“New School” Adjusting

Adjusting may be a time-honored profession, but it is one facing an intense period of transition. New privacy rules, varied and changing auto insurance systems, the rise of class actions and growing concern with potential bad faith lawsuits. As if all of these forces were not enough, adjusters are also being challenged by a hard market where the pressure to reduce loss costs is extreme. But, incoming Canadian Independent Adjusters Association (CIAA) president Jim Eso says education and communication are the means to leading adjusters through these challenging times.

Whoever said ‘you can’t teach an old dog new tricks’, has not spoken to Jim Eso. The incoming president of the Canadian Independent Adjusters’ Association (CIAA) is an educator by trade and promises to bring this focus to his association as adjusters cope with new legislation and an ever-changing legal landscape. As vice president of B.C. operations for Crawford Adjusters Canada, a big part of Eso’s role is quality audit and training of staff, along with his own adjusting work on large injury claims. His plans for the CIAA in the year ahead involve education and communication to help members thrive under new legislation and market forces.

Eso is confident that the association is prepared to lead adjusters through these issues, building on work done by past presidents Keith Edwards and Arnold Pike. “In a large part, my role for the next year will be to ensure that these projects continue to get the support of our members to see them to completion.”

PRIVACY CONUNDRUM

The new federal privacy legislation, coming in to force for insurers from the beginning of next year is “probably the number one concern of adjusters and our number one concern as an association”, Eso says. “It’s going to create very uncertain times as to how the adjuster’s role in investigating a claim fits into privacy legislation.”

This is further complicated by indications provincial legislation in B.C. and Alberta will not be similar enough to the federal act to supercede it. This news “is going to throw a whole new curve ball into this process”, he adds. While both pieces of provincial legislation have been abandoned, there remains the potential for adjusters to face different legislation in each province as well as the federal act.

Added to this are the varied insurance company interpretations of the statute. Eso took part in Insurance Bureau of Canada (IBC) discussions aimed at industry consensus on compliance, i.e. a “consent document” to be signed by policyholders to allow for the collection, use and disclosure of their personal information which would be required to adjust a claim. The CIAA has taken two steps, first to hire a consultant to review the federal legislation, “to make sure we [adjusters] are ahead of the curve”. Also, the CIAA has asked Industry Canada to consider granting its members’ status as “investigative bodies”, just like the IBC’s Investigative Services Division, thus exempt from most of the constraints of the act.

NEW CLASS

Further impacting adjusters is the growth of class action lawsuits, now allowed in most provinces, representing both challenge and opportunity. “It opens up a new avenue for adjusters,” Eso notes, with his own firm having a distinct class action practice that has been appointed to such high profile settlements as the Walkerton tainted water and “Centerpulse” hip implant cases.

A legal development that is not being viewed positively by the association is the trend to naming adjusters personally in bad faith lawsuits. It is a trend that is definitely on the rise, Eso says, which is all the more troubling because generally the thrust of litigation is related to coverage or other decisions made by the insurer, rather than on the conduct of the adjuster. The CIAA and the Canadian Insurance Claims Managers’ Association (CICMA) have met and “both agree that it is very unproductive that an adjuster who is following the directive of the insurer gets named, often when there is no indication of any negligence on the part of the adjuster”.

The “ideal solution” would be to have insurance companies defend the adjuster acting on their behalf, but at the very least there need to protocols in place so that when a suit happens, the insurer and the adjuster are working together, says Eso.

The CIAA is reviewing its own professional liability program to ensure that it is meeting the needs of members. This is especially important in a period where commercial insurance buyers in general are having difficulty finding affordable professional liability coverage in the market. “We anticipate independent adjusters will be in that same position of having difficulty getting professional liability coverage,” Eso observes, so having a strong CIAA coverage program is an extra incentive for membership.

AUTO COSTS

“There has probably never been a more active time for legislation that will impact independent or insurer adjusters,” Eso says. This, he points out, is specifically so in the auto market with politically swayed events in New Brunswick having significant consequence for adjusters. He notes that any system that caps rates (as has been bandied about in New Brunswick) places pressure on insurers to reduce loss adjustment expenses, even if the outcome a year or two down the road is higher indemnity payments. “This could put additional pressure on adjuster workloads,” Eso adds.

He also sees the drive to reduce adjusting expenses as short-sighted in any realm. While the need to reduce overall loss costs is clear, only a small portion of that cost is related to adjusting expenses, with the much larger portion devoted to indemnity. Companies who cut adjusting expenses are creating a “false economy”, saving up-front but losing out on indemnity payments in the long run. This is especially troubling given insurers’ need to address areas such as insurance fraud, which have vaulted claims payments higher, but require thorough claims adjusting to combat.

The trend recently has been to move adjusting inhouse in an attempt to control costs, but as Eso notes, “anyone in this business long enough knows these things are cyclical”. On large claims, there has always been a role for independent adjusters and the expertise they offer. “Some of the best claims systems are those developed and used by independent adjusters.” It is these kinds of advantages adjusters need to get across to insurers.

PROTECT PROFESSIONALISM

The association is involved in ongoing efforts to educate provincial regulators, specifically regarding unlicensed adjusting activity. “Most recently, the Newfoundland Superintendent of Insurance [Winston Morris] has written to every insurer licensed to do business in Newfoundland, as well as various appraisers, contractors and others who are handling claims without the required license, reminding them of the licensing requirements as well as the penalties for violations.” The association wants to ensure that those practicing adjusting are qualified and to uphold the integrity of the profession.

In that vein, the CIAA continues to look at the concept of self-regulation for independent adjusters. However, the issue has faced several hurdles. “We have been watching the private investigators, who have for years been talking about self-regulation. Their own efforts have stalled on legislative issues and issues of expense,” says Eso. Self-regulation is expensive to implement and requires the cooperation of all regulators, thus it has taken a back sent to other issues such as privacy and bad faith.

Eso plans to do a lot of listening in the year ahead, learning what adjusters see as priorities. Last year the CIAA undertook focus groups with non-members to find out “why are they not members, what they perceive as the potential value of the association, and to talk about issues that affect adjusters as a profession”. The meetings helped increase membership by explaining its benefits: online access to IBC forms, the professional liability program, education, publications and an enhanced website. The association a lso reduced dues.

SHARED ENTHUSIASM

Eso himself has been a CIAA member for many years, and is a past president of its Pacific Region. He is also a member of the B.C. Insurance Adjusters Association and past director of the Alberta Insurance Adjusters Association.

His work in the profession has been varied, with 16 years of multi-line claims experience including bodily injury, environmental and trucking. He also brings prior experience as an accountant and in construction project management to his work. Following a stint with the Insurance Corporation of B.C., Eso joined Crawford in 1989, where he is a member of the national “professional standards review” team as well as vice president. Lifelong learning has characterized Eso’s career. Not stopping at a degree from the University of B.C., he also holds the AIIC designation and has attended Crawford courses in a variety of fields.