Why do lenient claims handling practices exist in the insurance industry? A survey study of ethical decisions by claims adjusters

Abstract

Purpose The purpose of this paper is to investigate which factors will affect the insurance claims adjusters’ attitude and behavior intention toward lenient claims handling practices. These factors include organizational justice, behavioral-based control, significant others, and customer complaints. Design/methodology/approach Data are collected with questionnaires from full-time licensed insurance claims adjusters in Taiwan. Partial least squares method is used to test the hypotheses. Findings The main results show that significant others and organizational justice have significant effects on the claims adjusters’ attitude toward the lenient claims handling practices. Significant others and attitude have significant effects on the behavioral intention. Originality/value The influence of claims management on insurance companies’ operation is quite considerable. Poor claims management may not only harm insurance companies’ finance, but also affect the adjustment of future premiums. Yet, in reality, some claims adjusters are found to make flawed claims decisions. Very few studies discuss this problem. This study provides an initial step toward understanding this issue.