Claims adjustment expenses (CAEs) are the various costs insurance carriers may incur in handling and resolving insurance claims. These claims adjustment expenses can represent a significant operational cost for insurance carriers, which may impact their processes and operational decision-making.
What are claims adjustments?
Claims adjustments are the processes an insurance company carries out when reviewing, investigating, and determining claim settlements. When a policyholder files an insurance claim, the insurance company may perform a combination of the following claims adjustment processes:
- Verify the policy’s coverage
- Investigate the details of the claim
- Determine liability where applicable
- Calculate potential payments owed
- Negotiate or settle claims
Claims adjustment exists to help determine whether a claim is covered and to what extent, which may be based on policy language and applicable law.
Claims adjustment expenses
Claims adjustment expenses are typically the insurance carriers’ costs for investigating, evaluating, negotiating, and settling insurance claims. This may include both internal and external costs.
Internal costs
Internal costs are expenses within the carrier’s organization, which may include:
- Salaries for claims adjusters
- Compensation for claims managers
- Staff wages
- Administrative overhead
External costs
External costs may differ widely from one claim to the next. They might include:
- Third-party fees to outsourced professionals
- Costs for other investigative services
- Attorney fees
- Court costs
The role of claims adjusters in the claims process
Claims adjusters are usually the primary evaluators involved in investigating and assessing claims. Their responsibilities may include:
- Reviewing claims
- Assess policyholder’s insurance policy
- Gathering evidence, like policy reports
- Determining settlement amounts
Factors that affect claims adjustment expenses
There are numerous factors that may impact claims adjustment expenses. Different claims may require different resources. If a claim is more complex, it may require:
- More adjuster hours
- Considering coverage terms for multiple parties
- Specialized investigators or consultants
- More negotiation for high-dollar claims
- Considerations for long-term medical needs
Learn about your coverage options
Infinity Insurance Agency, Inc. (IIA) works with carriers that offer various personal auto insurance policies. If you’d like to explore your coverage options, you can discuss your options with one of our Spanish bilingual agents.
Call IIA at 1-855-478-3705 or get a free quote online today.