Insurance Claims Adjusters
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 3,500 insurance claims adjusters in the US investigate, appraise and settle insurance claims. Public adjusters negotiate settlements with an insurance company on behalf of a policyholder. Company staff or independent adjusters represent the interests of the insurance company. Firms may specialize or offer services across a broad range of fields.
Payments Based On Contingency
Many claims adjusters primarily work on contingency and only receive payment when a claim is settled.
Integrated Process And Technology
Advances in technology in the insurance business have increasingly moved parts of the claims management process from the field back into the carrier’s office, reducing dependence on third-party claims adjusters.
Industry size & Structure
The average insurance claims adjuster operates out of a single location, employs 16 workers, and generates about $2-3 million annually.
- The insurance claims adjuster industry consists of about 3,500 firms that employ 57,000 workers and generate over $8 billion annually.
- The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for about 61% of industry revenue. The top four companies account for 25% of industry revenue.
- Large companies include Crawford & Company, Sedgwick, and IAS Claim Services. The largest firms may have hundreds of offices throughout the world.
Industry Forecast
Insurance Claims Adjusters Industry Growth
Source: Vertical IQ and Inforum
Coronavirus Update
Apr 10, 2022 - Claims Handling Is An Industry Pain Point
- All of the top five most complained about insurance processes have to do with claims handling, according to the National Association of Insurance Commissioners (NAIC). Dissatisfaction with how adjusters handled claims is the fourth most common complaint. The top complaint from insurance policyholders is claims handling delay.
- Adopting artificial intelligence (AI) might help claims adjusters overcome a shortage of new entrants to the field that the COVID-19 pandemic made worse, according to Property Casualty 360. COVID-19-related workers’ comp and business interruption claims put extra pressure on claims teams at a time when the industry has trouble attracting younger workers. Only 4% of millennials are interested in an insurance career, according to a survey by The Hartford. Applying AI such as machine learning to some of the more rote, repetitive claims tasks – such as cost tracking – claims personnel can focus on more interesting duties that involve nuanced problem-solving.
- Small business owners who thought that pandemic-related losses would be covered by business disruption insurance have mostly discovered otherwise. Some insurers inserted clauses excluding coverage for “loss due to virus or bacteria” a few years after the SARS outbreak, according to the Philadelphia Inquirer. Several states – including New York, Oregon, Pennsylvania, Rhode Island, and Washington – have introduced legislation to prevent insurers from denying business interruption claims resulting from COVID-19-related losses. None of the proposed state-level legislation passed, according to Moody’s Investor Service.
- More than 2,200 COVID-19-related business interruption insurance lawsuits had been filed in the US by March 14, 2022, according to the COVID Coverage Litigation Tracker (CCLT) maintained by the University of Pennsylvania’s Carey Law School. Insurers have secured motions to dismiss more than 95% of COVID-19-related business interruption lawsuits in federal courts, according to the CCLT. More than 75% of cases in state courts have been dismissed. Many of the dismissed cases involved policies with virus-specific exclusions. A fresh wave of business interruption suits involving larger companies could signal a shift, however. Large firms often have tailored policies that don’t include the virus-exclusion clauses that are typically sold to smaller businesses, according to The Wall Street Journal.
- Additional guidance regarding COVID-19 issued in April 2021 by the Centers for Disease Control and Prevention (CDC) may undermine business interruption claim arguments that assert physical damages due to the coronavirus clinging to surfaces. The CDC guidance suggests the virus primarily spreads through the air. The agency said, “It is possible for people to be infected through contact with contaminated surfaces or objects (fomites), but the risk is generally considered to be low.” However, some attorneys have filed suits that allege airborne viral contamination does cause physical damages. Such arguments, including in cases involving mold, have been successful for plaintiffs in the past.
- Global life insurance claims due to COVID-19 reached $5.5 billion in the first three quarters of 2021, compared to $3.5 billion for all of 2020, according to insurance broker Howden. While the industry had expected payouts to decline in 2021 due to vaccine rollouts, the emergence of the Delta variant, which is more transmissible than earlier variants and causes more hospitalizations, likely contributed to more life insurance claims. The rise in claims was most pronounced in the US, India, South Africa due to COVID-19 fatalities among younger, unvaccinated groups. Claims activity in 2020 was more subdued, primarily because most fatalities were among the elderly who do not typically take out life insurance policies.
- Increased prices for cars and housing are affecting property and casualty insurance firms in the form of higher loss costs, according to the American Property Casualty Insurance Association (APCIA). Insurers’ premium increases have not kept pace with the rate of inflation. Private property and casualty insurers saw a collective $11.3 billion in underwriting losses in the third quarter of 2021, according to a March report by the APCIA. Incurred losses and loss adjustment expenses rose nearly 18% in Q3 2021 compared to a year earlier. However, auto premiums only increased 3.1% and homeowner premiums grew 8.4%. Consumer prices for new cars and trucks were up 12.2% in January compared to the same month a year earlier.
- Customer satisfaction with property claims experiences dropped for the first time in five years in 2021, according to J.D. Power. Based on a 1,000-point scale, customer satisfaction with homeowner insurance property claims in 2021 dropped to 871 compared to 883 in 2020. Building materials shortages and personnel availability issues made it challenging for insurers to keep customers informed and manage their expectations. Digital tools – such as the ability to upload claims photos – generally improve customer satisfaction. However, if digital tools don’t function seamlessly, they can have a negative impact on customer experience. Longer cycle times to complete repairs hurt satisfaction levels. In 2021, insurers took an average of 17.8 days to complete repairs compared to 2.9 days in 2020.
- Insurers are raising premiums to cope with increasingly severe accidents and ballooning inflation, according to The Wall Street Journal. Many firms offered car insurance customers rebates and discounts early in the pandemic amid less driving and fewer accidents. Insurers’ margins are shrinking as higher vehicle values boost the cost of repairs and replacement. Shortages of new vehicles have driven up rental car rates, which increase insurer costs for policies that provide rentals to drivers whose cars are being repaired. Allstate plans to raise rates by an average of 7.1% across 25 states, and some firms are aiming for double-digit increases. However, in some states, rate hikes are subject to approval by state regulators before being imposed on consumers. Consumer prices for new cars and trucks were up 12.2% in January compared to the same month a year earlier.
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