Wednesday, June 21, 2017

The Evolving Role of the Claim Adjuster in Latin America

Borrowing a definition from the by-laws of the Chartered Institute of Loss Adjusters (CILA), a loss adjuster is “a person whose predominant activity is the investigation, management, quantification, validation and resolution of Property, Casualty or any other losses (whether insured or not) arising from any contingency and the reporting thereof”. 

The profession of loss adjusting came into being after the Great Fire of London in 1666. With the introduction of property fire insurance, independent surveyors began using their expertise to evaluate and settle claims. In 1941, prominent claims experts formed the Association of Fire Loss Adjusters, which later developed into “The Chartered Institute of Loss Adjusters” in 1961. 

It is difficult to say exactly when the loss adjusting profession commenced in Latin America but, by the early 1900s, associations of loss adjusters had been formed, such as the Mexican Adjusters Association (1935) and the Argentine Association of Insurance Adjusters and Experts (1937). In the past two decades, the insurance authorities of the different Latin American nations began to regulate the activity of loss adjusters issuing professional licenses or authorizations -which are now required in Argentina, Bolivia, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panamá, Paraguay, Peru and Venezuela.  

The “Traditional” vs. “Independent” Role of the Adjuster: 

In general, adjusters in Latin America are designated by the insurer with the main purpose of providing insight on a claim. Adjusters further contribute by participating in case-handling discussions and making recommendations. Written reports are directed to insurers and are not normally shared with any other party. Adjusters are expected to help protect the insurer’s rights against waiver, and will also typically represent insurers in negotiating and settling a claim within authorized limits as per their instructions. In short, in fulfilling their “traditional” role, adjusters may be viewed as working for insurers. 

But Peru and Chile have taken some legislative steps in another direction. As per the Peruvian Insurance Statute, the adjuster should be impartial and independent, and the insured has a right to participate in his/her appointment. The adjuster's findings are included in reports which are given to the insured and insurers for review at the same time. These rules are developed in more detail in Resolution 3202-2013 issued by the insurance regulator "Superintendencia de Banca y Seguros y Administradoras Privada de Fondos de Pensiones".  This Resolution sets out a procedure based on the adjuster’s final report, which should be issued within 20 days of receiving all necessary information and documents. Claim amounts are not negotiated by the adjuster as per instructions provided by insurers, but rather proposed to the parties in the context of the conclusions included in the reports that have been circulated to both sides. 

As mentioned, Chile has comparable rules, which also support adjusters’ independence and equal access by the parties to their work product.  

These rules have the adjuster assume a more neutral position, probably making his or her conclusions more difficult to overturn for either of the parties. While this legal framework certainly needs to be kept in mind and complied with, if the claim is handled professionally by knowledgeable individuals, the result should be satisfactory to all. 

Published by Daniel Baron*

*Not licensed to practice law in Florida