The public buys insurance for peace of mind. Adjusters execute the policy obligations that arise from the risks assumed by the underwriters. Therefore, the adjuster’s role in the claims process is an extensive one.
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One of the most critical functions of the claims department is setting accurate reserves for claims. Reserves are funds that the insurer sets aside to pay for claims reported to them. An adjuster upon receiving a claim will post a preliminary reserve as per company policy (process). The file is then investigated and, ideally, within 5 to 7 days the preliminary reserve is adjusted to reflect the probable outcome of the claim and how much is expected to be paid for indemnity and expense.
As additional information is developed on the claim it may be necessary to adjust the reserve further. Reserves are reviewed regularly by the adjuster and the management team to insure they reflect the true value of the claim. Over or under reserving is not something the insurer wants to do because it will negatively impact their financial reports. Therefore, accurate reserving is essential.
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