Claims Handling Excellence | Property Insurance Coverage Law Blog

Barry Zalma has long been a respected voice in the insurance law and claims community. His insights into what constitutes excellence in claims handling should serve as both a guide and a mirror for the insurance industry. In an article published on IRMI.com, Professional Insurance Adjusting and Insurance Fraud, Zalma lays out a clear and uncompromising standard for what a professional claims department should look like:

Excellence in Claims Handling

An insurer must work intelligently and with vigor to create a professional claims department. What type of person works in a claims department?

• People who can read and understand the insurance policies issued by the insurer
• Those who understand the promises made by the policy and their obligation, as an insurer’s claims staff, to fulfill the promises made
• Employees who are all competent investigators
• Those with empathy and who recognize the difference between empathy and sympathy…

. . .

• Employees who understand how to repair damage to real and personal property and the value of the repairs or the property

Without competent insurance claims professionals, insurers may face expensive and counterproductive litigation.

To avoid claims of bad faith, punitive damages, avoid losses, and make a profit, insurers must maintain claim staffs who are dedicated to excellence in claims handling. That means they will make sure every promise made in every policy is satisfied. Insurance training is available across the country through correspondence courses, in local colleges and universities, and from law firms that provide training as a marketing tool….

In addition, the insurer must institute a regular program of auditing claims files to establish compliance with the subjects studied. There is no quick and easy solution. Training takes time; learning takes longer. The insurer’s management must support and reinforce training regularly.

Zalma’s message is straightforward. Excellence in claims handling is not optional. Instead, it is essential. Yet the modern insurance industry often seems to drift in the opposite direction. Instead of prioritizing the quality and integrity of claims practices, many insurers have become preoccupied with managing “severity,” “leakage,” and “cycle time.” These metrics dominate executive dashboards and incentive structures, yet they can quietly erode the very excellence Zalma describes.

It is fair to ask, “How much money is the insurance industry underpaying and delaying because it fails to live up to the standard Zalma has set?” The true cost of mediocrity in claims handling is not just borne by policyholders. These costs reverberate through the courts, local communities and their economies, and the insurers’ own reputations. Every underpaid or delayed claim creates friction, public distrust of the insurance product, and litigation that might have been avoided had claims departments been staffed, trained, motivated, and empowered to fulfill their fundamental purpose of keeping the insurer’s promises. Claims adjusters are promise keepers if they are allowed to do so.

When insurers treat claims departments as profit centers rather than trust obligations, they risk missing Zalma’s central truth. A claims department dedicated to excellence is not a cost but a required investment in long-term profitability, customer retention, and brand integrity. The companies that ignore this reality may find themselves trapped in cycles of litigation, regulatory scrutiny, and policyholder alienation.

Perhaps the industry should spend as much energy measuring the costs of underpayment and delay as it does tracking and making up fictionalized numbers lost by insurance fraud. If Zalma’s standards were the norm rather than the exception, we might see not only fewer lawsuits but also a restoration of trust in an industry that too often seems to forget what it was created to do—protect people in their times of loss.

I want to applaud those carriers that are viewed by property claims professionals as being the best when it comes to payment and keeping the claims promise. In my speeches and presentations, I am now collecting votes for the residential and commercial property carriers who are the best at paying claims, and will publish the results. To allow balance, I will also publish the companies that are viewed as being the worst at paying residential and property insurance claims. The results should be interesting.

Thought for the Day

“Quality means doing it right when no one is looking.” 
— Henry Ford