Loss Adjustment is Boring – Is it? Well, decide yourself!

I would like to talk about this exciting and stimulating profession of loss adjustment, and what it can do to enhance your personal and communication skills.

Having graduated in Commerce, I joined the captioned firm, not knowing that I was about to enter a profession which would forever change my perspective of the Insurance Industry that is an essential ingredient of any successful working economy.

As an adjuster, I had the opportunity of working on large number of Insurance claims from a variety of fields. I cannot recall any industry that I haven’t visited for the purpose of claim adjustment. One day I could be in a fertilizer plant, the next in a cold storage facility and a third in a hydro electric power station.

What is so special about this profession is that once you get an opportunity to visit a plant/factory, apart from fulfilling your basic function as a loss adjuster you have a marvellous opportunity to learn about the complete process of production, which enhances your overall knowledge of industry.

In my opinion, this profession has anything and everything to offer an employee. As an adjuster, you would expect to meet qualified and experienced people from a variety of disciplines, ranging from Chartered Accountants, Engineers, Solicitors, Lawyers, Scientists and the list goes on. You would appreciate the tremendous amount of knowledge that these professionals possess. A regular interaction with these professionals will do wonders for your ability to communicate and negotiate effectively. Clear and concise communication together with effective negotiation, are today indispensable ingredients for success in any profession. While training and working as a loss adjuster you will gather these crucial skills for furthering your career.

In order to function effectively you would need to possess the following characteristics:

• A thorough knowledge of Insurance Law, its principles and working practices, together with an in depth understanding of Insurance.
• Common Sense, which unfortunately is not always so common.

To develop the above qualities I first completed the Fellowship in General Insurance from The Insurance Institute of India and then proceeded to complete the Advanced Diploma in General Insurance from The Chartered Insurance Institute, UK. I am presently pursuing an MBA from The University of Wales, in Aberystwyth.

The professional examinations of the ascribed institutions like CILA are tough and laborious, yet if you are training as a Loss Adjuster, you get exposed to the practical side of Insurance that extends beyond the mere understanding of policy wordings. Consider this – while studying for ACII, I was facing difficulty in understanding the interpretation of Spontaneous Combustion clause under Fire policy. The clause covers the damage to stocks due to fire following spontaneous combustion. Now, until and unless you have come across the physical evidence of spontaneous combustion, it is extremely difficult to conceive a finite understanding of the topic and accordingly interpret your opinion at examinations. This is where I feel the field experience of loss adjustment helps you grow as a student as well as a professional.

I had an opportunity to visit a Sugar Mill where a claim had been lodged due to a reported fire in Molasses – a saleable by-product obtained from process of Sugar Production. The Molasses forms the feedstock for the production of alcohol in distilleries. While inspecting for the loss, we noted that the subject matter, the Molasses, was stored in vertical steel tanks as well in an open pit. The chemical composition of molasses is such that if exposed to higher temperature it has the natural tendency to decompose/ferment, which de-facto affects it saleability. From our visual inspection of the Molasses (stored in the open pit), it was apparent that due to having been exposed to a high temperature in May (the hottest month in summers in India) the process of fermentation had started and the Molasses in effect was decomposed, yet the important point is that there was no evidence of fire, thus making it difficult to accept liability under the Spontaneous Combustion Clause of the policy which mandates the occurrence of fire for a S.C. claim to become payable. Because of the experience gained through one visit to the site I was able to:

1. Learn about the process of Sugar Production and use this knowledge to my advantage during future claims;
2. Understand in detail the cause of Spontaneous Combustion and apply the practical subtleties of the clause in practice.

Similarly, practical experience from a wide variety of claims has taught me to relate the theoretical aspects of Insurance in accordance with the factual demands of situation. For example, while inspecting a fire loss involving damage to stock in the form of electrical energy meters, I came across a classic illustration of policy interpretation. The Designate of Property Clause under Fire policy states that in the event of a dilemma regarding description of stocks post damage, their identification shall be traced in the books of accounts maintained by claimant. The aforementioned fire caused vast damage to meters which were packed and ready for dispatch. Yet, surprisingly due to an accounting procedure, the meters had been accounted and recorded as WIP (work in progress) in the books despite their being almost at the point of dispatch. Incidentally, the finished meters were insured as WIP under the policy. While it was quite apparent that Finished Meters (Uninsured entity under the issued policy) were damaged, since these were recorded as WIP and declared as such to bankers as per hypothecation agreement against term loan, the liability was accepted in line with the spirit of Designate of Property Clause and not necessarily as per accounting definition of a finished stock. Due adjustments were however made from cost of finished meters to dovetail their identification and corresponding description as Work in Progress.

I can give countless examples of similar instances experienced as an adjuster in other industries however for sake of brevity have presently restricted the article to only two cases. Using the experience gained in practical situations as in the above examples, attempting questions with regard to understanding and interpretation of clauses at professional exams was made easier.

Therefore, I would wholeheartedly encourage and advise all students seeking a career in Insurance and especially Loss Adjustment to go ahead and embrace this exciting profession. If you do decide to follow this route you should certainly consider joining CILA. The institute with its valuable website and publications presents a treasure of knowledge which is going to immensely assist and help you in developing your career and enhance your knowledge of different subjects. The qualifications of the institute are globally recognised and are a symbol of quality and achievement.

The only question that you need to ask yourselves is Do you have it in you to become a successful professional and embark a challenging path towards a rewarding career?

Deepak Shahani

Deepak is a member of Institute and currently training for LCILA examinations.