How Insurance Adjusters Are Paid to Undervalue Claims in Personal Injury Cases

When you file a personal injury claim, it’s crucial to understand that insurance adjusters are not neutral parties. Their primary goal is to save money for their employer—the insurance company—by settling claims for as little as possible. What many claimants don’t realize is that adjusters are often evaluated, rewarded, and even financially incentivized to undervalue claims.

This practice can make it challenging to secure the compensation you deserve. Understanding the motivations behind an adjuster’s actions can help you navigate the claims process more effectively and avoid costly mistakes.

How Adjusters Are Paid and Evaluated

Insurance adjusters are tasked with assessing claims and negotiating settlements, but their performance is closely tied to how much money they save the company. Here are some key ways adjusters are paid and evaluated:

1. Performance Metrics

Insurance companies use metrics to evaluate adjusters, including:

• Claim Closure Rates: Adjusters are rewarded for quickly resolving claims, which often involves pressuring claimants to accept low settlements.
• Average Payout Amounts: Adjusters are assessed based on the average amount paid per claim. Lower payouts reflect favorably on their performance.
• Reserves Management: When an insurance company sets reserves (the amount they expect to pay for a claim), adjusters are often incentivized to settle for less than the reserved amount.

2. Financial Incentives

Many insurance companies offer bonuses or commissions to adjusters who meet or exceed certain goals, such as:

• Reducing Payouts: Adjusters who consistently settle claims for less than the reserved amount may receive performance-based bonuses.
• Avoiding Litigation: By settling claims quickly and cheaply before claimants hire attorneys, adjusters help the company avoid costly legal expenses, which can lead to additional rewards.
• Meeting Quotas: Adjusters are often required to meet monthly or quarterly quotas for claim closures, pushing them to resolve claims quickly, even if it means undervaluing them.

3. Training and Strategies

Adjusters are trained to use various tactics to minimize payouts, such as:

• Disputing Medical Bills: Using claims evaluation software to argue that medical expenses are excessive or unnecessary.
• Downplaying Injuries: Questioning the severity of injuries or suggesting they were pre-existing.
• Delaying Claims: Drawing out the process to pressure claimants into accepting lower offers out of frustration or financial need.

The Role of Claims Evaluation Software

Insurance companies often rely on software like Colossus to calculate settlement values. While these systems provide adjusters with a baseline offer, they are designed to work in favor of the insurer by:

• Assigning lower values to certain injuries.
• Flagging high-cost treatments as unnecessary.
• Calculating pain and suffering based on rigid multipliers that often undervalue non-economic damages.

Adjusters can manipulate these outputs to justify low settlement offers, knowing that many claimants lack the expertise to challenge them. Colossus and similar programs have been widely criticized for undervaluing claims.

Why Insurance Companies Incentivize Lower Settlements

Insurance companies are for-profit businesses, and reducing claim payouts directly impacts their bottom line. By undervaluing claims:

• They Protect Profits: Every dollar saved on a claim contributes to the company’s financial success.
• They Control Reserves: Settling claims, especially car accident claims, for less than the reserved amount helps improve financial metrics, making the company appear more efficient.
• They Reduce Litigation Costs: By discouraging claimants from pursuing legal action, insurers avoid the higher costs associated with court cases.

These incentives create a culture where adjusters prioritize cost-saving over fairness, often at the expense of injured victims.

How Adjusters Undervalue Claims

To minimize payouts, adjusters use a variety of tactics:

• Disputing Liability: Arguing that the claimant shares some or all of the fault to reduce the settlement amount.
• Questioning Medical Treatment: Suggesting that treatments were excessive, unrelated, or not necessary for the injuries.
• Downplaying Non-Economic Damages: Offering minimal compensation for pain and suffering, even in cases of significant trauma.
• Exploiting Delays: Prolonging the claims process to pressure claimants into accepting lower offers out of financial desperation.
• Using Recorded Statements: Taking statements early in the process to find inconsistencies or admissions that can be used to lower the claim’s value.

How to Protect Yourself Against Adjuster Tactics

To ensure you receive fair compensation, it’s important to take proactive steps:

1. Seek Legal Representation

Hiring an experienced Naperville personal injury attorney levels the playing field. Attorneys understand the tactics adjusters use and can negotiate aggressively to secure a fair settlement.

2. Document Everything

Keep detailed records of your medical treatments, expenses, and correspondence with the insurance company. This documentation can help counter adjusters’ attempts to dispute your claim.

3. Avoid Recorded Statements

Do not provide a recorded statement without consulting an Illinois injury attorney. Anything you say can be used to undermine your claim.

4. Be Patient

Insurance adjusters rely on claimants’ frustration and financial need to push for lower settlements. Avoid settling too quickly, especially before you fully understand the extent of your damages.

5. Understand Your Claim’s Value

An experienced car accident attorney can help you calculate the full value of your claim, including medical expenses, lost income, and non-economic damages like pain and suffering.

Why You Need a Personal Injury Attorney

Given the financial incentives adjusters have to undervalue claims, navigating the process alone can be risky. A knowledgeable personal injury attorney can:

• Challenge Unfair Practices: Attorneys know how to counter tactics like disputing medical bills or downplaying injuries.
• Negotiate Aggressively: With an attorney advocating for you, insurers are less likely to make low-ball offers.
• Level the Playing Field: Attorneys have the experience and resources to ensure your claim reflects the full extent of your damages.

Contact the Top-Rated Illinois Personal Injury Attorneys at John J. Malm & Associates for Help with your Claim

Insurance adjusters are often evaluated and rewarded for minimizing payouts, creating a system that prioritizes company profits over fairness to claimants. By understanding how adjusters are incentivized and taking steps to protect yourself, you can avoid costly mistakes and secure the compensation you deserve.

At John J. Malm & Associates, our award-winning Illinois injury attorneys have extensive experience fighting for injured victims and holding insurance companies accountable. If you’ve been injured, don’t face the claims process alone. Contact us today for a free consultation and let us help you secure the settlement you’re entitled to.