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Most insurance professionals will have crossed paths with policyholder advocates during the claims process. Policyholder advocates come in various forms, including licensed public insurance adjusters, attorneys, agents, brokers, and even contractors. While engaging with policyholder advocates can add complexity to a claim situation, there are some practical strategies insurers can implement to help facilitate smoother interactions that are beneficial to all parties.
Understanding the different types of policyholder advocates and being mindful of state regulations can help insurance carriers engage more effectively.
The licensed public insurance adjuster is often the first policyholder advocate that comes to mind. Forty-six states recognize and license public insurance adjusters to participate in the claims process, while some states may prohibit their practice. Agents and brokers also frequently advocate for their policyholder clients, and it’s becoming increasingly common for attorneys to get involved in the early stages of the claims process. Additionally, some contractors insert themselves into the claims process, asserting that the work they plan to carry out, or have already started, is covered.
Insurers should begin by determining whether, under applicable state law, the individual or firm purporting to advocate on behalf of the insured is either duly licensed to represent the insured as a public adjuster or, alternatively, is exempt from any such licensing requirement. To the extent an individual or firm is not licensed as a public adjuster or does not qualify for an exemption therefrom, then insurers must exercise caution when dealing with such individuals or firms. Additionally, regardless of which individuals or firms insurers deal with, all applicable Unfair Trade Practices Law or Unfair Claims Settlement Practices Law requirements must be complied with, if a settlement is not to be potentially voided by regulators.
As many on the carrier side will acknowledge, a unique dynamic often exists among public adjusters and policyholder advocates who are not licensed or required to be licensed as public adjusters, and insurance industry professionals. Rather than viewing certain policyholder advocates negatively, consider them partners in the claim process. During your initial interaction with a policyholder advocate, encourage a cooperative conversation, seek common ground, and work together toward shared goals. Strive to remain objective and avoid emotional biases. Many policyholder advocates are professionals who genuinely prioritize the policyholder’s best interests. Make every effort to give them the benefit of the doubt.
Since policyholder advocates represent the interests of the policyholder, they may want to control the dialogue. Make it a priority to include the policyholder in all communications. Establish clear expectations with the policyholder from the start and encourage their active participation throughout the claim investigation process. Always request the policyholder’s presence during onsite inspections and involve them in phone conversations and email communications related to their claim.
If the policyholder was absent during a phone conversation or inspection, send a follow‑up email, with a copy to the policyholder advocate, summarizing the discussion and detailing the necessary next steps to progress the claim. It’s crucial to keep policyholders informed at every stage. Transparency builds trust and empowers policyholders to participate actively in decisions regarding their claim.
Effective claims handling hinges on transparent communication. Openly and candidly share information about your investigation and your findings, as well as any coverage concerns, with all parties involved. Consider sharing consultant reports and damage estimates to allow the policyholder and their advocate to raise appropriate questions.
Active listening is essential: understand the policyholder advocate’s viewpoint and address their concerns professionally, maintaining mutual respect even during disagreements. Continuous communication is key: keep the policyholder and policyholder advocates informed along the way about progress, changes, and any new information. Fostering collaboration and trust benefits everyone.
In today’s environment, emails provide a quick and efficient way to communicate. However, formal letters still hold an important role. There are several reasons insurance carriers deem it crucial to write formal letters when communicating with policyholder advocates. Essentially, formal letters are an opportunity to provide a thorough explanation of the situation, including claim facts, investigation status, coverage details, and damages.
They allow the insurance carrier to clearly communicate concerns, requests, or other important information. Formal letters also outline expectations and next steps, which helps to move the claim forward.
Most important, formal letters fulfill legal and administrative requirements, serving as historical records that protect the rights of both parties. The use of formal letters helps expedite the claims process, reduce ambiguity, and ensure timely responses.
When managing claims involving policyholder advocates, it’s crucial to understand that these claims may necessitate extra documentation and extra communication. Ensure that your examiners have the resources to manage the increased workload and regularly assess whether your current staffing levels allow examiners adequate time to work on each claim file. Ultimately, it is important to recognize that claims involving certain policyholder advocates may be more time-consuming and, sometimes, difficult to resolve.
Consider creating specializations within the team or assigning claims to individuals who have deeper knowledge of the intricacies of complex claims. For example, team members should have in‑depth knowledge of insurance policies, a strong understanding of construction practices and building codes, and the ability to read estimates and accurately assess repair or replacement costs.
The adjustment process should be straightforward: the damage is identified, repair costs are determined, and the appropriate claim amount is paid. However, disputes over the extent of damage, repair costs, and policy coverage are common. Claims examiners will benefit from having basic negotiation skills to resolve conflicts with policyholder advocates fairly and effectively while maintaining a calm, patient, and confident demeanor.
Strong evidence is vital so make sure you gather solid proof to back up your position. Claims examiners should thoroughly understand the policy and its limitations, take clear photographs of the property during onsite inspections, and obtain expert opinions to support their position. When a claim is disputed, the goal is to have productive, fact-based discussions leading to fair and reasonable negotiated settlements. To achieve this, your claim file needs to be well‑prepared.
These negotiation skills can be developed through a combination of training, practice, and real-world experience. Consider setting up formal negotiation training programs, courses, and on‑site mentorships for examiners to hone those skills. However, always remember that the initial claim adjustment is not a negotiation. Claims should be paid fully and promptly based on the scope of damage, repair costs, and available coverage. Negotiation is appropriate only when a dispute arises.
To optimize claims handling, it’s crucial to ensure your specialized team has access to experienced and vetted resources, including structural engineers, building consultants, forensic meteorologists, cause and origin investigators, and forensic accountants. Involving these experts early in the claims process improves accuracy and efficiency. Maintaining strong relationships with specialized and local contractors who can offer real-time pricing, accurate bids (as opposed to estimates), and repair timelines is essential.
Ensure that your examiners have appropriate settlement authority. Avoid confining them to low-reserves authority, which can lead to unnecessary delays in approvals. Empower your examiners to make decisions that expedite the claims resolution process.
Disputes often arise as to when damage occurred. An underwriting file can be a valuable tool in resolving these disputes. As an example, for a property claim the underwriting files should contain detailed photographs of the roof, interior, exterior, and other relevant aspects of the property taken at the time of policy inception and, if appropriate, during yearly renewals.
Such documentation can be used in discussions with the policyholder advocate to accurately determine the timing of the loss and the extent of the damage resulting from the event. Maintaining thorough underwriting files helps reduce the number of claims with disputes about pre-existing damage.
Many policyholder advocates are well-versed in recent industry developments, including new legislation and court decisions. Claims examiners should also be informed on these issues so they can effectively respond to, and address concerns raised by the policyholder advocate. Staff should be encouraged to participate in relevant courses, workshops, and conferences. They should consider subscribing to prominent policyholder advocates' websites, newsletters, or publications to gain better perspective and understanding. We are happy to provide links to relevant industry resources.
Most policyholder advocates are professionals who advocate fairly for the policyholders’ best interests, but others may have motivations that may not be in full alignment with those of the policyholder. Knowing the reputation of the firms involved in your claims helps you understand how to best accomplish your claims-handling goals. By monitoring policyholder advocate firms, insurance companies can get in front of potential issues and keep the policyholder advocate market honest.
If improper or unethical conduct is identified, submitting complaints to the State Department of Insurance ensures transparency and helps uphold the ethical standards of the industry.
Policyholder advocates excel at sharing information within their circles. Insurance carriers should share information concerning policyholder advocates, provided it is done in a compliant manner. Insurance industry trade associations and advocacy groups can be helpful resources as insurers consider building out their knowledge of policyholder advocates and their practices.
The primary goal is to establish a robust network for sharing ideas, identifying trends, discussing strategies, and enhancing claims practices. At Gen Re, we understand that collaboration and knowledge sharing extend beyond mere resource exchange; they are about creating a supportive ecosystem where carriers can learn from each other, collectively enhancing and strengthening industry efficiency.
Working with policyholder advocates can be a positive experience. While at times it can be arduous, integrating the strategies mentioned above into your claims-handling process can help carriers navigate the complex world of policyholder advocates more efficiently, an approach that benefits the carrier and the policyholder alike.
