by Gene, originally published on Axiom
Before I was an adjuster, I was a schoolteacher. Before I was a schoolteacher, I was a preacher. I know a thing or two about standards.
In ministry, or at least the kind I was engaged in, the standard was the Bible and Jesus Christ. Everything was judged against that.
When I entered the public school system as a teacher, I learned they had a standard, too. They call it STAAR (State of Texas Assessments of Academic Readiness) now. In my day (early 2000s), they called it TAAS (Texas Assessment of Academic Skills). Everything we taught we taught to that test. It was vital that the kids do well because our educational ranking and eligibility for important grants depended on it.
Theoretically, the kids would benefit from this standard because they would learn the material included on the test, and, therefore, benefit from the accumulated knowledge.
Then, I became an adjuster and learned it is an industry highly standardized and regulated for the “good of the insured” and the health of the system. I learned policy because the policy is the standard, the bible by which each claim of loss is interpreted. I learned state regulations and DOI requirements because they set and enforce the standards of claim investigation, settlement, and customer service.
It is fair to ask questions, like…
What Is a Standard?
A standard can be a flag or banner representing a country, family, or team. Or “it can be something established by authority, custom, or general consent as a model, or example.”[1]
It can also be “a level of quality, achievement, performance, etc., that is considered acceptable or desirable.”[2]
So, we have terms like…
- “Up to standards”
- “Below standards”
- “Double standards”
- “The gold standard”
A standard, then, as we use it here, is definitely not a banner or flag. It is a value. It is a foundational value. It is the base. It is not everything, but it is something, and that something is the base for everything we do.
What Standards Are Applicable to the Claims Industry?
There are several standards to which an adjuster or anyone associated with claim handling may be subject.
Legal Standards
These may come from
- statutes,
- regulations,
- licensing requirements,
- case law,
- and administrative rules.
Each implies and may impose a standard to be met.
Contractual Standards
These arise from:
- the insurance policy,
- service agreements,
- carrier guidelines,
- vendor contracts,
- adjuster/IA firm contracts,
- and delegated authority.
Technical Standards
These involve such expectations as…
- construction practices,
- repair methodologies,
- measurement protocols,
- estimating databases,
- engineering principles,
- manufacturer specifications,
- and building codes.
Professional Standards
Like…
- competence,
- neutrality,
- reasonable investigation,
- timeliness,
- accuracy,
- communication,
- ethical conduct.
Cultural or Informal Standards
These are always the least visible to the outsider and often the most important to the insider. They include ideas like…
- “This is how we handle these.”
- “We never pay for that.”
- “Reviewers expect this.”
- “That will not get approved.”
- “Stay inside the guideline.”
These subtle little tyrants may not even be written anywhere. They “walk lightly and carry a big stick.” They produce a critical distinction:
A standard may be written, implied, assumed, inherited, or imposed.
Who Decides the Standards?
Even this question opens a few cans of worms. Here they are…
- legislatures,
- regulators,
- courts,
- policy drafters,
- carriers,
- claims executives,
- legal departments,
- compliance teams,
- quality-control departments,
- vendors,
- software designers,
- estimating platform providers,
- industry custom,
- and individual managers.
It is difficult enough to serve two masters. Try twenty or so.
How are Standards Enforced?
I saw one way when I was on a phone call on my very first storm deployment, which happened to be Hurricane Katrina. I had only been an adjuster for about a week. I left security for the chance to do something bigger and there I was, listening to a ranting manager cuss more eloquently than any sailor, firing half of the team on the call. He called them name by name and dismissed them right then from the storm. That was unsettling. Just 24 hours before the raging cusser was relieved of his duties and replaced by a man who would bring calm to my storm and do as much as anyone to open a new path, which I have followed.
Standards are not typically enforced by highly stressed, about-to-blow managers. Thank God. There are other ways and none of them is much more pleasant than that, to be honest.
- licensing discipline,
- regulatory action,
- litigation,
- audits,
- file reviews,
- scorecards,
- authority controls,
- system restrictions,
- management approval,
- compensation incentives,
- vendor rankings,
- retraining,
- discipline,
- or termination (of an adjuster, a contract between carrier and TPA/IA firm, etc).
Deviation from or failing to meet standards never results in good vibrations.
What Happens When Standards Conflict?
We are seeing some things play out between the state of Oklahoma and a couple of large and influential carriers right now. Allegations of interoffice memos and directives not to pay claims that may have warranted at least further investigation.
What happens when:
- a carrier guideline conflicts with the policy?
- a workflow conflicts with the evidence?
- a technical standard conflicts with local practice?
- a speed metric conflicts with a thorough investigation?
- a system recommendation conflicts with professional judgment?
- an internal expectation conflicts with a regulatory duty?
If you are caught in the crossfire of conflicting standards, where do you owe your loyalty? To which standard do you adhere?
Let me put it in simple terms for illustration. A son is told to obey his father. But his father is a criminal who commands his son to participate in criminal behavior. He may be just a child or a teen. To whom is he accountable? Which authority does he obey?
Just so, an employee is instructed, probably off the record, to deny a claim that ought to be paid or further investigated. He knows the policy. He knows the law. He knows his job may depend on his next step.
What is the hierarchy of authority? Is there one?
Here is one to consider, in descending order:
- Law and regulation
- Policy language
- Facts and evidence
- Professional duty
- Organizational procedure
- Custom and habit
Is the organization above the law? Is the person making the decision above the organization? How does one proceed when these are in conflict?
Adjusting a claim is as much an art as a science. You cannot ignore the science—the hard evidence; the apparent truth; the policy, its endorsements and exclusions; the mitigating circumstances of the loss; etc.—but that will not always eliminate the gray areas. Adjusters are called adjusters because they adjust the loss to the claim, they adjust the policyholder’s expectations, they adjust themselves, they adjust…
Sometimes adjusting comes down to a judgment call.
Here’s the Axiom I am driving toward:
Standards are created to make claims handling more consistent and responsible. But when their authority is unclear, their assumptions go unexamined, or their enforcement discourages judgment, standards can produce the very failures they were intended to prevent.
Standards are guardrails. They are not railroad tracks.
In a nutshell,
- Don’t fall short of the standard.
- Don’t be afraid to exceed the standard.
- Don’t fail to examine the standard in light of the evidence.
Do the right thing. Whether you are a state board member, a carrier executive, a claim manager, an adjuster, or a file reviewer, it always comes down to that. Just do the right thing. That doesn’t mean it will always be the thing you feel best doing. You wanted to pay that widow’s claim. It did not meet the standard. The policy did not cover the loss.
The right thing is seldom the easy thing but it is never, ever the wrong thing. It is the standard. Just do it.
My name is Gene. I am a standard-bearer. This is Axiom.
[1] Merriam-Webster Dictionary
[2] Ibid.