Fiduciary Duty and Ethics
Ethical challenges for adjusters
-bias for insurer -dealing with unruly claimants (desperate for money, needy, rude, insulting) -bias for claimant (claimant endured emotional catastrophic loss and is in major need of money)
Liaison
The adjuster is a liaison between the insurer and the claimant -insurers don't want to pay more than is necessary -claimants want to collect as much as possible
Fiduciary Duty
a legal relationship of confidence and trust, requiring honesty and good faith
Ethical behavior
acting in accordance with these values so as to make good decisions
Advising of rights
adjuster should not fail to advice claimants of all their claim rights in accordance with the terms and conditions of the contract and of applicable laws
Traumatized claimants*
adjusters should not attempt to negotiate with or obtain any statement from claimants or witnesses who appear to be in shock or under severe emotional distress
Salvage Misappropriation*
after a loss, salvaged property usually goes to: -insured -insurer, to recoup losses paid
Truthfulness*
make truthful and unbiased reports of the facts after making a complete investigation
Kickback*
money or favors offered to adjuster in exchange for referring business to specific repair shops or contractors
Avoid Prejudice
never be prejudiced in your investigations, adjustments, or settlements
Ethics
system of moral values
Inducements include*
-cash or in-kind bribes -kickbacks -favors -gifts -trades -sexual favors
Consequences for inducements include
-losing license -bad reputation -lawsuits -jail time
Adjuster's fiduciary duties
-uphold the financial interests of the principal (usually insurer) -be truthful in all representations of principal -ensure claimant receives accurate indemnification
Equal Treatment*
do not favor your nice clients or disfavor your rude clients
The Elderly*
exercise extraordinary care when dealing with elderly clients -take extra cautions to ensure elderly claimant gets a complete and fair settlement -don't let failing memory or impaired cognitive processes disadvantage the claimant -may need to consult claimant's relatives or neighbors to clarify facts
Integrity*
handle every adjustment and settlement with honesty and integrity
Reporting Violations*
promptly report licensed insurance representatives whose conduct violates any insurance law, rule or order
Inducements*
an action, item, or promise made to someone to motivate him toward certain desired actions
Denying or misrepresenting coverage
the adjust must never withhold material information or misinform a claimant regarding his/her rights in order to save money for an insurer
Diligence*
act with speed and care in completing the adjusting process -every claim is important -failure to settle a claim in a timely manner can result in disciplinary action by the insurance commissioner
Witnesses*
adjuster is permitted to interview any witness or prospective witness without consent of opposing counsel or party -avoid any attempt to influence witnesses -provide witnesses with copy of any signed or recorded statements
Disclosure*
adjuster shall disclose all direct or indirect financial interest they have in adjusting a claim
Right to attorney*
adjuster should not advise a claimant to refrain from seeking legal advice, nor advise against the retention of counsel to protect the claimant's interests
competence*
adjuster should not deal with a claim that he is not trained to take on
Release Forms*
adjuster should not draft any form of release, unless approved in writing in advance by insurer
Attorneys*
claimant has right to representation by an attorney -adjuster is prohibited from dealing directly with a claimant who has hired an attorney (i.e. if claimant has attorney, deal with attorney and not the claimant)
Ethical behavior involves
honesty, integrity, fairness, loyalty, thoughtfulness, compassion, & care of the rights of others
Settlement Padding*
increasing the settlement amount dishonestly in order to increase commissions (occurs when adjusters are paid on commission)