The Claims Processor
If you imagine yourself in the role of referee in a ball game, you can grasp the basics of claims. However, it's important to keep in mind that you are an employee of a trucking firm, and each claim you settle in favor of a shipper represents a loss to your company. Yet, there's more to it than that. Your first and foremost task is to try to see to it that claims are prevented before they can happen.
By definition, a claim is a demand for compensation for damages done, either to the product or to the company's relationship with its customers. In other words, nothing has to actually break to warrant a claim. The most common nonphysical damage claim in the trucking business occurs because of late deliveries. If a product is broken in shipment, the settlement is fairly simple, but what if a shipper's business is hurt because of a late delivery to a client? What is that worth? What is the price tag for a shipper's reputation? As you can see, claim settlements can be very simple or extremely complicated.
There is also the question of responsibility. Consider oranges. Oranges are picked as they reach their peak. Once the harvest begins, time becomes the enemy because oranges, like any citrus fruit, remain fresh only so long, then begin to lose their market appeal. Once picked, they are hauled from the orchard to be crated. The crates are stacked on pallets and placed on a loading dock to be picked up. Finally, the oranges are picked up by a truck and hauled to their destination. When they arrive, they are inspected, either by a company official or a trained inspector. If the inspector determines that the oranges have passed beyond ripeness and are no longer fit to be served or sold, they are sent to a pulper to become juice, as are most damaged citrus fruits. At this point, a claim may-- and almost certainly will--be filed.
The question now is who is responsible for the damage in this case? Is it the people who picked the oranges? Did they wait too long? Is it the people who packed or crated the oranges? Did the load wait too long before being handled, or was it left out in the hot Florida or California sunshine too long? Was it the trucker's fault? Did the trucker fail to refrigerate the load or set the thermostat improperly? In the business world, if damage occurs, someone faces a loss, and no one willingly accepts this responsibility.
Claims people are part complaint department, part detective, part referee, part negotiator, and, in some ways, they are part hall monitor. If too many claims come in from one trucker's loads, one type of shipment, or one shipper, a claims processor must not only settle the claim, but must act fast to determine why the damage has taken place and then take the steps necessary to prevent it from happening again, especially if it proves to be the trucking company who is at fault.
Job Requirements and Training
Training for a claims processor is varied. At one extreme, a claims processor may need a working knowledge of the laws governing transportation. On the other hand, the requirements may be simpler: just a good phone manner and the ability to communicate and handle simple mathematics. The majority of claims people, however, begins and learns on the job because there are few better ways to learn this sometimes complicated business. Other skill requirements may include word processor or computer knowledge, general office skills such as filing and typing, knowledge of insurance, and above-average skills in math and deductive reasoning.
Finally, a claims processor, at times, needs to be a bit hard-nosed. Often you will find yourself the bearer of bad news. Imagine yourself telling drivers that the damage to their last load was their fault, and the company is going to charge them for it. Imagine telling a shipper that his or her product was improperly packaged, and therefore, the damage done it was not the company's fault. Some people have no problem with this kind of confrontation; others never do work up the courage or nerve to handle the job.
Two Case Studies
Often, a claims processor must put together the pieces of a claim like a puzzle, employ a great deal of general knowledge, and know where to go to learn specifics on certain products. Sound complicated? It often is. Here are examples of two actual claims and what was required of the claims person before they could be settled.
Florida Oranges
Trucker A picked up a load of oranges in Florida in October destined for Des Moines, Iowa. When the trucker arrived, the fruit was "probed"--a method of measuring the temperature of the fruit by inserting a thermometer probe into one of the oranges buried deep within the crate--and the shipper rejected the load as "hot." The warm temperatures inside the oranges indicated that the fermentation process was about to begin. This meant that the oranges would not enjoy a long shelf life in any grocery store, and therefore they were useless to the grocery supplier to whom they were shipped. The entire load was rejected and sent to the pulpers at a major loss to the shipper. In a case like this, the driver should call his or her company's claims department, before even leaving the loading dock, and explain the situation. Half the battle of settling claims is to receive the information about a potentially damaged load as soon as possible.
In this case, the shipper claimed the trucking company was responsible, accusing the driver of not setting the refrigeration thermostat at the right setting. The driver argued that the thermostat was set correctly and that the oranges probably sat on the dock too long before being shipped. Who was right?
Photos and samples taken from the load were sent to the claims department. A thin, blue, hair-like growth was observed on the skin of the fruit. The claims processor called the local university and talked with an expert before making a decision in favor of the trucking company. How? The blue hair-like substance was the beginning stages of mold. The university people told the claims processor the amount of time needed for an orange to reach the stage where mold begins to form. Then, by figuring the amount of time between pickup and delivery, the processor was able to determine that the fermentation process had already begun before the driver ever loaded the oranges.
A Broken Table
The second claim involved furniture. A driver had picked up a load from a military family moving from Missouri to Texas. When moving furniture, it is a common practice to disassemble some items in order to protect them and, at the same time, to save space on the trailer. In this case, the driver disassembled a dining table whose base consisted of a type of particleboard, a fairly common building material in less expensive furniture. When the load arrived in Texas, the family found that the screws that held the table legs to the particleboard table could no longer be tightened. The holes had stripped out. The table was unusable and had to be repaired. The question was, did the moving company owe for damage to the table, or should the customer take responsibility?
A claims processor studied the situation, and then questioned both the driver and the customer. Had the table been disassembled by movers and shipped before? The answer was "yes." How many times? Twice prior to this move. Then the claims processor asked if the driver had noted on the load sheets that the table was particleboard, and that the legs were removed. The driver said "no." The table was listed, but not in so specific a manner. The claims processor decided in favor of the customer, but only because the driver failed to write the table up on the load sheet as being constructed of particleboard. During the investigation, the claims processor learned from manufacturers that particleboard is used in construction because it's cheap, but that removing and replacing screws in the table base would tend to weaken the binding compound--a mixture of wood chips and glue--that holds the particles together. In this case, multiple moves and repeated disassembly had weakened it until the screws threads no longer had anything to grip.
A claims processor is a detail person, an organized person. Nothing escapes his or her notice. A claims processor may, from time to time, work hand in hand with insurance companies if products are damaged during an accident.
Indeed, part of the claims person's job is very similar to an insurance adjuster's duties.
In a sense, a claims person is the trucking company's complaint department. At the same time, the claims person is the driver's friend or foe, depending on whether the driver is found to be at fault for a claim or if it's a product problem that caused the damage. It takes a very special type of person to work this position because no matter how the claim turns out, someone is going to wind up unhappy over the outcome.
Who Pays for Claims?
This is an excellent place to address who, exactly, pays for a claim. Obviously, if the damage to the goods is the fault of the shipper, the shipper must stand the loss. However, if it's the trucking company's fault, one of three things can happen. First, the company may decide, on the advice of the claims processor, to "eat" the loss themselves, to pay for it and not charge the driver. Usually this will happen when the claims processor has determined that, while the shipper cannot be held liable, either there was no reasonable way the driver could have foreseen the possibility of damage, or there was nothing the driver could have done to prevent it.
The second possibility is that the damage will be charged to the driver. If this happens it is because the claims processor feels the driver was negligent in his or her duties and could have prevented the damage had the job been done properly.
The third possibility, and probably the most common, is that the company and the driver will share the blame. In some companies--especially household moving operations--the driver has set obligations that resemble insurance. If a claim runs $100, the driver may have to pay 25 percent of the cost-- in this case, $25-up to a maximum amount per shipment of perhaps $200. One exception is lost or missing articles. Should part of the load turn up missing, the driver is generally required to stand the total cost of the claim. That's the main reason most drivers are very careful about tallying up the number of boxes, crates, pallets, or items of cargo. It doesn't take too many missing items to completely destroy a paycheck.
Claims are never taken lightly. Because of this, the claims person carries a heavy responsibility. One of the most difficult areas of claims work is claims settlements due to accidents. Even as the insurance company and its investigators are working the claim that comes from a traffic accident, the claims processor is assessing how much, if any, of the load can be salvaged and whether it did, in fact, suffer any damage. Then, in cooperation with the other divisions within the company, the claims department works at getting that portion of the shipment that is salvageable picked up and delivered. In some companies, drivers are given the home phone numbers of claims persons, or a claims representative is on duty 24-hours a day, seven days a week, just to make sure any potential problems are addressed immediately.
Claims Made By Trucking Firms
So far, we've only discussed claims owed customers of the company. Yet, there is another type of claim: one made by the trucking company itself. By law, a driver, the driver's equipment, and the company's time are all worth money. At times, shippers find themselves owing a claim for delaying a driver and the driver's equipment.
This type of claim is illustrated in the following incident. Driver A was dispatched to ABC Company in Dallas. As usual, the driver was given an appointment time to be at the loading dock. In this case, the truck was due at 6 A.M. on Wednesday. The driver showed up on time, only to discover that the company had suffered a problem with some of its manufacturing equipment and the product was not yet ready to be loaded. ABC Company had not bothered to call the driver's company to tell them of the delay. The driver called dispatch and was then put in contact with the claims department to inform them of the situation. The manufacturer did not start loading the driver's truck until 8:30 the next morning. When loading was completed, the driver called the terminal and once again reported to the claims processor. The manufacturer was charged a hundred dollars an hour for the driver and the company's equipment for waiting time. In this particular example, the specific rates for waiting time are published, and the circumstances under which these fees can be charged are very clear. It's the claims person's job to know when and where to apply these rules and what the fees are.
In trucking, just as in any other business, time is money. This type of claim is reasonably easy to understand. Assume the payments on the tractor and trailer amount to $3,500 per month, licensing and permits are $7,000 a year, and insurance is $5,000 a year. The driver's wage is 32 cents per mile to translate to $18 an hour, plus the cost of simply eating and sleeping while out on the highway. Add all these expenses, plus the cost of not being loaded and running and earning, and a hundred dollar an hour charge can actually seem reasonable.
The claims processor's word is not always final, and this, too, goes with the position. In some cases, customers simply refuse to believe that damage was the fault of their people, their product, or anything within the sphere of their control. When all other avenues have been exhausted, it sometimes happens that the trucking firm and the customer find themselves in a court of law. This is why it is so urgently important that a claims person is exacting in his or her work. What may have seemed a routine claim at the time could evolve into a court case if the person being assessed the claim disagrees.
Earnings
The claims person can expect to earn only a mediocre wage at the beginning of a career. Yet, as experience is gained, the wages climb, and the work is extremely steady. The average starting wage usually runs around $15,000 to $20,000, unless an associate's degree in transportation law is expected, and this is a fairly rare requirement.
Claims tends to be a highly specialized area, but one direction a claims person can aspire to is customer service and some of the administrative posts within the company. These, in turn, can lead into major employment areas within the trucking industry.
