As discussed last month, there is little standardization amongthe states regarding adjuster licensing. Twenty-nine states requirean exam administered by the insurance department to obtain anadjuster's license, and most states that license either staff orindependent adjusters require continuing education (CE), usually 12to 24 credit hours every one or two years. A few require even morethan that, especially in ethics. A handful of states have specialrequirements. Massachusetts requires licensees have two years ofexperience and 15 hours of continuing education every three yearsto maintain the license. Public adjusters are also licensed in moststates. Even states that do not issue adjuster licenses stillrequire continuing education for insurance adjusters. For example,a minimum of nine hours of ethics education is mandatory inCalifornia, and CE units are also required in fraud prevention.Most states require three to six hours of ethics annually or everytwo years.

The states requiring CE generally do mean “continuingeducation,” not just listening to some luncheon speaker ata claims association meeting, unless that speaker has pre-arrangedfor a certain number of continuing education units. As anoccasional speaker, I have had to submit an outline of what willactually be taught, and it must be educational. The state thenassigns CE units to the presentation. Too many claims associationswould rather have a former football hero tell how he made a famoustouchdown then discuss insurance best practices. Occasionally abook may be approved for CE units, but the number of CE unitsearned may differ by state.

The Difference Between Education andTraining

In the adjusting business these two words have often beenconfused. Valuable employees have been sent for “training” whenwhat they really needed was education. It is one thing to learnhow to read an insurance policy or process a claim; it isquite another to understand what the policy covers or why the claimmust be processed correctly. Policy declarations give the who,when, where, and how much, but it requires a bit more understandingto decipher what and why. As journalism majorsback in the old newspaper days were taught, the “lead” had tocontain the who, what, where, when and why of the story, written insuch a way that it would attract the reader to the entire article.Writing was triangular (): a short lead to catch the eye, then thedetails.

Insurance and claim reporting are similar. A headline mightread, “Man Bites dog.” The lead could read, “Attracted by a roastbeef sandwich in a paper sack, a neighbor's dog knocked down JohnJones as he was heading to work on the morning of Tuesday, August3, on Fifth Street, and Jones subdued the beast by biting it on itsear.” Then come the details, “Jones, of 213 Fifth Street, wasfamiliar with 'Rex,' an overly friendly bulldog, but when the dogpounced at the sack with the large sandwich inside, Jones wasknocked down, but not bitten. He struggled to prevent the dog fromdemolishing the sandwich and bit it on its ear until it gave up andlicked Jones's face instead.” End of story. Too many claim reportssimply give the headline (“the insured rearended the claimant”),but leave out the lead and details that might suggest alternativeliability or coverage factors than the headline suggests.

In insurance, the headline might be “Personal Auto Policy,” andthe lead is the declarations, listing the insured, wherethe auto is garaged, what kind of auto is covered, for what amountsit is covered and what perils are covered, along with the policyperiod and premium. A computer can figure all that out. But thencome insuring agreements, exclusions, definitions and conditions.That's the heart of the story: what happened to the insured's auto,whether that event was covered, and whether or not the insured isliable to someone else. It is the adjuster's job to figure out ifthe coverage applies to the loss. These factors require seriousthought, study and understanding, and training alone may beinsufficient to teach such skills. It is one thing to investigate,another to evaluate and make correct determinations. Computersdon't do that.

Adjusters handling National Flood Insurance Program or federalcrop insurance claims have even stricter requirements, usuallyincluding actual classroom study of the coverage and testing ofproficiency on the computer software used to estimate damage. Sinceclaims involving flood often also involve windstorm insurance,accurate coverage decisions are mandatory.

The Claims Education Business

Clearly many adjusters are lacking good claims education,otherwise there would not be the hundreds of insurance litigationcases clogging the courts each month, with attorneys arguing whatsome adjuster or supervisor should have known in order to avoid thelawsuit. Litigation is usually a result of adjusters just beingtrained, not educated, plus a lack of quality experience. Forexample, in the May 1, 2014, issue of Insurance LitigationReporter (Thomson Reuters West) the lead story discussed howan earlier claim within the “claims made” policy period establishedcoverage for a later class action. In another, the Alabama SupremeCourt ruled that an owner's claim for defective workmanshipconstituted an “occurrence.” Then there was a gas leak pollutiondispute in Wisconsin, and an Indiana Supreme Court decisionregarding underinsured motorist coverage reduced by a workerscompensation award. Each involved decisions on whether thecoverages applied, things that adjusters need to know andunderstand, or seek guidance on before issuing a denial. It takesmore than just knowing how — adjusters also need to know what andwhy.

A good multiline property and casualty adjuster needs to knownot only coverage, but how various courts have interpreted coverageissues. Therefore much of what is in the Thomson Reuters West textsinvolve court decisions on coverage issues. Courts frequently takediffering positions on coverage issues. For example, what isconsidered a “pollutant” in one state under the policy definitionmay not be considered a “pollutant” in the adjoining state.Sometimes education requires research. The easy way out is to ask alocal lawyer, but a good attorney is going to do some researchbefore answering.

What is Education?

The dictionary suggests that education is the process ofdeveloping knowledge, especially by formal schooling. It involvesteaching and training, development of the mind, character andability, and systematic study of methods and theories. It ison-going.

Every day there are ads on television for commercial collegesthat will “train” students in a variety of fields: medical homecare, computers, business, bookkeeping, etc. “Come on in and signup for a student loan. You can graduate to the career you desirewith an Associate Degree.” These are all good goals, but they maynot necessarily represent real education. Education is not the endgoal, it is just the beginning, the instilling of curiosity abouteverything else: literature, science, art, the world. Allgraduation may bring many such students is a world of debt thatwill hamper them for decades, forcing them to hold two jobs andnever give them the opportunities to really obtain that broadeducational background discussed in Part One of this series. Theywill, perhaps, learn some basics, and that may be enough to get ajob, but not necessarily a vocation. Employers will want to dothings differently from what is taught in a classroom.

The Need for Common Sense

One thing that neither training nor education will instill insomeone is common sense. Sometimes the smartest people fail to seethe most practical solution. Generally, common sense does notresult from either training or education; it is innate, a naturalwisdom that may not earn any continuing education units, but whichhelps to make a good adjuster. Next month we shall look at therequired study in adjuster ethics.