Of the many careers and professionals in the financial industry, there is a growing shortage of insurance adjusters. As a profession that is highly stressful and mundane, those who have worked in the insurance profession more many years are simply moving into other realms of business services.
With the shortage of property and casualty insurance adjusters, many college students are considering this type of profession as a viable stepping stone into the financial and business sector. If you are considering this option, it is important to understand the dynamics involved with this profession, including your responsibilities in the financial reserve establishment on each claim you are handling.
Reserving is the term used to describe the process by which you make a best-guess estimation of the anticipated financial outcome of the claim. In other words, following the reasonable establishment and investigation of a claim, reserves should be placed on the claim file, usually within 30 days of notice of the claim. When considering reserves, there is no exact science involved. Because of this, many new adjusters struggle to learn the concept of financial reserves and reserve setting.
As a general rule, when establishing financial reserves on an insurance claim, there are charges to consider outside of the initial property or bodily damage estimates. Costs involving the fee to retrieve records, conduct surveillance, utilize legal services, obtain second opinions and even the costs associated with supplemental adjusting services are all incidental charges that must be considered.
To the insured, setting reserves is important. This is especially true for business insurance policies where many policies carry relatively high insurance deductibles. When insurance reserves are set too high, the business may be required to “front” the loss monies at the on-set of the claim, only to find they were forced to “front” too much. In contrast, if the financial reserves are set too low, your insurance may be required to pay additional premiums, or additional funds, many months or years after the claim, often negatively impacting their business finances.
As an adjuster, the key to appropriate financial reserving on a claim lies in your ability to use your experience in claim handling, apply your best-guess on the anticipated outcome of the claim and what expenses you can expect to reach that outcome. Looking at the big picture is necessary to ensuring your reserves are set appropriate and that, ultimately, your insured is protected against losses without unnecessary financial burden. If you are considering insurance adjusting as a profession, be certain the company for which you are employed is offering adequate training the scope of reserve establishment.