Here’s Why Claims Professionals Aren’t Compliant and How You Can Fix It

Implementing regulatory requirements in the claims, underwriting, and distribution process is a challenge for many insurers.

Claims professionals need to make sure they’re reporting information about claims to the proper state and federal agencies. However, errors continue to be the most frequent reason that insurers are cited by regulators - most of which could have been resolved by more careful attention to proper documentation procedures.

It should come as no surprise that claims are the most common reason for compliance issues, given tight deadlines, numerous notice requirements, and tough standards for the amounts to be paid on claims.

Here’s what’s happening

The primary reason errors occur is involved in the documentation that proves what adjusters have done, when it was done, and how they did so.

For example, many states require claims to be paid or denied within a specific timeframe. Insurers can extend those deadlines but are required to send notice to the policyholders explaining why. If notices are sent with no explanation or not sent at all, that’s a problem.

• Auto claims are frequently delayed because the collision repair shop uncovers additional damage after beginning work, requiring a supplemental report.
• In a homeowner’s claim, the adjuster may hold up on a file because an inventory of damaged personal items has not been received.

The purpose of these requirements is to keep the claimant informed. But often, adjusters fail to notify them of the reason for the delay.

• In Illinois, an insurer denied a claim and gave proper notice on time, but failed to give notice to the policyholder that he has a right to contact the state Department of Insurance.
• In California, an insurer improperly applied depreciation to overhead and profit when calculating the value of a property damage claim.
• In Connecticut, an insurer was cited for setting “unreasonable and arbitrary limits” on reimbursement for paint and materials for vehicle repairs.
• In West Virginia, an insurer recommended that a claimant file a claim against his own insurer instead of the insurer for the other vehicle involved in the crash, which is prohibited.

According to a report by Wolters Kluwer, claims have consistently been the leading source of regulator citations against insurers over the past 16 years the company has been studying market conduct actions.

Wolters Kluwer’s Top 10 Market Conduct Criticisms of P/C Insurers

1. Failure to acknowledge, pay, or deny claims within specified time frames
2. Using unapproved/unfiled rates and rules or misapplying rating factors
3. Failure to cancel or non-renew policies in accordance with requirements
4. Failure to process total loss claims properly
5. Improper/incomplete documentation of claim files
6. Failure to adhere to producer appointment, termination and/or licensing requirements and adjuster and appraiser licensing requirements
7. Failure to provide required compliant disclosures in claims processing
8. Failure to provide required compliant disclosures in underwriting processes
9. Improper documentation of underwriting files
10. Failure to process and pay claims in accordance with policies

What’s causing these mistakes

Errors happen, but it’s important to keep them to a minimum. These mistakes tend to add up and can make a significant impact in the profitability of your claims department.

There are several reasons that adjusters make mistakes, which means we can take steps to prevent them from happening:

• Claims Staff Turnover - losing an experienced adjuster can be costly. Every time a claim changes hands there’s an increased opportunity for a mistake to occur. A simple miscommunication, misinterpretation, or misplaced document is all it takes.
• Lack of Training & Experience - if adjusters are not properly equipped to do their job, can we really blame them for when a mistake occurs? The necessary help and resources must be made available to them.
• High Caseloads - stress, burnout, overwhelm. We all make mistakes, we’re human. But when adjusters have too much on their plate, it’s significantly easier to drop the ball on something important, rush through work, or miss an otherwise obvious error.
• Outdated Claims Systems - when the tools that adjusters are using are no longer effective or efficient, it impacts their ability to do their job well. Real time information, dashboards, and streamlined communication can help them avoid mistakes.

Fixing the problem

By simply identifying the problem impacting adjusters, there are several preventative measures that can be taken to reduce errors and remain compliant.

1. Conduct internal audits of what adjusters and other claims professionals are responsible for to help improve the system and process for consistently filing compliant claims.
2. Communicate the importance of compliance, especially the downstream impact it can have on the organization so that claims professionals don’t view these activities as a nuisance.
3. Implement technology that reduces the amount of time that claims professionals spend on compliance and administrative tasks.
4. Identify training needs to provide the support and education needed to ensure claims adjusters are able to navigate the necessary tools and procedures that keep them efficient.
5. Keep employees happy to reduce stress and turnover. New employees who lack the necessary training and expertise to handle claims are more likely to make mistakes.

It’s important to do so continuously because claims professionals’ responsibilities are constantly evolving.

Without communication between teams, errors tend to occur.

Technology can automate repetitive tasks and take a lot of weight off of the adjuster’s shoulders.

This also serves as an opportunity to keep them aware of new laws and relevant regulations.

The same can be said for experienced adjusters when they are overworked and stressed.

The goal here should be to help adjusters do their jobs better. Provide them the resources they need to get the job done. Streamline and automate the process to reduce room for errors to occur.

And should you ever need help servicing your claims, US Claim Solutions is here with extensive knowledge and expertise in both field and desk adjusting to help you remain compliant! We’re available to service claim needs 24 hours a day, 7 days a week.

Email us at customerservice@usclaimsolutions.co or give us a call at (888) 701-1153.

Sources:

• https://www.insurancejournal.com/news/national/2020/10/08/585845.htm
• https://www.insurancebusinessmag.com/us/news/breaking-news/top-10-market-conduct-issues-for-us-insurers-22146.aspx
• https://www.claimsjournal.com/news/national/2016/06/08/271392.htm
• https://riskandinsurance.com/claims-adjusters-spend-too-much-time-on-compliance-what-tools-might-help/