An insurer that finds it economically impractical to establish a claims office in a given state is likely to use which to perform the claims handling function?

• A. Producers
• B. Third-party administrators
• C. Public adjusters
• D. Independent adjusters

Answer: (D)

The concept being tested is using external resources to handle claims when it isn’t economical to maintain a full claims office in a state. Independent adjusters fit this role because they are outside contractors hired by insurers to investigate, adjust, and settle claims. They provide local presence and expertise without the overhead of staffing a permanent office in every state, and they can be deployed quickly to handle varying volumes or catastrophe situations. This arrangement lets the insurer manage claims cost-effectively while still ensuring claims are adjusted by professionals with relevant local knowledge.

Producers are the agents who sell policies, not involved in claims handling. Third-party administrators manage claims for self-insured programs or specific groups, not typically the insurer’s standard claims handling in a state where it has no office. Public adjusters represent the insured in negotiations with the insurer, not the insurer’s own claims handling. Independent adjusters are the ones designed for the insurer’s needs when a state office isn’t practical.