Latest / The Art of Adjusting® Podcast / Episode #103 - The Economics of Independent Adjusting

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Episode #103 - The Economics of Independent Adjusting · The Art of Adjusting® Podcast

• 0:00
  William Auten: Hi, before we get into this, you may have noticed that Chantal isn't here with me today.
• 0:04
  William Auten: She's got some things at home that need her attention right now, so she's going to be uh stepping away from the podcast for a little while.
• 0:11
  William Auten: Everything's okay with the show.
• 0:12
  William Auten: She's still very much part of the art of adjusting since that's the title of her book.
• 0:17
  William Auten: Uh she just needs some time to take care of some things that are more important right now.
• 0:21
  William Auten: So for at least the next few episodes, you're probably going to be stuck just with me.
• 0:26
  William Auten: So I'm actually going to use that as an opportunity to do a few episodes that work pretty well as solo topics.
• 0:35
  William Auten: And Chantal will be back when she's ready.
• 0:37
  William Auten: So in the meantime, let's talk about independent adjusters.
• 0:42
  William Auten: And I actually want to start with the people who don't use independent adjusters every day.
• 0:47
  William Auten: Maybe you're a staff adjuster, or maybe you're a claim supervisor, maybe you work for an insurance company that handles most of the claims internally.
• 0:56
  William Auten: And maybe, or or maybe you're an agent and you know that independent adjusters are a thing.
• 1:02
  William Auten: You've probably dealt with some of us, but you're not entirely sure how that part of the claims industry actually works.
• 1:09
  William Auten: Because independent adjusting is a little bit of a strange business.
• 1:13
  William Auten: We're part of the claims process, but we are not employed by the insurance company as employees.
• 1:21
  William Auten: We're independent companies, we're independent contractors that insurance carriers hire to perform some of the claim handling process on their behalf.
• 1:31
  William Auten: And that can mean a lot of different things.
• 1:34
  William Auten: It can mean that we're sending that you're sending someone out to inspect a house after a fire.
• 1:41
  William Auten: It could mean that we're writing an estimate after a windstorm for the insurance company.
• 1:47
  William Auten: It can even mean that we're interviewing people that were involved in an accident.
• 1:51
  William Auten: Sometimes we we go out and we photograph an accident scene, we locate witnesses, we get statements, we gather records, we measure stuff, we document stuff.
• 2:03
  William Auten: And sometimes it's a relatively small assignment, a very simple thing that we have to do.
• 2:08
  William Auten: And sometimes we're involved in a claim for months or even years.
• 2:12
  William Auten: But there's an important distinction here that I think sometimes gets lost.
• 2:16
  William Auten: The independent adjuster isn't the insurance company.
• 2:20
  William Auten: Yes, we're kind of an agent of the company, but generally speaking, we're not the ones who ultimately own the claim's decision.
• 2:27
  William Auten: The carrier does.
• 2:28
  William Auten: The carrier has the policy, they have the contractual relationship with its insured, they make the coverage decisions, the settlement decisions, reserving decisions.
• 2:39
  William Auten: They ultimately decide what's going to happen with the claim.
• 2:43
  William Auten: And our job is to give that person at the carrier enough information to make those good decisions.
• 2:49
  William Auten: We're the boots on the ground.
• 2:51
  William Auten: I use that phrase a lot because it describes the job pretty well.
• 2:54
  William Auten: The desk adjuster might be sitting a hundred miles away or 500 miles away or in another state entirely.
• 3:02
  William Auten: But something happened here.
• 3:05
  William Auten: Somebody has to go look at it.
• 3:07
  William Auten: Somebody has to talk to the people who were there.
• 3:10
  William Auten: Somebody has to photograph it, measure it, document it, figure out what records exist and get the information back to the person who actually has to make the decision.
• 3:21
  William Auten: That's where an independent adjuster is enormously valuable.
• 3:26
  William Auten: And there are a lot of reasons insurance companies might use one.
• 3:29
  William Auten: Geography is an obvious one.
• 3:32
  William Auten: Let's say you're a regional carrier and you have a staff claims department.
• 3:36
  William Auten: Most of the time your staff can handle those claims just fine.
• 3:40
  William Auten: But then you get a loss that's three hours away from your nearest staff adjuster.
• 3:46
  William Auten: You can put one of your staff adjusters in a car for six hours, or you can call an independent adjusting firm that already has somebody in that area.
• 3:55
  William Auten: That's a pretty easy calculation to make.
• 3:57
  William Auten: But geography isn't the only reason.
• 4:00
  William Auten: Sometimes the problem is capacity.
• 4:02
  William Auten: And I think anyone who's ever worked in the claims department for any length of time knows exactly what I'm talking about.
• 4:09
  William Auten: You can have a perfectly adequate claims staff on Monday morning, and by Wednesday afternoon, they're buried.
• 4:17
  William Auten: Maybe there was a windstorm, maybe there was a big freeze event, uh, or maybe you just had a bunch of large losses come in at the same time.
• 4:25
  William Auten: That happens a lot.
• 4:27
  William Auten: Maybe you've got two adjusters on vacation and someone else is out sick, or maybe nothing dramatic happened at all.
• 4:35
  William Auten: Sometimes the pending just starts to creep up.
• 4:39
  William Auten: Everybody gets a few more claims, then a few more, then a few more, and eventually something changes.
• 4:48
  William Auten: Your adjusters aren't really adjusting claims anymore.
• 4:52
  William Auten: They're triaging, they are putting out fires, they're looking at their pending and trying to figure out what emergency do they need to solve next?
• 5:03
  William Auten: Which insured do they have to call back first?
• 5:06
  William Auten: Which diary is overdue?
• 5:09
  William Auten: Uh, which estimate needs to get done today?
• 5:12
  William Auten: Which attorney is waiting for a response?
• 5:16
  William Auten: Which claim can I push until tomorrow without getting another problem?
• 5:21
  William Auten: Once a claims department gets into that mode, it can be very difficult to dig out because the new claims don't stop coming while you're trying to catch up with the old ones.
• 5:32
  William Auten: That's one of the situations that an independent adjuster can solve for you.
• 5:37
  William Auten: They can be tremendously useful.
• 5:38
  William Auten: You don't necessarily have to hire another employee.
• 5:42
  William Auten: You don't have to decide that your permanent staffing level needs to increase just because you had an unusual month.
• 5:48
  William Auten: You can take some of that workload and move it outside.
• 5:52
  William Auten: And the people you're moving it to are already claims professionals.
• 5:56
  William Auten: They're ready to roll.
• 5:58
  William Auten: Give them the assignment, tell them what you need, and let them go do it.
• 6:02
  William Auten: Now that doesn't mean you dump the claim on an independent adjuster and forget about it.
• 6:07
  William Auten: That's not the relationship we're describing here.
• 6:09
  William Auten: The carrier still needs to manage that claim.
• 6:12
  William Auten: The desk adjuster still needs to think.
• 6:15
  William Auten: The independent adjuster is giving that desk adjuster additional capacity.
• 6:19
  William Auten: And I think that's an important way to look at it.
• 6:22
  William Auten: You're not necessarily outsourcing uh responsibility for the claim, you're outsourcing work.
• 6:29
  William Auten: There's a difference.
• 6:31
  William Auten: And I'll give you a simple example.
• 6:33
  William Auten: Suppose a regional carrier gets hit with a windstorm on a Sunday night.
• 6:39
  William Auten: We just had one here yesterday.
• 6:41
  William Auten: So Monday morning comes around, and suddenly you've got 50 new property claims in an area where you normally get five.
• 6:48
  William Auten: Your staff adjusters already had claims assigned to them before this this uh this happened.
• 6:53
  William Auten: Those claims didn't go away.
• 6:56
  William Auten: Now you got 50 more.
• 6:58
  William Auten: Uh, you could divide those 50 uh among your existing staff and tell everybody to you know buck up and and handle it.
• 7:07
  William Auten: Uh mathematically, that might work.
• 7:09
  William Auten: 10 claims here, 10 claims there, you get a few claims, you get a few claims, everybody gets a few claims, problems solved, but it isn't solved because every one of those claims represents an insured who's waiting for a telephone call.
• 7:23
  William Auten: Everyone needs to be reviewed, everyone needs to be scheduled, uh, properties need to be inspected, photographs need to be taken, damage needs to be evaluated, all that stuff needs to be done.
• 7:36
  William Auten: Are you going to have the capacity to do all that and write the estimates, complete the reports?
• 7:40
  William Auten: Meanwhile, all those claims that were open the Saturday before the storm hit, they're still open.
• 7:46
  William Auten: So instead, maybe the carrier keeps the claims that make sense for its staff and sends 20 or 30 of those storm losses to independent adjusters.
• 7:55
  William Auten: Now you've added claims capacity immediately.
• 7:59
  William Auten: And when the surge is over, you don't have 20 extra employees sitting around waiting for another storm.
• 8:05
  William Auten: That's one of the fundamental economic reasons independent adjusting exists.
• 8:10
  William Auten: It allows an insurance company to buy claims capacity when it needs claim capacity.
• 8:15
  William Auten: And then there's other situations where the carrier might have plenty of capacity, but it needs a particular kind of help.
• 8:21
  William Auten: Maybe there's a liability claim where somebody needs to get to the scene quickly.
• 8:25
  William Auten: There's maybe a video that might disappear.
• 8:28
  William Auten: There are witnesses who need to be identified.
• 8:31
  William Auten: There's physical evidence that needs to be documented or retrieved.
• 8:35
  William Auten: The staff adjuster can certainly make telephone calls and send letters, but if they're sitting 300 miles away, they're not going to walk into the business and talk to the manager.
• 8:45
  William Auten: They're not going to stand at the accident location and see what the claimant was looking at when the accident happened.
• 8:50
  William Auten: They're not going to measure the step.
• 8:52
  William Auten: They're not going to knock on the neighbor's door.
• 8:54
  William Auten: That's where the IA or the independent adjuster becomes the carrier's eyes and ears.
• 9:01
  William Auten: And this is probably the simplest description I can give you of what we do.
• 9:05
  William Auten: We gather information, we document it, we organize it, and then we report it.
• 9:12
  William Auten: We give the responsible person at the carrier better information so that they can make the right decision on the claim.
• 9:18
  William Auten: Now, depending on the kind of independent adjusting we're talking about, what happens after that can look very different.
• 9:26
  William Auten: And that's something I want to spend a little bit of time on because there really isn't one independent adjusting business model.
• 9:32
  William Auten: A property adjuster who's handling storm claims and a liability adjuster who's investigating serious bodily injury claims are both called independent adjusters.
• 9:41
  William Auten: But economically and operationally, those are actually two very different jobs.
• 9:45
  William Auten: The property adjuster might be handling several claims in a day.
• 9:49
  William Auten: They may be working on a fee schedule.
• 9:51
  William Auten: The amount paid for the assignment may be tied to the size of the loss.
• 9:54
  William Auten: And if that adjuster is a 1099 contractor working for an independent adjusting firm, they'll probably receive a percentage of whatever the firm receives under that fee schedule.
• 10:06
  William Auten: That's one model.
• 10:07
  William Auten: Then you have companies like mine, Auton Claims Management, who are exclusively a liability investigation firm.
• 10:13
  William Auten: So we're not sending an adjuster out to write five roof estimates in a day.
• 10:18
  William Auten: We may spend hours interviewing one person.
• 10:21
  William Auten: We may have to locate witnesses.
• 10:23
  William Auten: We may inspect an accident scene.
• 10:27
  William Auten: Often we're waiting for medical records, medical information.
• 10:31
  William Auten: We get contracts, municipal records, photographs, video, any other information that attorneys might have about their clients' injuries.
• 10:40
  William Auten: A claim might stay with us for weeks or months because the investigation takes a long time.
• 10:46
  William Auten: And rather than working from a property fee schedule, we generally bill hourly for our time.
• 10:51
  William Auten: So those are two very different economic models.
• 10:55
  William Auten: And if you really want to understand the independent adjusting business, whether you're an adjuster, an agent, claim supervisor, or anybody thinking about getting into this business, you need to understand both.
• 11:06
  William Auten: So let's start with the one that probably comes to mind first when most people hear the words independent adjuster.
• 11:13
  William Auten: Let's talk about property claims.
• 11:14
  William Auten: So if you're not particularly familiar with the independent adjusting business, this is probably the version you've seen most often.
• 11:21
  William Auten: There's a storm, a tree comes down, or a house catches fire, somebody has a pipe break and their basement's full of water, or maybe there's hail damage, wind damage, water damage, whatever.
• 11:35
  William Auten: The insurance company needs somebody to go out there, inspect the property, document what happened, determine the scope of the damage, prepare an estimate if that's part of the assignment, usually it is, and report back to the carrier.
• 11:50
  William Auten: So depending on the carrier and the assignment, there might be a lot more involved than just that.
• 11:57
  William Auten: But unlike liability work that my company does, property adjusting is very often built around a fee schedule.
• 12:03
  William Auten: So if you've never seen one before, the basic concept is pretty simple.
• 12:09
  William Auten: Instead of saying we're going to pay you $100 an hour to handle a claim, there's an agreed-upon fee schedule for handling a loss of a specific size.
• 12:19
  William Auten: So to make the math easy, let's say the fee schedule says that for a loss between $5,000 and $7,500, the adjusting fee is $800.
• 12:29
  William Auten: I'm making these numbers up.
• 12:32
  William Auten: Don't go calling your adjusting firm, tell them Bill Aughton said you should be getting $800.
• 12:36
  William Auten: I'm just trying to explain how this works.
• 12:39
  William Auten: But let's say it's $800, $800.
• 12:42
  William Auten: The independent adjusting firm receives the assignment from the carrier.
• 12:47
  William Auten: The firm then assigns that claim to one of their field adjusters, who's most often, not always, but very often a 1099 adjuster who works as a contractor on a percentage split.
• 13:01
  William Auten: And typically, not always, but typically it's 60%.
• 13:06
  William Auten: So if the fee on that claim is $800, 60% of that is $480.
• 13:11
  William Auten: So that's how much the field adjuster gets: $480.
• 13:16
  William Auten: The adjusting firm retains $320.
• 13:19
  William Auten: So if you're new to independent adjusting, it's really easy to look at that and immediately focus on the $480.
• 13:26
  William Auten: Or for that matter, to look at the $320 and say, wait a minute, the field adjuster did the inspection.
• 13:33
  William Auten: Why is the firm getting $320?
• 13:36
  William Auten: Well, that's where we have to start looking at the economics of the whole operation because neither one of those numbers tells the entire story.
• 13:46
  William Auten: Let's start with the adjuster's $480.
• 13:49
  William Auten: How long did it take to earn it?
• 13:51
  William Auten: That's really the question.
• 13:53
  William Auten: If the claim is, say, 20 minutes from your house, you get there, you have a cooperative insured, the damage is straightforward, you conduct your inspection, you take your photographs, write an estimate, and then you complete your report, and you're done.
• 14:09
  William Auten: That may be a pretty good assignment.
• 14:11
  William Auten: But suppose the next $480 assignment is an hour and a half away.
• 14:17
  William Auten: You drive an hour and a half to get there.
• 14:19
  William Auten: The insured isn't home when you arrive.
• 14:22
  William Auten: Happens.
• 14:23
  William Auten: Happens a lot, actually.
• 14:24
  William Auten: Or maybe you just can't get into part of the property for some reason.
• 14:29
  William Auten: Uh you have to make another telephone call.
• 14:31
  William Auten: You have to reschedule.
• 14:32
  William Auten: Things get complicated.
• 14:34
  William Auten: So you wind up having to go back another uh hour and a half.
• 14:39
  William Auten: Now there's a question about the scope.
• 14:42
  William Auten: The estimate comes back for a revision.
• 14:44
  William Auten: Somebody wants additional photographs.
• 14:47
  William Auten: There's a supplement, happens all the time.
• 14:49
  William Auten: Now you've got additional communication going back and forth, and it's the same fee schedule, the same percentage, the same split.
• 14:59
  William Auten: You're not getting paid anymore, but you're doing a whole lot more work for $480.
• 15:04
  William Auten: So completely different economics on two different claims.
• 15:08
  William Auten: And I think this is something that anybody who's considering independent adjusting as a career really needs to understand is you're going to have some winners and some losers.
• 15:19
  William Auten: You can't evaluate an assignment simply by looking at what it pays.
• 15:23
  William Auten: You have to look at what it costs you to produce that result.
• 15:26
  William Auten: I don't just mean gasoline.
• 15:29
  William Auten: Your time is a cost.
• 15:31
  William Auten: Your time away from the ability to do other claims, your uh other expenses, like you probably need some liability insurance, your equipment is a cost, your vehicle is a cost.
• 15:44
  William Auten: Uh depending on what the arrangement is, you may have some software costs also.
• 15:49
  William Auten: Exactimate and these estimating programs are very expensive.
• 15:53
  William Auten: You will have a lot of admin time putting things together.
• 15:57
  William Auten: Uh, you will have spent time scheduling appointments.
• 16:00
  William Auten: Sometimes people do that for two or three hours a day, just make calls and set appointments.
• 16:05
  William Auten: And if you're a 1099 independent adjuster, remember what that means.
• 16:10
  William Auten: You are operating a business.
• 16:13
  William Auten: That $480 isn't a paycheck in the same sense that an employee receives a paycheck, it's gross revenue coming into your business, and that's an important distinction.
• 16:26
  William Auten: So there is actually another side to this.
• 16:29
  William Auten: Uh, property adjusting can become extremely efficient when you've got volume and geographic density.
• 16:37
  William Auten: So let's say I've got five claims today and they're all within 15 or 20 minutes of each other.
• 16:42
  William Auten: That changes the economics a lot.
• 16:44
  William Auten: Now you're not having to drive, you know, hours to get to an assignment.
• 16:50
  William Auten: They're all next to each other.
• 16:52
  William Auten: You can bang out the inspections one after the other.
• 16:55
  William Auten: Now you can get into a rhythm, you can set your appointments in the morning, inspect in the afternoon, you're inspecting, photographing, documenting, and moving on to the next one.
• 17:07
  William Auten: And depending on how the operation is structured, you may be able to do some of your estimated reporting together later in that day.
• 17:15
  William Auten: That's one of the main reasons that catastrophe adjusting or cat adjusting can look very different from somebody handle handling uh scattered daily claims.
• 17:24
  William Auten: After a major weather event like a hurricane or a hail or flood, you may have a huge concentration of losses in a small geographic area.
• 17:34
  William Auten: And suddenly you've got adjusters who can handle significant volume because the work is all concentrated.
• 17:40
  William Auten: But that volume can fool you too.
• 17:42
  William Auten: If you're handling a lot of claims and you're not keeping up with the reporting, you're not keeping up.
• 17:47
  William Auten: So if you're doing inspections all day and then staying up until two o'clock in the morning every night trying to write estimates and reports, those hours count.
• 17:55
  William Auten: They may not show up on the fee schedule, but they count.
• 17:59
  William Auten: And eventually they count against you.
• 18:01
  William Auten: They count against your health, your mental stability, and uh your well-being.
• 18:08
  William Auten: And that's why experienced independent adjusters learn to think about efficiency a little different.
• 18:14
  William Auten: It's not just how fast can I inspect this property, it's how efficiently can I move the entire assignment from receipt to completion without sacrificing the quality of the work.
• 18:25
  William Auten: And that's an important distinction.
• 18:27
  William Auten: Speed and efficiency are not the same thing.
• 18:30
  William Auten: You can be very fast and create a mess for everybody behind you.
• 18:34
  William Auten: And if the photographs aren't properly documented, or if they're blurry, uh, or if the estimate doesn't make sense given the photographs, if important information is missing, if somebody has to keep sending the file back to you for corrections, you weren't efficient.
• 18:51
  William Auten: You were fast.
• 18:52
  William Auten: Well, and what all you did was you you just moved the work to somebody else.
• 18:57
  William Auten: And that's not fair, and it's not really going to work out for you in the end.
• 19:02
  William Auten: That somebody else might be the folks at the independent adjusting firm.
• 19:07
  William Auten: So that brings us back to our $320 that they retained in our hypothetical example.
• 19:13
  William Auten: So what is that paying for?
• 19:16
  William Auten: Well, first, that firm had to go out and get that client.
• 19:20
  William Auten: Somebody has to develop and maintain a relationship with the insurance carrier.
• 19:25
  William Auten: Then somebody has to receive the assignment, somebody has to get it into whatever claim management system that firm uses.
• 19:33
  William Auten: And then somebody may have to review it and decide which adjuster needs to handle it.
• 19:38
  William Auten: Then somebody might be asking or answering questions asked by the carrier.
• 19:44
  William Auten: And then somebody will be reviewing the adjuster's work before it goes out.
• 19:49
  William Auten: It doesn't go straight to the carrier.
• 19:51
  William Auten: It's got to go through a filter to make sure everything's right.
• 19:54
  William Auten: Then somebody does the billing, and somebody is collecting the money, somebody is maintaining the technology behind all of this to make sure that everything's running like a smooth engine.
• 20:05
  William Auten: Then there's uh costs like insurance, uh, there's accounting, um, there's admin expenses, there may be rent, there may be employees providing support to the field adjusters, file reviewers, and whatnot.
• 20:20
  William Auten: And somewhere in all of that, the independent adjusting company actually has to make a profit because if it doesn't, eventually there isn't going to be an adjusting company.
• 20:32
  William Auten: So when you see a 60-40 split or 70-30 split or whatever that arrangement happens to be, it's tempting to think of that entirely as a division of profit, but that's not what it is.
• 20:45
  William Auten: It's a division of revenue.
• 20:48
  William Auten: And those things are very different things if you look at a PML statement.
• 20:53
  William Auten: The field adjuster has expensive uh expenses that have to come out of their percentage.
• 20:59
  William Auten: The independent adjusting firm has expenses that have to come out of its percentage, and whatever's left, whatever money you have left over, after you pay all those expenses, that's what profit is.
• 21:11
  William Auten: So there's another part of the fee schedule that's worth understanding if you're on the carrier side.
• 21:18
  William Auten: The fee schedule creates incentives.
• 21:21
  William Auten: And that's not necessarily a bad thing.
• 21:24
  William Auten: Every compensation system creates incentives.
• 21:29
  William Auten: Hourly billing creates incentives, um, salary creates incentives, and fee schedules create incentives.
• 21:37
  William Auten: So let's talk about those incentives.
• 21:40
  William Auten: A lot of people believe that uh insurance adjusters get paid more if they're able to keep the cost down.
• 21:46
  William Auten: But with a fee schedule, that's not really how it works.
• 21:49
  William Auten: With a fee schedule, the higher the estimate is, the higher the fee schedule.
• 21:54
  William Auten: And once people understand that, they might think a little bit different, more differently about.
• 21:59
  William Auten: About how an independent adjuster actually earns an income for one, but also how their claim is handled.
• 22:06
  William Auten: So we don't want to see the economic incentive to be, you know, how little can I do or how how low can I write this estimate to get more money.
• 22:17
  William Auten: We want the adjuster incentivized to make sure they're writing for as detailed an estimate as they can.
• 22:25
  William Auten: The bottom line is the carrier shouldn't simply want the cheapest inspection it can buy.
• 22:30
  William Auten: It needs useful work with accurate information.
• 22:34
  William Auten: It needs to have work that it can stand behind.
• 22:36
  William Auten: And the field adjuster shouldn't simply want to get to the next fee as quickly as possible.
• 22:41
  William Auten: They need to make sure they're pouring their heart and soul into creating a thorough estimate.
• 22:47
  William Auten: Your reputation follows your work, especially in this business.
• 22:52
  William Auten: Claims is a surprisingly small world.
• 22:56
  William Auten: Now, from the carrier's perspective, a fee schedule has some real advantages.
• 23:01
  William Auten: First, it creates a degree of predictability.
• 23:05
  William Auten: You know generally what you're going to pay for a particular category of losses.
• 23:09
  William Auten: And when you're sending out a significant number of property assignments, that predictability can be really useful to your reserves.
• 23:17
  William Auten: It also shifts some of the productivity risk.
• 23:19
  William Auten: If an assignment takes the adjuster longer than expected, the carrier isn't necessarily paying an additional an additional hourly charge for every minute that went into it.
• 23:28
  William Auten: Again, I'm speaking generally here, but fee schedules are going to differ.
• 23:34
  William Auten: The contracts between carriers and independent adjusters are also going to be different.
• 23:38
  William Auten: What is included in that particular fee is different.
• 23:42
  William Auten: There can be additional charges, expenses, different schedules for reinspections or supplements, and there could be separate charges for photos and mileage and all those things.
• 23:51
  William Auten: There's not one universal independent adjusting fee schedule, but the basics of that economic model are important to understand.
• 23:59
  William Auten: The carrier pays the independent adjusting firm according to the agreed fee arrangement, and then the firm, the independent adjusting firm, pays that field adjuster according to whatever compensation arrangement that exists between them.
• 24:13
  William Auten: Everybody involved has to perform their part of the work efficiently enough for the system to make economic sense.
• 24:18
  William Auten: And this is where I want to make a distinction, because everything I've just described can sound completely foreign to somebody who primarily works in liability claims or an agency or but if you're still sitting here thinking uh five claims in one day, it doesn't make sense.
• 24:34
  William Auten: Yeah, I get it.
• 24:35
  William Auten: So, as far as liability claims, that's not what we do.
• 24:37
  William Auten: Ot in claims management, if I told you one of my adjusters uh I expected five completed investigations today, they'd look at me like I'm crazy.
• 24:46
  William Auten: Although we're also independent adjusters, the economics of what we do are very different.
• 24:52
  William Auten: We generally aren't working from a property fee schedule.
• 24:55
  William Auten: We're billing for time and we bill hourly.
• 24:58
  William Auten: And instead of asking how many inspections we can efficiently complete in a day, instead we're asking how much investigation is necessary to properly develop one claim for the carrier.
• 25:11
  William Auten: So let's look at the other side of independent adjusting and let's talk a little more about liability claims.
• 25:17
  William Auten: So this is the side of the independent adjusting business that I've spent the last seven years focused on with ACM.
• 25:26
  William Auten: If you're a property adjuster, you may receive an assignment, inspect the property, prepare an estimate, complete the report, and then you move on to the next one.
• 25:34
  William Auten: In liability, we're usually trying to answer a different question.
• 25:38
  William Auten: We're trying to figure out what happened.
• 25:40
  William Auten: And sometimes that's pretty simple.
• 25:42
  William Auten: Sometimes it absolutely is not.
• 25:45
  William Auten: So let's say somebody slips and falls at a grocery store.
• 25:50
  William Auten: If the carrier gets notice of the claim and sends it to the independent adjuster, I'm not going out there to estimate the cost of the floor.
• 25:58
  William Auten: I'm trying to figure out what happened and develop facts.
• 26:02
  William Auten: Where did they fall?
• 26:04
  William Auten: What did they say caused them to fall?
• 26:06
  William Auten: Who did they talk to?
• 26:08
  William Auten: What was on the floor?
• 26:09
  William Auten: Uh how long had it been there?
• 26:12
  William Auten: Uh were there other incidents like this?
• 26:14
  William Auten: Did anybody know about it?
• 26:15
  William Auten: Were there any cameras in the area?
• 26:17
  William Auten: Were there any employees that saw it?
• 26:19
  William Auten: Were there any other people, other witnesses?
• 26:22
  William Auten: Uh did anybody take photographs?
• 26:24
  William Auten: Cell phones are everywhere.
• 26:25
  William Auten: Are there are there any inspection records?
• 26:28
  William Auten: So did employees regularly go through here and take a look at the condition of the area?
• 26:34
  William Auten: Um, if so, did anybody report a problem?
• 26:37
  William Auten: And then if they did, what happened after?
• 26:40
  William Auten: One of the most important questions is often, what evidence exists today that might not exist 30 days from now, or 60, or three years from now when the statute of limitations is about to run.
• 26:53
  William Auten: You may need somebody at that location quickly because the physical condition is going to change.
• 26:58
  William Auten: The video might get overwritten, uh, people's memories are going to fade, get worse, employees are going to leave, uh, documents can disappear.
• 27:08
  William Auten: As far as weather, the snow, the ice, they melt.
• 27:12
  William Auten: Slip and fall claims from February and July.
• 27:15
  William Auten: Broken things get repaired, a tree gets cut up and hauled away, uh, whatever the physical condition was, there's a very good chance it isn't going to be there waiting for the claim to develop.
• 27:27
  William Auten: So our job is to get out there, preserve as much useful information as we can while it still exists.
• 27:34
  William Auten: And that's why I describe independent liability adjusters as the carrier's boots on the ground.
• 27:39
  William Auten: We're developing a factual record.
• 27:42
  William Auten: So let's make this a little more complicated.
• 27:45
  William Auten: Suppose that same slip and fall claim involving a shopping plaza, the claimant says they fell on ice in the parking lot.
• 27:53
  William Auten: Okay.
• 27:54
  William Auten: Who owns the parking lot?
• 27:56
  William Auten: Who maintains it?
• 27:58
  William Auten: Is there a property manager?
• 28:00
  William Auten: Is there a snow removal contractor?
• 28:03
  William Auten: Is there a lease agreement?
• 28:05
  William Auten: How about a snow removal contract?
• 28:08
  William Auten: Written.
• 28:10
  William Auten: And if so, what did the contracts say?
• 28:14
  William Auten: Uh when was the snow removal guy last there?
• 28:18
  William Auten: What were the weather conditions that day?
• 28:20
  William Auten: Did anybody salt the area?
• 28:22
  William Auten: Was the contractor responsible to do it or was the building owner?
• 28:26
  William Auten: Are there any records?
• 28:28
  William Auten: Are there any photographs?
• 28:29
  William Auten: How about cameras?
• 28:30
  William Auten: I know some snow removal contractors keep video cameras in their trucks.
• 28:34
  William Auten: Was the condition reported to the owner or anybody responsible?
• 28:39
  William Auten: Were there any other prior incidents?
• 28:41
  William Auten: So now we've gone from somebody fell in the parking lot to a claim with several different people and companies and several different sources of evidence, contracts that might matter, records that need to be obtained, and potentially several insurance carriers involved.
• 28:57
  William Auten: And I haven't even got to the injury yet.
• 29:00
  William Auten: That's why liability investigations don't fit particularly well into the high volume model described for property claims.
• 29:09
  William Auten: I can't say, well, it's a $10,000 bodily injury claim, so the fee for the investigation is X amount of dollars.
• 29:16
  William Auten: I don't know what the investigation is going to require yet.
• 29:20
  William Auten: One $10,000 claim may take three hours, another one may take 30 hours.
• 29:24
  William Auten: And frankly, at the beginning of the investigation, we might not even know whether it's a $10,000 claim.
• 29:30
  William Auten: We might not know much of anything.
• 29:32
  William Auten: That's why companies like mine generally work on an hourly basis.
• 29:36
  William Auten: The carrier is purchasing investigative time, and I think that's an important distinction.
• 29:42
  William Auten: They're not purchasing a result.
• 29:45
  William Auten: They're not paying me to prove the insured wasn't negligent.
• 29:49
  William Auten: If anything, they're paying me for one or the other.
• 29:53
  William Auten: They're not paying me to prove that the claimant was negligent.
• 29:56
  William Auten: They're paying us to investigate.
• 29:59
  William Auten: Our job is to develop facts as objectively as we can and report what we find.
• 30:04
  William Auten: Sometimes what we find is very helpful to the insured, sometimes it isn't.
• 30:10
  William Auten: That's the job.
• 30:11
  William Auten: And from an economic standpoint, that creates a completely different model from the property fee schedule.
• 30:16
  William Auten: If one of my adjusters spends three hours conducting a detailed interview, that's three hours devoted to one claim, they're not conducting four other inspections during those same three hours.
• 30:29
  William Auten: If they drive an hour and a half to a scene, conduct a two-hour inspection, interview somebody nearby, and then drive back, that's most of the day.
• 30:39
  William Auten: And that may be exactly what the assignment required.
• 30:43
  William Auten: So when somebody asks how many claims a liability adjuster can handle in a day, I don't really know how to answer that.
• 30:51
  William Auten: What kind of claims?
• 30:52
  William Auten: What are we doing there?
• 30:54
  William Auten: What are we doing on the claim itself?
• 30:56
  William Auten: An adjuster might touch 10 or 15 files in one day, make some calls, send some emails, follow up on records, review something that came in, but that's a very different thing from saying they completed 10 or 15 investigations.
• 31:11
  William Auten: A substantial liability investigation might remain open with us for several weeks, months, or years.
• 31:18
  William Auten: And that doesn't mean we're working on it eight hours every day.
• 31:22
  William Auten: A lot of liability investigation is a series of events, and a lot of it is waiting for things to come in.
• 31:28
  William Auten: We conduct the initial investigation, we issue a report, then maybe we're waiting on medical records, or maybe we're waiting for the attorney to give us something.
• 31:39
  William Auten: We're waiting for a witness to call us back.
• 31:41
  William Auten: We're waiting for municipal records or contracts, leases, snow removal contracts.
• 31:48
  William Auten: We're waiting for an attorney to provide us with medical information.
• 31:52
  William Auten: We're waiting for the insured to locate those photographs they took two years ago.
• 31:56
  William Auten: Then something comes in.
• 31:58
  William Auten: We review it, it creates three more questions, let's say.
• 32:03
  William Auten: So now we get back to work, and this continues as the claim develops.
• 32:06
  William Auten: Bodily injury adds another dimension because people don't heal according to our diary system of every 30 days.
• 32:14
  William Auten: You can have a clear understanding of how an accident occurred, but yet have no idea what the claim is ultimately worth because the claim it's still treating.
• 32:23
  William Auten: Maybe they're having surgery.
• 32:25
  William Auten: Maybe they're going back to work.
• 32:27
  William Auten: Maybe they're not going back to work.
• 32:29
  William Auten: Maybe what initially looked like a relatively minor injury turns into something much more significant.
• 32:35
  William Auten: Or maybe the opposite happens.
• 32:38
  William Auten: The passage of time is part of liability claims.
• 32:42
  William Auten: And again, the independent adjuster's role isn't necessarily to sit there and make the ultimate decision about what the claim is worth.
• 32:50
  William Auten: The carrier actually owns that decision.
• 32:52
  William Auten: They can get advice from us, and we can continue to develop information as the carrier needs it.
• 32:59
  William Auten: And this gets back to something I had said earlier.
• 33:02
  William Auten: As a carrier, you're not outsourcing responsibility, you're outsourcing the work.
• 33:06
  William Auten: And I think that's especially important for staff adjusters and claim supervisors to understand.
• 33:12
  William Auten: A good independent adjuster will make your staff more efficient and effective.
• 33:18
  William Auten: We shouldn't make you less involved in your own claim.
• 33:20
  William Auten: If you're the desk adjuster, you should be able to look at your file and say, here's what I need to do now, or here's what I need to ask the independent adjuster to do next.
• 33:29
  William Auten: Here's what I can develop from my desk.
• 33:31
  William Auten: And here's what requires somebody in the field.
• 33:33
  William Auten: Here's what requires more time than I can reasonably give to it right now.
• 33:38
  William Auten: And here's what my independent adjuster needs to do for me.
• 33:43
  William Auten: That's a very productive relationship.
• 33:45
  William Auten: And sometimes the assignment can be extremely narrow.
• 33:48
  William Auten: Maybe all you need is scene photographs.
• 33:52
  William Auten: Maybe you just need a follow-up statement.
• 33:55
  William Auten: Fine, assign that.
• 33:56
  William Auten: Maybe you have a witness who refuses to pick up the telephone but you have an address and you need somebody to go knock on the door.
• 34:02
  William Auten: Maybe there's surveillance video that needs to be secured, and somebody needs to go there with a thumb drive and plug it in so we can retrieve it.
• 34:09
  William Auten: Maybe you need to go to the municipality and see if there's any records on file.
• 34:14
  William Auten: Maybe you need a full investigation.
• 34:16
  William Auten: The IA assignment doesn't always have to be here.
• 34:19
  William Auten: Take this claim and handle it.
• 34:21
  William Auten: In fact, sometimes that's not the most efficient use of us.
• 34:24
  William Auten: Most of our carriers do send us full assignments, but there may be a specific problem you need to have solved, and that's a better way to think about it.
• 34:33
  William Auten: From the carrier standpoint, this gives you a little bit of flexibility.
• 34:36
  William Auten: Maybe your staff is perfectly capable of handling the full claim.
• 34:40
  William Auten: Capability isn't the problem.
• 34:42
  William Auten: Time is, location is.
• 34:44
  William Auten: Let's say if you've got a staff adjuster with 175 files sitting on their desk telling me that they're capable of interviewing three witnesses, doesn't magically create the four hours they need to do it.
• 34:55
  William Auten: That's a resource problem.
• 34:57
  William Auten: And I think claims departments uh sometimes wait a little too long before recognizing that they have a problem.
• 35:03
  William Auten: They wait until everybody's drowning, and now the diaries are behind, and telephone calls are not getting returned, and investigations they're not getting completed, uh, reports not getting reviewed, and people are working reactively.
• 35:20
  William Auten: And then somebody says, Hey, we need help.
• 35:25
  William Auten: Well, sure, of course you do.
• 35:27
  William Auten: You probably needed help three weeks ago.
• 35:30
  William Auten: Independent adjusters can be used reactively, but I think they're much more valuable when they're used deliberately.
• 35:37
  William Auten: If you've got a temporary surge, use them.
• 35:41
  William Auten: If you've got a geographic hole in your staff, use them.
• 35:46
  William Auten: If you've got an investigation that requires local field work, use an IA.
• 35:52
  William Auten: If you've got a staff adjuster spending half a day driving somewhere to perform a task that a qualified local IA could perform, at least ask whether that's the best use of your own employees' day.
• 36:04
  William Auten: And I want to be careful because obviously we're biased.
• 36:08
  William Auten: I own an independent adjusting firm.
• 36:10
  William Auten: I'm not suggesting insurance companies should outsource their entire claims departments, and that's actually the opposite of what I'm suggesting.
• 36:17
  William Auten: There are very good reasons to have very experienced staff adjusters.
• 36:22
  William Auten: They know their own employer, they know their own policies, they know their own systems, they understand the company's claim and settlement philosophy.
• 36:33
  William Auten: They've got relationships with underwriting, agents, defense counsel, and insurance company management.
• 36:40
  William Auten: That's enormously valuable.
• 36:41
  William Auten: The independent adjuster serves a different function.
• 36:45
  William Auten: We are flexible in terms of your capacity.
• 36:48
  William Auten: We are geographic outreach, we are investigative resources, we're specialized expertise when that's needed.
• 36:56
  William Auten: And sometimes we're simply additional hands when there are more claims than there are hours in the day.
• 37:02
  William Auten: And those two models can complement each other really well.
• 37:05
  William Auten: And agents need to understand that too, because if you're an agent and one of your insureds tells you some guy from a company I've never heard of called me about my claim, that doesn't necessarily mean the insurance company had handed off the claim to a stranger and just kind of walked away.
• 37:22
  William Auten: The carrier is likely hired a local independent adjuster specifically because it wants somebody closer to the loss, somebody who can get there, somebody who can meet with the insured, explain the claims process to them, look at the scene, gather all the facts, get the statements.
• 37:40
  William Auten: The IA is working on behalf of the carrier, but the carrier is still the carrier.
• 37:46
  William Auten: And once you understand that relationship, this whole system makes a lot more sense.
• 37:50
  William Auten: So there's one more piece of this that I think people outside the independent adjusting uh business don't see.
• 37:57
  William Auten: And that's what it actually costs to provide this capacity.
• 38:01
  William Auten: Because whether we're talking about that property adjuster working on a percentage of a fee schedule or a liability firm billing by the hour, the amount in the invoice is not the amount somebody puts in their pocket.
• 38:12
  William Auten: Not even close.
• 38:13
  William Auten: There are adjusters to pay, there are support people, there's vehicles and technology and insurance and equipment and management and quality control.
• 38:22
  William Auten: There's non-billable time.
• 38:24
  William Auten: There's billing, collections, and then the uncomfortable little detail that the company has to make enough money to still be there next time the carrier needs it.
• 38:35
  William Auten: That's where I want to go next.
• 38:36
  William Auten: So let's talk about the economics of the independent adjusting firm itself.
• 38:41
  William Auten: Alright, so let's talk about the money.
• 38:44
  William Auten: Because this is the part I think is misunderstood from almost every direction.
• 38:48
  William Auten: The carrier sees an invoice, the independent adjuster sees whatever they're being paid, the employee sees their paycheck, and the owner of the adjusting firm sees all of it moving through the company.
• 39:01
  William Auten: Those are four very different views of the same dollar.
• 39:04
  William Auten: And one of the easiest make uh mistakes to make in this business is to confuse revenue with income.
• 39:12
  William Auten: If an independent adjusting firm bills a carrier $100 an hour, the company isn't making $100 an hour.
• 39:19
  William Auten: It has $100 of revenue.
• 39:21
  William Auten: That's where the conversation really starts, not where it ends.
• 39:25
  William Auten: Out of that $100, we've got to pay the adjuster who performed the work.
• 39:30
  William Auten: And if that adjuster is an employee, we've got wages, insurance, taxes, the employer side of payroll taxes.
• 39:37
  William Auten: I've got the benefits depending on the company.
• 39:39
  William Auten: I've got paid time that isn't necessarily billable time.
• 39:43
  William Auten: If it's a 1099 independent adjuster, the economics are structured differently, but obviously that adjuster still has to be paid.
• 39:50
  William Auten: And then there are support people because an adjuster sitting at a desk doing admin work is an expensive way to get that admin work done.
• 40:00
  William Auten: So we have other folks to handle some of the file processing, organizing incoming material, preparing photographs, assisting with records, helping with billing, and a lot of other administration administrative functions.
• 40:13
  William Auten: So now my adjuster can spend more of their time doing the thing that the client actually hired us to do, and that's adjust claims.
• 40:20
  William Auten: But those support people aren't free.
• 40:22
  William Auten: Then there's software.
• 40:23
  William Auten: There's phones, there's computers, insurance, accounting, office expenses, training, management, quality control, all that stuff.
• 40:33
  William Auten: And then there's business development.
• 40:35
  William Auten: We still got to go make relationships with carriers and probably 15 other things I'm forgetting while I'm talking to you here.
• 40:41
  William Auten: But none of these things disappear just because they don't show up on a line item on one of our invoices.
• 40:47
  William Auten: Then we get into something that's kind of important in an hourly business, and that's utilization.
• 40:53
  William Auten: That's basically the relationship between the time you're paying somebody for and the time you're actually able to bill the client for.
• 41:00
  William Auten: And those two numbers are never quite going to be the same.
• 41:04
  William Auten: If you've got an employee working 40 hours this week, I can't assume I'm going to bill 40 hours of that person's time necessarily.
• 41:13
  William Auten: They're going to have administrative work, they're going to have meetings, they're going to have to go to training, they're going to have to answer internal emails, they're going to have technology problems.
• 41:25
  William Auten: All of these things have to be addressed or corrected, and it takes time.
• 41:31
  William Auten: There's also downtime between assignments.
• 41:34
  William Auten: They may spend some time doing something that's necessary to operate the business, but isn't properly chargeable to a client.
• 41:42
  William Auten: All of that time still costs money.
• 41:44
  William Auten: And this is one of the reasons that simply looking at an hourly billing rate tells you very little about how profitable an adjusting company actually is.
• 41:52
  William Auten: You need to know how much of the available time is billable.
• 41:57
  William Auten: You need to know what it costs to produce that billable hour.
• 42:01
  William Auten: You need to know what other expenses the business has.
• 42:05
  William Auten: And then you have to actually collect the money.
• 42:09
  William Auten: So that's another part of this business that I don't think people necessarily think about.
• 42:14
  William Auten: We do the work first and then we bill for it.
• 42:16
  William Auten: Then somebody has to process the invoice.
• 42:19
  William Auten: Then the insurance company has to process the invoice, and then eventually the money arrives.
• 42:24
  William Auten: In the meantime, payroll still happens.
• 42:27
  William Auten: The adjuster still has to be paid.
• 42:30
  William Auten: The support staff, they still have to be paid.
• 42:33
  William Auten: The phone company doesn't particularly care that one of my clients hasn't paid an invoice yet.
• 42:38
  William Auten: The rent still has to be paid here.
• 42:40
  William Auten: The internet connection has to be paid.
• 42:43
  William Auten: My insurance company for liability and professional liability, they still want to be paid.
• 42:49
  William Auten: Everybody else keeps getting paid while I'm wanting to get paid, and that's cash flow.
• 42:54
  William Auten: And a business can actually be profitable on paper and still have a cash flow problem.
• 42:58
  William Auten: And if you're growing quickly, that can become even more pronounced because growth consumes cash.
• 43:05
  William Auten: Let's say assignments suddenly increase by 50%.
• 43:09
  William Auten: Sounds great.
• 43:11
  William Auten: But now I need more adjusting capacity.
• 43:15
  William Auten: So we're kind of get into that same problem that staff adjusters have.
• 43:19
  William Auten: Maybe I need another adjuster.
• 43:21
  William Auten: Maybe I need another support person.
• 43:23
  William Auten: Maybe I need another 1099.
• 43:25
  William Auten: Maybe I need new technology to help things along.
• 43:29
  William Auten: Maybe there's more management now involved.
• 43:31
  William Auten: And I may have to pay for all of that before I've collected revenue from these additional claims.
• 43:36
  William Auten: So more work isn't automatically the answer to everything, whether you're a single 1099 adjuster or if you're a growing firm.
• 43:44
  William Auten: In fact, poorly managed growth can create a tremendous amount of stress on an adjusting company.
• 43:51
  William Auten: And here's where I think that becomes relevant to the carrier because you don't necessarily want your independent adjusting firms operating on the absolute thing.
• 43:59
  William Auten: It's the margin.
• 44:00
  William Auten: I understand that you have to have competitive pricing.
• 44:04
  William Auten: Of course you do.
• 44:05
  William Auten: Insurance companies have budgets.
• 44:07
  William Auten: Claim expenses matter.
• 44:09
  William Auten: You should care about what you're paying, but there's a point where cheap becomes expensive.
• 44:14
  William Auten: If the fee or the hourly rate doesn't support competent adjusters, adequate supervision, good support, and proper investigation, then something's eventually going to give.
• 44:24
  William Auten: And maybe it's turnaround time.
• 44:26
  William Auten: Maybe it's quality.
• 44:28
  William Auten: Maybe experienced adjusters who are really good leave for a better opportunity.
• 44:34
  William Auten: Maybe the firm starts taking on more files than it can properly handle because volume is the only way it can make the numbers work.
• 44:40
  William Auten: Maybe reports stop getting reviewed so carefully.
• 44:45
  William Auten: Maybe the carrier saves $50 on the adjusting expense and creates a much larger problem on the claim.
• 44:52
  William Auten: That's not efficiency.
• 44:53
  William Auten: That's just moving the expense somewhere else.
• 44:55
  William Auten: And to be fair, this works in the other direction too.
• 44:59
  William Auten: An independent adjusting firm has a responsibility to be efficient with their clients' money.
• 45:04
  William Auten: Hourly billing isn't a license to wander around a file.
• 45:08
  William Auten: If I can accomplish something in 15 minutes, it shouldn't take an hour.
• 45:13
  William Auten: If my support staff can properly perform a task at a lower cost than one of my senior adjusters, I need to think about that.
• 45:21
  William Auten: If we're doing work that the carrier doesn't need, we should stop doing it.
• 45:25
  William Auten: If the assignment isn't clear, we should clarify it.
• 45:28
  William Auten: So we're not doing things we don't need to do.
• 45:31
  William Auten: Good independent adjusting should create value for the carrier, not just activity.
• 45:36
  William Auten: And that's really where the economics and the claim handling come together.
• 45:42
  William Auten: The carrier is buying capacity.
• 45:45
  William Auten: It's buying time, it's buying geographic reach.
• 45:51
  William Auten: Uh, it's buying investigative capability.
• 45:54
  William Auten: And sometimes it's buying specialized expertise.
• 45:57
  William Auten: And what makes independent adjusting valuable is that the carrier can buy those things when it needs them without necessarily carrying all of that capacity permanently on its own payroll.
• 46:08
  William Auten: Think back to the storm example.
• 46:10
  William Auten: You need 30 additional property adjusters this week.
• 46:13
  William Auten: An independent adjusting operation might be able to help you get them.
• 46:17
  William Auten: You don't necessarily need 30 additional employees for the next five years.
• 46:21
  William Auten: You need them now.
• 46:23
  William Auten: Or maybe you don't need 30 adjusters at all.
• 46:25
  William Auten: Maybe you've got one liability claim in a part of the state where none of your staff is located.
• 46:30
  William Auten: You don't need to build a claims office there.
• 46:32
  William Auten: You need one qualified person who can get to the scene.
• 46:35
  William Auten: That's the beauty of the model.
• 46:36
  William Auten: I think sometimes claims departments look at the independent adjuster as something you use only after you've run out of options.
• 46:43
  William Auten: I would look at it differently.
• 46:45
  William Auten: Um, it's another tool.
• 46:47
  William Auten: You have staff adjusters, you have independent adjusters, you have attorneys, you have experts, you have investigators, you have all kinds of resources available to you.
• 46:57
  William Auten: The question isn't, can my staff adjuster do this?
• 47:00
  William Auten: Of course, they probably can.
• 47:02
  William Auten: The better question is what's the best use of my staff adjuster's time?
• 47:08
  William Auten: Because if you've got a good staff adjuster spending six hours driving somewhere and back to take photographs and measurements that a qualified local IA could have obtained, you haven't saved money just because you didn't receive an IA invoice.
• 47:21
  William Auten: You still paid for those six hours.
• 47:23
  William Auten: And more importantly, you lost six hours of that adjuster's capacity.
• 47:27
  William Auten: That's six hours, they weren't reviewing coverage.
• 47:30
  William Auten: They weren't negotiating settlements, they weren't talking to insureds, they weren't evaluating claims, they weren't moving the rest of their pending anywhere.
• 47:38
  William Auten: That's an economic cost too.
• 47:40
  William Auten: It just doesn't arrive on an invoice, and that's probably the biggest point I want people on the carrier side to take away from this episode.
• 47:47
  William Auten: Don't evaluate independent adjusting solely by looking at the expense line.
• 47:52
  William Auten: Look at what you're buying and look at what you're freeing up your own people to do.
• 47:57
  William Auten: Sometimes the IA is going to be more expensive.
• 48:00
  William Auten: Sometimes your own staff absolutely should handle the work.
• 48:03
  William Auten: Sometimes an assignment is unnecessary.
• 48:06
  William Auten: I'm not suggesting otherwise, but there are situations where an independent adjuster is way more efficient than asking an overloaded staff adjuster to somehow find another four hours in a day that already doesn't have enough hours in it.
• 48:19
  William Auten: And if you're managing a claims department that's reached a point where everybody is doing nothing but triage, that's not the time to congratulate yourself because you haven't spent any money on outsiding adjusting.
• 48:32
  William Auten: You've got a capacity problem.
• 48:34
  William Auten: Use the resources that are available to you.
• 48:36
  William Auten: That's why this industry exists.
• 48:39
  William Auten: And if you're an agent listening to this, hopefully this also gives you a little better understanding of where the independent adjuster fits when one shows up on your insurance claims.
• 48:49
  William Auten: We are not the insurance company.
• 48:51
  William Auten: We're working on behalf of the insurance company.
• 48:54
  William Auten: We are there because the carrier needs something done.
• 48:57
  William Auten: They need some help.
• 48:58
  William Auten: That's sometimes a complete property adjustment.
• 49:01
  William Auten: Sometimes it's a very specific investigation, and sometimes it's because the carrier needs somebody locally who can get there faster than its own people can.
• 49:10
  William Auten: So the models are different, the economics uh are different, but ultimately we're all part of the same claim process.
• 49:18
  William Auten: And when that relationship works properly, the independent adjuster makes the carrier's claims operation more capable, not less.
• 49:26
  William Auten: It's a system where the staff adjuster can get better information and the carrier gets flexible capacity.
• 49:31
  William Auten: The insured gets somebody who can actually get to the loss, and the independent adjusting firm gets paid fairly for providing that service.
• 49:39
  William Auten: And everybody wins when that system is working the way it's supposed to.
• 49:43
  William Auten: So I think that's probably a pretty good place to leave this one.
• 49:46
  William Auten: But before I go, I do want to say something about Chantal.
• 49:49
  William Auten: I know she'd much rather be sitting here giving me a hard time than having me do this all by myself.
• 49:55
  William Auten: But she's got some things at home that deserve her attention right now, and that's exactly where her attention should be.
• 50:01
  William Auten: So, Chantal, if you're listening, we miss you.
• 50:04
  William Auten: Take care of what you need to take care of.
• 50:06
  William Auten: And the microphone and the camera, they'll both be ready when you come back.
• 50:11
  William Auten: And for everybody else spending some time with me, this has been the Art of Adjusting.
• 50:15
  William Auten: I'll see you next episode.