Are fee schedules negotiable?

I get asked all the time:  what’s a good fee schedule, what’s a good percentage, and is that negotiable?

But what is a “fee schedule?”

A fee schedule is one of the ways that IA firms charge insurance companies for their services.  

The way it works is this:  

..the insurance company has a big storm with a ton of claims that their local folks can’t keep up with.  

They call the IA firm and says, “we’ve got 3500 claims in Chicago and need some extra adjusters.”

The IA firm says, “okay, we’ve got 50 people we can send to you right now.”

So for each one of the claims that the IA firm handles on behalf of the carrier, the IA firm sends the carrier and invoice - for each claim.

The amount of that invoice is determined by a list of rules called the fee schedule 

  • the amount of the claim (hint:  the higher the amount of the claim, the higher the amount on the fee schedule). Counter intuitive that a company that’s trying to save money on your claim is actually paying the adjuster MORE for a BIGGER claim.  Keep that one in your back pocket for when a ktor accuses you of denying a claim because you’re trying to save money for the company)

  • Any add ons - like if the roof is steep or requires special equipment to access, or there is interior damage

  • etc.

So for every claim that an adjuster turns in, he or she also turns in an invoice for that claim - the amount of which is based on the fee schedule that the IA firm and the carrier agreed on previously.

The adjuster and the IA firm split that fee bill.  So the adjuster makes a part of that invoice that the IA firm sends to the carrier.

Now, how that’s split up depends on a few factors.  

  1. The normal split across the industry

  2. Whether there is a huge event that could demand more adjusters than are available - like hurricane Irma

  3. Whether the IA firm is open to negotiation with experienced, veteran adjusters - hint:  not all are.

The typical split these days is 60/40.  60 goes to the adjuster and 40 goes to the IA firm.

When I started, I made 65% of the fee bill, but then that number dropped after a few years to 60%

Under special circumstances, I’ve earned 75% of the fee bill - specifically, after Katrina hit, I was offered a special assignment:  Another carrier had a big hail late season storm in a big Minneapolis suburb.  They made it worth my while and I took it.

Now, what makes a good fee schedule?  I’ve seen so many different fee bills - some high, some low.

I think it’s much more important to take some other factors into consideration:

  • How busy can that IA firm keep you

  • How complex is the carrier’s claims process

So if I had to choose between company A that had a complex claims process, required me to write checks, and had several layers of bureaucracy that I had to deal with - but had a fee schedule 10% higher than company B..

..who has a super streamlined process, Xactimate was the only software I had to deal with, and they have a small - focused team who runs everything and everybody is easily accessible by phone?

Likely going to pick company B.

Mathew Allen

I teach new catastrophe adjusters how to get started in the business.  I also build my own websites and sites for friends (who sometimes pay me).  In addition, I film and produce personal adventure videos for hunting and fishing clients.