Attempts to Obtain a Quarterly Profit Insurers Lose Multi-Year Profits

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Insurers have, over the last three decades, decimated their professional claims staffs. Experienced claims adjusters were fired and replaced with young, untrained, unprepared people. A virtual clerk replaced the old professional claims handler. Software programs took over from the seasoned interviewer to analyze the right to claims proceeds. Hands-on human skill, empathy and judgment were removed from insurers contact with those to whom they promised to provide indemnity fairly, promptly and in good faith. Money was saved from the insurer’s expense column by paying lower salaries. Within three months of firing the experienced claims people gross profit increased for a quarter of a year or two quarters.

Insurance is a business. Corporate insurers must show their shareholders a profit that pays dividends and increases the share price of the insurer. For centuries insurers understood that catastrophes, firestorms, windstorms, hurricanes and tornados could not be predicted. Some years the insurer will make profits and some years it will incur a loss. The prudent insurer recognized that because of the impossibility of predicting all possible losses, profitability was measured over a decade or several decades. No insurer can accurately measure its profitability for periods of a quarter of a year.

Insurance is a service business. The insurance contract is a collection of promises made by the insurer to those persons or entities who understand that they, or their business, face risks of loss that could destroy the viability of a business or the home of a family. Insurers promise to pay to protect the insured against the risks of loss the insured faces. The person or entity insured relies on the professionalism of the employees of the insurer who are called upon to resolve the claims of the insured and provide the protection promised by the policy.

Since people face a material loss to a house, factory, office, or commercial structure rarely, if at all. Insurance spreads the risk faced by many so that it can indemnify the few who actually suffer a loss. It is the claims person who was created to work with the insured to keep the promises made by the policy. If the claims person is inexperienced, untrained and not able to deal professionally with an insured the promises will not be kept. Unhappy insureds will leave the insurer for another and word of mouth of unhappy insureds will devastate the sales of the insurer.

Insurers have, over the last three decades, decimated their professional claims staffs. Experienced claims adjusters were fired and replaced with young, untrained, unprepared people. A virtual clerk replaced the old professional claims handler. Software programs took over from the seasoned interviewer to analyze the right to claims proceeds. Hands-on human skill, empathy and judgment were removed from insurers contact with those to whom they promised to provide indemnity fairly, promptly and in good faith. Money was saved from the insurer’s expense column by paying lower salaries. Within three months of firing the experienced claims people gross profit increased for a quarter of a year or two quarters.

Insurance is a business. Corporate insurers must show their shareholders a profit that pays dividends and increases the share price of the insurer. For centuries insurers understood that catastrophes, firestorms, windstorms, hurricanes and tornados could not be predicted. Some years the insurer will make profits and some years it will incur a loss. The prudent insurer recognized that because of the impossibility of predicting all possible losses, profitability was measured over a decade or several decades. No insurer can accurately measure its profitability for periods of a quarter of a year.

Insurance is a service business. The insurance contract is a collection of promises made by the insurer to those persons or entities who understand that they, or their business, face risks of loss that could destroy the viability of a business or the home of a family. Insurers promise to pay to protect the insured against the risks of loss the insured faces. The person or entity insured relies on the professionalism of the employees of the insurer who are called upon to resolve the claims of the insured and provide the protection promised by the policy.

Since people face a material loss to a house, factory, office, or commercial structure rarely, if at all. Insurance spreads the risk faced by many so that it can indemnify the few who actually suffer a loss. It is the claims person who was created to work with the insured to keep the promises made by the policy. If the claims person is inexperienced, untrained and not able to deal professionally with an insured the promises will not be kept. Unhappy insureds will leave the insurer for another and word of mouth of unhappy insureds will devastate the sales of the insurer.

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