1. Claims Adjusting Objectives Complying with contractual promise Achieving profit objective Collection of information Marketing Underwriting Actuarial Definitions First party = claims by policyholder Third party = claims against policyholder

2. Claims Environment External General public Plaintiffs’ attorneys Defense attorneys State regulators Licensing Consumer complaints Market conduct audits Unfair claim settlement practices legislation Documentation Communications Settlement standards Internal Marketing Underwriting Legal Training

3. Organization of Claims Function Physical Organization Centralized/decentralized By product or line of business Personal/commercial Property/liability

4. Organization of Claims Function Management Structure Claims managers Examiners Supervisors Adjusters Independent adjusters Producer claim services Public adjusters Other claim personnel Cause and origin experts Appraisers Reconstruction experts Private investigators Rehabilitation experts

5. Claim Adjusting Process Questions Is the loss covered? Is the policyholder or insurer legally liable? What are the damages? Coverage Insuring agreement Exclusions Conditions Response to coverage issues Reservation of rights letter Filing for declaratory judgment action

6. Claims Adjusting Process Liability Sources of liability Statutes Contracts Torts Intentional Negligence Strict or absolute liability Investigation of liability Statements Inspections Document review

7. Claims Adjusting Process Damages Property damage Bodily injury damages Medical Loss of earnings Pain and suffering Consortium (Sex, society and services) Future damages Punitive damages Survival and wrongful death Extra-contractual damages

8. Loss Reserving Case reserves Judgment Average value Tabular IBNR (Incurred But Not Reported) Reserving problems Stair-stepping Inconsistency

9. Claim Settlement Pre-settlement negotiation Persons involved Agent Policyholder Claimant Witnesses Attorneys Negotiation of settlement Denial of claims

10. Settlement Documents Proof of loss General release Joint tortfeasor release Covenant not to sue High/low agreements Release for injury to a minor Parent’s release and indemnity agreement Nominal releases Release draft Telephone recorded releases

11. Litigation Alternatives to litigation Arbitration Mediation Rent-a-judge Settlement conferences Summary jury trials Selection and direction of outside attorneys Decisions relating to defense Defend or settle Nuisance settlements Subrogation

12. Measuring Claim Performance Financial measures Loss ratio Accuracy Consistency Claim-handling performance Turnover of claims Average cost of settlement Litigation rates Average caseload Staff turnover