The news last week that major loss adjusters McLarens Young International and Freemans have at last finalised their merger arrangements was hardly a surprise. The two firms’ managers did the rounds of insurance company clients months ago to ensure there were no ruffled feathers. And insuranceNEWS.com.au carried most of the details way back in January.

That the companies needed to get the concept out and being aired long before the details could be finalised illustrates just how close major loss adjusting companies have grown with their insurers. They’re working together to achieve something insurers have always wanted – a more efficient, active and cheaper claims process.

The transformation of the loss adjusting sector in the past 10 years illustrates how much insurers’ claims service systems and the push for greater efficiency are driving change across the industry.

It’s only seven or eight years since leading insurers began changing their old loss adjusting panels, which were primarily made up of a mix of small and large companies. The insurers plumped for sole service-providers. The howls of dismay from the loss adjusting sector were loud and long.

It was, they said, the end of loss adjusting as we knew it. And they were right. Executives in the larger loss adjusting companies may have briefly worried at the impact on so many of their respected colleagues, but they also seized the opportunity to transform their businesses.

Over the past few years the name of the loss adjusting game has been consolidation. We’ve seen the takeover of a major loss adjuster by US claims company Cunningham Lindsey, and now we have a merger at the top.

Competition isn’t always a business positive when companies need to maintain offices in all the major population centres. Systems that simplify work routines, supply the data clients want and provide greater levels of service are expensive. A merger means branch offices can be combined and services become cheaper and easier to supply. And the big loss adjuster companies are just as likely to be run by a businessman as an adjuster.

Senior executives at the recent CC09 Claims Conference in Sydney spoke with some passion of the absolute need to develop services that can be provided economically and effectively. “The market is screaming for us to do things differently,” one said.

Just as the adjusting companies know better levels of claims services to the insurers is the paramount issue, they also know it’s their best hope to stay well ahead of emerging competition. If they want to stay dominant, they’ll have to learn how to work alongside – or at least provide services as cheap as – the building assessors who are moving in on the soft side of housing and building claims.

Loss adjusters are on their way to becoming a new kind of service provider: the data-loaded, end-to-end claims service company with the big accounts, but also the operator of an efficient and cheap “commoditised” claims service for routine matters. The insurers will love them.

Now that consolidation has ceased to be an issue at the top – but expect lots more clustering by smaller companies – the big issue is now likely to be the drive for innovation and wider client bases. After all, why work just for insurers?

All in all, it’s not loss adjusting as we may have known it, but it’s a very interesting place to be.