Loss Adjustment

Loss adjuster is an evaluator of damages. In foreign countries, especially in the USA and also in West Europe, this is an integral part of the insurance system. Loss adjusters are independent companies involved in the process of settlement of damages, as well as in the process of negotiating in the form of evaluation or assessment of risks. However, the most important activities include – as can be seen from the name – expert opinions on losses, especially their evaluation, in the context of insurance or reinsurance clauses and policies.

The history of loss adjustment in the Czech Republic (apart from visits of foreign experts sent especially by reinsurance companies to solve more serious damages in the past) dates back to approximately 1993. But recently, especially after the floods in 2002, when insurance companies often lacked capacities for dealing with the huge amount of flood damages, this area have come through significant development.

Using services of a loss adjuster brings the following advantages:

- guarantee of independence of the developed opinion – in many cases the independence of opinions enables to solve difficult communication between the injured/damaged party and the insurer any may prevent complicated lawsuits
- knowledge of the insurance business – evaluation of occurrence of loss from the view of the insurance conditions / policy
- handling of losses regardless of the branch (accidental damage)
- reduction of work load of a busy loss adjuster of the insurance company

The activity of a loss adjuster is not that of an Independent Loss Adjuster according to Act No. 38/2004 Sb. on Insurance Intermediaries and Independent Loss Adjusters and on Amendment to the Trade Licensing Act (Act on Insurance Intermediaries and Loss Adjusters) from 17 December 2003.

The independent loss adjuster performs, on the basis of the contract concluded with the insurance company, on the insurance company’s behalf and at its expense, the survey necessary for determination of the extent of the insurance company’s obligation to pay insurance benefit on the basis of the arranged insurance. The provisions of § 10 Par. 1 of the Act mentions the survey needed for determination of the extent of the insurance company’s obligation to pay. This means determination of the legal foundation of the claim for the insurance benefit, making of documentation, determination of the extent and amount of the obligation to pay including any reduction of the insurance benefit, salvage costs, performance of connected administrative acts etc. A single act performed by an expert thus cannot be considered the activity of a loss adjuster (from the letter of Mr. Přikryl from the Ministry of Finance of the Czech Republic).

Loss adjuster does not determine the legal foundation of the insurance benefit. Loss adjuster is a consultant, dealing with technical and economic issues, not legal ones. Loss adjuster does not commit the insurer to pay and does not act on behalf of the insurance company and at its expense.

For more, see: http://www.cap.cz/kontejner.aspx?id=43
especially Question No. 2:

Question: Do loss adjusters fall within the force of the Act, it their activities include elaboration of expert answers, e.g. calculation of the amount of loss in prices according to the customer’s requirements (new, time…), determination of the technical cause of the damage etc., but not determination of the legal foundation of the insurance benefit?

Answer from the Ministry of Finance: These activities do not fall within the force of Act No. 38/2004 Sb., because there is not fulfilled the basic condition, i.e. a to determination of the legal foundation of the claim for insurance benefit as the basic element of the activity of the Independent Loss Adjuster.