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What Does Disruption Mean For Independent Adjusters?

Technology has a way of creating new markets and eliminating others. This is called disruption. Learning from the past, the experience with travel agents being replaced with online destination and booking websites, online and electronic books eliminating much of the brick and mortar book stores, digital photography replacing photo printing, are just some of the examples. Yet, there are steps that can be taken to protect organizations from being completely eliminated from the markets. This is achieved by constantly being on a look out to recognizing disruptive innovations and adapting to the upcoming changes early.

It is not a coincidence that the independent adjustment business has been growing over the years. Insurance industry has been rapidly undergoing numerous changes, forcing it to adopt lean models to reduce costs of geographically scattered operations. Independent adjustment firms have become that exact layer of protection against the different types of changes in the industry by being able to offer dynamic, highly elastic, and efficient response and claim assessment models for “Blue Sky” and Catastrophe events. Yet, independent adjustment business is not unique. It follows the same rules of being susceptible to new emerging trends capable to disrupt current business models by also undergoing changes and is being affected by new emerging technologies and trends.

To define the basis for possible disruption, let’s take a look at a typical independent adjuster business model and evaluate the threats. Independent adjustment organizations are very dynamic and are able to quickly respond to incidents in quantity, but they rely highly on the response logistics. The right type and volume of experienced staff can be made available to handle different type of claims. Yet, much of the decision making to quickly and efficiently determine the right size and skill set of the responding force is often made with limited information. The results of claims response can be quite disappointing, incurring undue costs, causing delays, and providing lower quality of service.

The main question is how an independent adjustment organization can be more effective in its response, both from the ROI and from the quality of the service perspective. Learning from many successful tactical response units such as first responders that have a strong ability in coming en masse to handle various types of incidents, a lot of value comes from pre-planning the right level of response. The pre-planning begins with acquiring the right type and detail of information at the earliest possible point.

There have been quite a few technologies in development over the years that can cause disruption. Pictures in auto claims have been able to reduce the deployments of vehicle adjusters in the field and combine the damage estimation and auto repair into a coherent and efficient uniform operation. Property claims have not been able to take advantage of pictures in the same way as the auto claims since more information is required to substantiate the settlement of the property claim. There are different types of policies that require a deeper analysis into the cause of the claim in order to qualify for coverage.

Property claims, however, are beginning to undergo rapid changes by the increasing availability of real-time video technology made possible via a mobile device. Accessing policyholder’s first person view into the size, scope, and type of the damage and being able to collect the visual evidence of the claim remotely without dispatching field adjusters allows insurance carriers to reduce the dependency on the field adjusters for certain types of claims. Getting the insight into the damage also helps deliver accuracy necessary to reduce the size of resources that are required to handle a medium or large size claim.

These technological developments can cause a significant impact to independent adjustment organizations by reducing the number of events they will be called upon to handle. For example, industry initiatives to reduce carrier small size claim load by 30% by handling them remotely via virtual means have already been launched, leading to quite a few worries. Although it is easy to be threatened by new emerging technology, these changes also provide great opportunities.

Taking advantage of such opportunities is the key to adapting the organization for the future and avoiding being disrupted. After all, the most valuable adjuster asset, as noted by the increasing number of virtual adjusters, is the skills and experience in being able to assess the damage and estimate an accurate settlement for the claim. Independent adjustment organizations that view logistics as the primary barrier in preserving current in-person adjuster response business models will find themselves losing their market share by the accelerating industry adoption of real-time visual technology. The key to avoid disruption is to prepare for the technology driven, virtual adjustment capabilities of tomorrow.

What is the best way to adapt and what is the best strategy for evolving independent adjustment business? Since most independent adjusters provide services for many carriers, the first steps are to standardize the data and evidence collection process. This means investing into a technology that supports a uniform claim handling process that can handle policyholder, textual, estimation, visual and audio data. This step optimizes the process in preparation to convert the business from logistically centric physical adjuster response to being able to handle virtual adjustment services.

The second step is to adopt the technology to better communicate with a policyholder in real-time, from a first notice of loss to subsequent interactions. Being able to adopt visual capabilities to help gain a better insight into the full extent of the damage for a given claim would enable organizations to pre-plan tactical responses for different events quickly and efficiently without running the risks of incurring higher costs and impacting the quality of the claim handling process.

In addition, using the same concepts and deploying visual capabilities in the field helps improve the claim handling process itself. Being able to capture and record the information helps minimize the strain on the field adjusters by allowing them to concentrate solely on collecting the visual evidence and handing off the claim processing to be conducted virtually by the office adjustment team. This change in the business process significantly speeds up the claim resolution and offers policyholders immediate assistance they deserve.

Having the means to reach high levels of efficiency and elasticity to reduce costs while being able to continuously increase the value delivered for the carriers will be the key in maintaining the competitive advantage and being able to protect the business from being disrupted. The good news, however, is that disruption does not arrive immediately. It occurs in several stages.

The first stage of disruption is encountered when a new technology, concept, or the new method of its application is being developed and proposed. The second stage occurs when the technology becomes available and is being adopted and evolved to fit within a wide set of business workflows. Then, follows a wide adoption, when the solutions are no longer deemed to be disrupting innovations, but rather become an industry standard or the norm.

With the increasing rate of the smartphone adoption and the growing strengths of the wireless networks, processing power, and rising number of real-time video solutions, the real-time visual technology is no longer a disruption, but is an evolution to become the norm. Organizations that fail to recognize this trend and continue to rely heavily on entrenching the business with logistics, run into the risk of being disrupted. To stay on top, it is important to observe, to innovate, and to adapt.

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