The Art Of Insurance Adjusting: Navigating The Complex World Of Claims And Coverage

The insurance industry is a slow-growing but safe sector for investors. It is made up of companies that offer risk management in the form of insurance contracts. The basic concept of insurance is that one party, the insurer, will guarantee payment for an uncertain future event, while the insured or policyholder pays a smaller premium to the insurer in exchange for that protection.

Insurance companies can be structured as traditional stock companies with outside investors or as mutual companies where policyholders are the owners. The industry is highly regulated to ensure consumer safety, financial stability, and ethical practices.

Insurance plans are the principal product of the sector, but in recent decades, insurance companies have also offered corporate pension plans and annuities to retirees, putting them in direct competition with other financial asset providers.

There are several types of insurance companies, including accident and health insurers, property and casualty insurers, and financial guarantors. The most common types of personal insurance policies are auto, health, homeowners, and life insurance.

Claims adjusters play an important role in the insurance industry. They investigate insurance claims on behalf of an insurer to determine the extent of the insurer's liability. They gather information and details to work out what happened in the incident and find a fair settlement price.

Types of Adjusters: Company/Staff, Independent, and Public Adjusters

Insurance adjusters are responsible for assessing property damage, writing a report, and reporting the value to the insurance company. There are three main types of insurance adjusters: company/staff adjusters, independent adjusters, and public adjusters.

Company/Staff Adjusters

A company adjuster, also called a staff adjuster, is a full-time, salaried employee of an insurance company. Their job is to investigate, evaluate, and settle an insurance claim. Company adjusters work for a single insurance carrier and handle claims only for that insurer. They are usually hired as full-time employees and receive standard employee benefits such as health insurance, paid holidays, vacation time, and sick leave.

There are two types of staff adjusters: desk adjusters and field adjusters. Desk adjusters work remotely and process claims by communicating with the policyholder, asking questions, and requesting photos or other relevant information to determine the damage. Field adjusters, on the other hand, visit the site of the damage to assess the situation and determine the extent of the damage.

Independent Adjusters

Independent adjusters are not direct employees of an insurance company but are hired on a contract basis by the insurance company or a third-party claims-handling company. They often work for an independent adjusting firm and are called in when there is a high volume of claims, such as during catastrophic events or natural disasters. They process claims on behalf of the insurance company and are paid per assessment.

Public Adjusters

Public adjusters, also known as private adjusters, are hired by the policyholder and work exclusively for them. They are typically self-employed and paid a percentage of the final claim settlement amount. Public adjusters help policyholders navigate the insurance claim process, ensuring they receive a fair and accurate settlement. They evaluate damages, estimate repair or replacement costs, help policyholders understand their insurance policies, and negotiate with the insurance company.

Adjuster Licensing and Certifications

Insurance adjusters are licensed at the state level in the US. While the specific requirements vary by state, there are some general steps and considerations to keep in mind when pursuing an adjuster license. Here is a comprehensive guide to help you understand the process and requirements for obtaining an adjuster license:

Step 1: Understand the Different Types of Adjuster Licenses

There are typically three main types of adjuster licenses:

• Company (Staff) Adjuster: These adjusters are salaried employees of a specific insurance company and handle claims only for that insurer.
• Independent Adjuster: Independent adjusters work for an adjuster firm that can represent multiple insurers. They settle claims for the insurer's customers.
• Public Adjuster: Public adjusters are independent contractors who represent the financial interests of the policyholder or insured individual. They are hired and paid by the policyholder to negotiate and settle their claim.

Step 2: Check Your State's Requirements

Different states have different requirements for obtaining an adjuster license. Some states require passing a state exam, while others may accept a designated home state (DHS) license or have prelicensing education or work experience requirements. It is essential to research and understand the specific requirements for your state before initiating the licensing process.

Step 3: Complete an Adjuster Training Course

Many states mandate that insurance adjusters complete an approved adjuster training course as a prerequisite for licensing. These courses provide valuable knowledge and skills related to insurance adjusting and can help you meet the educational requirements for your state. Some states may also accept certain designations or certifications in place of the training course.

Step 4: Pass the Adjuster License Exam

If your state requires an exam, you will need to demonstrate your knowledge by passing the state insurance adjuster license exam. This exam covers various topics, including property and liability insurance concepts, casualty and liability insurance, state-specific laws, and adjusting practices. Preparing for this exam is crucial for your success.

Step 5: Submit Your Adjuster License Application

After completing the necessary training and/or exam, you will need to submit your adjuster license application to your state's Department of Insurance or equivalent authority. This process typically involves providing personal and background information, paying the required fees, and submitting any necessary fingerprints or additional documentation.

Step 6: Apply for State Reciprocity (Optional)

While not mandatory, applying for state reciprocity can significantly enhance your ability to process claims in neighbouring states or during disasters. This is especially relevant if you plan to work as a catastrophe adjuster, as you may need to travel to different areas affected by natural disasters. Obtaining reciprocal licenses can streamline your ability to work across multiple states without completing additional training or education requirements.

Additional Considerations:

• Fees: The cost of obtaining an adjuster license can vary depending on your state. Application fees, license identification fees, exam fees, and other charges may apply. Be sure to review the fee structure for your state.
• Continuing Education: Many states require licensed adjusters to complete continuing education credits periodically to maintain their licenses. This helps adjusters stay up to date with industry changes and best practices.
• Renewal: Adjuster licenses typically have an expiration date, and you will need to renew your license periodically. Stay informed about the renewal process and deadlines for your state to ensure your license remains valid.

Adjuster Work Hours and Salary

The salary of an insurance adjuster depends on several factors, including location, education, and experience, and the type of adjuster.

Salary Range

The average salary for an insurance adjuster in the United States is around $60,000 per year, with a range of $40,000 to $80,000. The hourly rate for insurance adjusters typically falls between $19 and $38 per hour, with an average of $27.56. However, it's important to note that salaries can vary significantly, with some adjusters earning as low as $46,000 or as high as $100,000 or more annually.

Entry-level Salary

For those starting out in the field, the average entry-level salary for an insurance adjuster is approximately $40,000 per year. With 0-2 years of experience, the average salary is slightly higher at $35,106.

Senior-level Salary

Senior-level insurance adjusters with 7-12 years of experience can expect significantly higher earnings, with an average annual salary of $91,266.

Staff Adjuster vs Independent Adjuster

The type of adjuster also plays a role in salary differences. Staff adjusters, who are salaried employees of an insurance carrier, typically earn between $40,000 and $70,000 per year. On the other hand, independent adjusters are independent contractors who often earn higher incomes, especially during catastrophe claims. While it's challenging to determine their annual salary due to variable working hours, independent adjusters can make over $100,000 in a good year.

Work Hours

The work hours for insurance adjusters can vary depending on the specific role and the nature of the claims they handle. Auto claim adjusters and desk adjusters typically work 60-70 hours per week, with desk adjusters working up to 80 hours during a natural catastrophe. Property insurance adjusters may also work 60-70 hours per week and earn a percentage of the full claim amount.

Adjuster Job Outlook

The job outlook for insurance adjusters, also known as claims adjusters, is varied. Some sources state that the demand for insurance adjusters is projected to decline by 3% from 2022 to 2032, with a projected job growth rate of -6% from 2018 to 2028. This decline in employment is thought to be due to the increasing automation of tasks and improvements in data collection and processing speed. However, despite this projected decline, there are still expected to be around 21,500 openings for claims adjusters each year over the next decade, due to the need to replace workers who transfer to other occupations or exit the workforce.

On the other hand, one source states that the overall job outlook for insurance adjusters has been positive since 2004, with vacancies increasing by 22.22% nationwide and an average growth of 1.39% per year. Demand for insurance adjusters is expected to increase, with an estimated 24,340 new jobs by 2029, representing an annual increase of 0.94%.

The salary for insurance adjusters varies depending on the source and the year. In 2023, the median annual wage for claims adjusters was reported to be $75,050, with the lowest 10% earning less than $47,390 and the highest 10% earning more than $105,440. In 2024, the average claims adjuster salary was reported to be $51,116, and in 2023, the median pay was stated to be $63,670.

Adjuster Investigative Work

Insurance adjusters are responsible for evaluating insurance claims to determine liability and calculating settlement amounts. They work on behalf of insurance companies and are often called in to assess property damage resulting from disasters, such as floods, fires, or accidents.

The investigative work of an insurance adjuster involves gathering information and evidence related to the incident. This includes taking photographs of the property damage, obtaining statements from everyone involved, and reviewing relevant documents such as police reports, video footage, and previous insurance claims. Adjusters may also need to consult with experts, such as accountants, architects, engineers, or lawyers, to seek their evaluation of the claim.

During the investigation, adjusters must determine whether the insurance policy covers the loss claimed and ensure that the claim is not fraudulent. They may need to contact the claimant's doctors or employers for additional information, especially if the claim is questionable.

Once the investigation is complete, adjusters prepare a report for claims examiners to review. This report includes details of the incident, damage assessment, and the calculated settlement amount. If the claim is approved, adjusters negotiate with the policyholder and settle the claim.

The investigative process can vary depending on the type of adjuster. For example, a public adjuster, who works on behalf of the policyholder, aims to get the highest possible settlement amount for the insured. On the other hand, a company adjuster or independent adjuster works in the interest of the insurance company, aiming to save as much money for the company as possible.

Frequently asked questions