All Insurance Companies Have Written Claims Processes

I was recently told that USAA has a claims manager who said USAA has no written claims procedures. I was skeptical about that statement until I read the USAA claims manager’s deposition.

USAA has written claims procedures and claims processes. I am attaching to this post just one subset that deals with its Direct Repair Program, which was downloaded into the public domain by a USAA adjuster.1 Those working in its Contractor Connection program know all about these written claims procedures—so it is not a top-secret deal. Indeed, when you have thousands of active and former claims adjusters in USAA with knowledge of written claims procedures, it is hard to imagine how claims procedures can be like a Coke or Kentucky Fried Chicken secret recipe. USAA should share these with its members if it is genuinely being honest about how their claims are supposed to be handled.

Written claims procedures of USAA are often reviewed during Market Conduct Studies by the various Departments of Insurance. So, it seems like an obvious lie when a USAA claims manager states that they do not exist. For instance, a Massachusetts Market Conduct Study of USAA2 found:

Observations: RNA noted each of the tested claims was handled according to the Company’s policies and procedures except as noted above. Based upon testing, it appears that the Company’s processes for handling claims are generally functioning in accordance with its policies, procedures and statutory requirements. Finally, upon evaluation of 11 claims-related complaints, the related claims appeared to be properly handled.

Required Actions: The Company shall adopt new policies and control procedures to address the requirements of M.G.L. c. 139, § 3B and M.G.L. c. 175, § 24D, 24E and 24F and provide training or guidance to claims adjustors on proper and timely implementation of these policies and procedures. The new procedures shall be tested by internal audit or compliance to ensure that they are effectively implemented with the results of the independent testing completed and reported to the Division by June 30, 2014, or another agreed upon date.

Subsequent Actions: The Company has adopted new procedures for compliance with M.G.L. c.139, § 3B. The procedures have been communicated to the claims staff and state that upon receipt of a first notice of loss for property damage that is expected to exceed $1,000, the staff is to notify local municipal officials of the claim using the Company-designed letter template.

Indeed, to make certain that claims processes are followed, USAA has audits conducted as noted in the Market Conduct Study:

The Company has quality assurance programs in its underwriting and claims departments. The Company’s underwriting audit team conducts monthly quality assurance testing, which includes five files per underwriter to ensure that the Company’s underwriting standards and statutory requirements are met. Additionally, supervisors and managers monitor phone calls by customer service representatives for training and compliance with Company policies and procedures. The Company has also established a quality assurance program for claims operational management through monthly reviews of closed claim files by claims managers. The claims audits include a sample of claims for each adjustor to assess adherence to Company policies and procedures. The claims audit results are documented and reported for each adjustor for use by claims management as part of the employee training and performance evaluation process.

The USAA Market Conduct Exam also stated on page 53:

The Company’s claims handling process is centralized in the home office with teams assigned to various claims handling processes and/or geographic regions. Home office claims personnel are supplemented with employee field adjustors. The Company utilizes field staff and independent field appraisers to complete automobile appraisals for property damage claims. Massachusetts non-automobile injury claims are processed by two primary teams, who are specifically trained to handle Massachusetts claims. Claims handling employees are organized in the functional teams with a supervisory structure in place to ensure that claims settlement authorities and Company procedures are followed.

Written policies and procedures govern claims handling processes….

USAA must have a rogue claims manager who says that USAA has no written claims procedures. USAA had a Code of Conduct which its executive wrote about:3

Service, Loyalty, Honesty and Integrity form the foundation of USAA’s business practices. These core values also represent a shared bond with our loyal members, whose sacrifice inspires us to deliver on our mission.

The Code of Business Ethics and Conduct is your best resource for understanding how to treat each other and care for our members. Please spend time to familiarize yourself with it.

Each of us is accountable for upholding USAA’s principles as we serve our members with excellence into our second century.

My father and my sister proudly served in the United States Coast Guard. They are proud to be members of USAA, as are many other active duty and retired service members. The military has all kinds of written processes and procedures, and so does USAA. I have no idea why a USAA claims manager would not admit to those unless he and those under his direction are not living up to the standards set forth.

Thought For The Day

If you tell the truth, you don’t have to remember anything.
—Mark Twain
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1 USAA Property Direct Repair Program Guidelines and Consistencies. 3/1/2017.
2 Report on the Comprehensive Market Conduct Examination of United Services Automobile Association and USAA Casualty Insurance Company. Massachusetts Division of Insurance. Jan. 8, 2014.
3 USAA Code of Business Ethics and Conduct.