.”

UNITED FRONT

On the membership front, Pike says he has been “watching and listening” to better understand the concerns of members and what value they want from the association. That said, he thinks the association has a great deal to offer member firms. “I don’t understand why every independent adjuster doesn’t want to be part of this association.”

He hopes to increase interest in the association through improved communication at the local chapter and even individual firm level. This year, “significant energy” will be put toward increased communication. “Clearly we have to get all independent adjusters on-side” so that the association can act as a single voice for the profession. “This year, I’m hoping to demonstrate greater accountability to our membership, and encourage greater communication, not just at the head office level.”

One area to be addressed is self-regulation. In Newfoundland, unlike other provinces, adjusters are licensed through a graduated system. In the past, having a national body to self-regulate the industry has been discussed and past CIAA presidents have shown interest in seeing the association act as that self-regulatory body. “We’ve talked about self-regulation again and again, this year I hope we will do something about it.” Part of this process will involve researching the nature of self-regulation and looking into how the process would work in practical terms.

Pike notes that as doctors, lawyers and other professionals are self-regulated and required to belong to an association that administers this process, why should adjusters not face the same professional controls? Looking at industry-wide issues such as a schedule of fees that is reasonable and profitable might be part of this collective effort to regulate the industry.

Finally, Pike says that the association has a clear role to play in advancing the profession within the insurance industry at large. “I would like to be able to address the industry and show that we are valuable.” Too often, adjusting has been viewed as a “necessary evil” and nothing but an expense. Pike wants to turn this image around, and see adjusters viewed as bringing value to insurers through better claims handling and customer service.

LIFETIME’S WORK

Pike began his career in 1972 on the “other side” of the industry, working as an underwriter at a local broker for USF&G in his hometown of St. John’s, Newfoundland. Soon after, he moved into adjusting, starting with UAB in St. John’s and then in the early 1980s moving inhouse to work for the Halifax Insurance Co. He followed this with stints at Canadian General and the Continental (now Lombard).

In 1992, he returned to independent adjusting with his current company, Provincial Adjusting Services in St. John’s. At the same time, he joined the CIAA and has been a local president for the Newfoundland/Labrador chapter. Pike continues to call St. John’s home, along with wife Marilyn and their three children. He is an outdoorsman and says he recently has taken up stained glass as a hobby.

Adjusting, and his new role with the CIAA will take up much time, Pike predicts. “This [adjusting] is my life’s work.” He hopes now to give something back to the profession that has been his focus for three decades. And, he adds, “to make some noise” in the year ahead.