I once had a boss who would occasionally float the question of why we weren’t overly good at claims.   As much as other areas of the company may parrot this message as money flows out and pointing fingers is easy, the reality is claims organizations serve a vital role in paying what is fair.   Sure, we are the only part of the company that sends money out the door, but we control the outflow and aggressively pursue recoveries to bring some of that money back.

That said, are there areas of improvement?   To address our needs, the aforementioned boss tasked me with building a quality team for a large, global insurer.   After a few closed file audits, I remember going back to him and advising that his sentiment wasn’t totally wrong, but the fix was right in front of us.   With so many adjusters doing things right, we simply had to build consistency across the organization.

Four areas were identified that could significantly move the needle: fraud recognition, liability assessment, negotiations and subrogation.

Like many organizations we had been doing more with less for years.    Adjuster assignments and caseloads were up as were disposition demands.    What wasn’t up were hours in the day with additional headwinds being created as some positions were being mandated as non-exempt.  If you give an adjuster too many claims in a set number of hours something has to give.   It is a simple reality.

Given we were already into the fiscal year there wasn’t a lot of money in the hopper to hire additional staff.  We had to make the staff we had better.

We began with calibration exercises which were designed to share the behaviors of the top performing adjusters with all adjusters with the goal of moving the needle on behavior.   Let’s look at four key areas where we focused.

Fraud recognition

Certain jurisdictions and claim types are more prone to fraud.   By focusing on key claim characteristics adjusters can do a better job of identifying the hard fraud, which accounts for roughly 10% of claims nationwide.    Scams such as staged accidents have recurring patterns that can be identified when data, both internal and external, is properly utilized.    While hard fraud became easier to recognize, soft fraud was still a challenge.   The problem with soft fraud (excessive treatment, modifier abuse, upcoding, unbundling and the like) is that it can be difficult to identify without the proper tools.   While some property soft fraud occurs, the vast majority involves injury claims which were the result of legitimate accidents.    Through the use of tools and improved investigation and negotiation strategies we enabled adjusters to identify these types of claims faster.  The proactive approach greatly reduced the medical buildup and improved negotiation strategies enabled better outcomes.

Liability assessments

Comparative negligence is generally one of the greatest weaknesses that we saw, and I continue to see, in closed file audits.   The vast majority of claims are closed at 100% or 0% with the occasional 50/50 sprinkled in for good measure.    Why is this?   There are several reasons.   Training, management, enforcement, workload all play a role in this.   But it becomes very telling when looking at jury verdicts in which more than 50% of all claims adjudicated nationwide have an apportionment of liability.    In pure and modified comparative states the expectation should be very high that adjusters are assessing and negotiating comp neg.

Back when I was a litigation adjuster my biggest pet peeve was front line adjusters accepting 100% liability to make their job easier which in turn made downstream jobs harder.    An untold number of claims went into litigation because the attorney was laser focused on how the company had already accepted the liability.  But juries generally don’t, hence the litigation.   One has to wonder how many bad liability decisions are being made in order to meet a disposition number resulting in a higher overall claim cost to the company due to downstream handling.

Not only are poor liability assessments a detriment to the claims process but also to the insured.   If an insured is only 50% at fault for an accident but is assessed at 100%, they will not only pay more in premium, but they will also be out their deductible.    This is an area that I believe is ripe for litigation should a crafty trial lawyer start investigating the frequency at which people are wrongfully assessed as being at fault for an accident.


The job of an adjuster is to negotiate.   It always struck me as odd that some adjusters really didn’t like to negotiate.   Negotiating an accurate settlement is the foundation of being a good fiduciary for your insured.   Just like an insured should get an accurate liability assessment, they also deserve fair negotiations on their behalf.

Listening to adjusters negotiate can be eye opening.  While some are truly outstanding at what they do, there are a lot of head scratching moments.   It is not uncommon to hear an adjuster bid against themselves.  I have heard adjusters offering multipliers of medical bills.    There have been moments of extremely large jumps in offers on cases where the initial offer was far too much.   Some negotiations are conducted via email.  These are all bad practices.   In negotiation trainings that I have attended and conducted there remains a lot of opportunity to hone this critical skill due to the many implications it has on the outcome of claims.

The quality of outcomes is directly related to the effectiveness of the negotiation strategy.  Of course, this strategy is based upon an underlying effective investigation that begins at FNOL.   Understanding all of the moving parts of the claim is critical.    Things like well thought out statements with deep, probing questions and follow ups, witness statements, estimates, preservation of evidence, due diligence on prior claims history, potential third parties with liability, background checks on certain types of claims all play into the quality of the overall outcome.


Perhaps the greatest challenge we faced as a claim’s organization was subrogation.   There were instances of subrogation being completely missed.    In fact, we had hired SecondLook to do a closed file audit on claims where the front-line adjuster did not ID subro, and they ended up recovering a substantial amount of money.    Front line adjusters were handling response arbitrations resulting in a very poor response rate with Arbitration Forums.   By leveraging an internal team and an outside business partner this problem was quickly solved.

Subrogation has long been an area of opportunity with carriers, self-insured’s and TPA’s.   While the aforementioned often do a decent job on certain aspects of claims, subrogation remains an area where opportunities exist.    Our focus was on getting the claims with the highest probability and dollar amounts into the hands of our capable subrogation team.   We then built a partnership externally to focus on everything else.

Where carriers typically see success in partnerships is with segmenting out certain types of claims such as arbitrations, high transaction claims with lower recovery dollars (i.e., property under 100K), overflow during peaks or CAT’s, unique claims where there may not be internal expertise.   By creating the right subrogation ecosystem, we saw a big lift in recoveries.

Chris Tidball is an Executive Claims Consultant with SecondLook, a leading provider of subrogation and consultative services.   He spent more than twenty years as an adjuster, manager and executive with multiple Top 10 carriers.   Chris is the author of Re-Adjusted: Taking Your Claims Organization from Ordinary to Extraordinary!   He is the creator of The Adjuster television series and can be reached at ctidball@2ndlook.net.