As an insurance company during catastrophic events, you may not have enough claims adjusters to handle the increased demand. This is when hiring insurance claims processing services can be helpful. Not only do they help you move through the mountain of paperwork, but they also keep your customers happy. If you’re not sure how insurance claims management companies work, you’re not alone. Here’s what you need to know.
Insurance companies hire staff adjusters for everyday claims, also known as employee adjusters or company adjusters. These adjusters work directly for the company as W-2 salaried employees. Independent adjusters are different because though they still adjust claims for the insurer, they don’t work directly as an employee of the company. Instead, they are contracted through a third-party company, or IA firm. The insurance company outsources their excess claims to a third-party claims-handling company, who then assigns it to an independent adjuster.
Through the years, independent adjusters have mostly worked as 1099 independent contractors, but that’s begun to change recently. For liability and legal purposes, employers are now starting to hire independent adjusters as W-2 employees, even if it’s just for catastrophe or seasonal deployment. Being hired as a seasonal employee has similarities to working as an independent contractor, and is used for sufficiently short deployments. Some smaller employers still hire IA’s as independent contractors, but this is becoming rarer in recent years.
Independent adjusters and staff adjusters have different licenses and licensing requirements. One of the biggest differences is who they are appointed to. Staff adjusters are legally appointed to their employers, but independent adjusters are appointed to themselves. For example, if Mary works for Acme Insurance as a staff adjuster, she’d apply for a license that listed her appointment as Acme. Once licensed, she can adjust claims for Acme but is not allowed to handle claims for another company without first changing her appointment. Independent adjusters, on the other hand, are self-appointed. They list their own name as the appointing entity, so they are legally able to handle claims for any company they feel like.
Also, to become a licensed independent insurance adjuster in Arkansas, a person must have at least a year of experience or work under the direct supervision of a licensed adjuster for 1 year after licensure, as opposed to staff adjusters who can be trained and licensed on the job.
Insurance claims management companies exist out of statutory and economic necessity. It would be extremely impractical for an insurance company to continually staff all the adjusters they need to quickly handle the massive number of claims that arise when a major catastrophe hits. Because of this, insurers and insurance claims processing services have built a relationship to handle major events or increases in everyday claims. If you need help handling an influx of claims, contact Action Claim Service today!