November 16, 2018

Archives for May 2012

Beware of These Deadly Sins of Claims-Handling!

Yahoo has a risk management forum called RiskList, which I have been a member of for years and years: http://finance.groups.yahoo.com/group/RiskList. I highly recommend it!

Recently, coverage guru Barry Zalma of California kicked off an interesting discussion, calling for nominations of the “7 Deadly Sins” of Claims Handling.

Barry ended up with more than just seven, as many people (including the Claims Coach) chimed in. Barry will be writing an article about these “sins,” but gave me permission to share the list with readers. They can form the basis for a claims training session and will go far toward inoculating companies and adjusters from bad faith claims.

Here is the list:

1. Failure to read every word in the policy and in the claims regulations

2. Failure to conduct a thorough investigation before making a claims decision.

3. Failure to teach the insured/claimant how to make and/or perfect their claim.

4. Failure to communicate with the insured.

a. Under communication

b. Routine status and timely substantive communication with insured

c. Failure to prepare policyholders and claimants in advance for “bad news”

d. Failure to respond to communications

5. Failure to document the claim file

6. Getting emotionally invested in one’s claim valuation, settlement position, coverage stance..

7. Unnecessary or unreasonable investigative delay

8. Discontinuity by frequently reassigning the claim to new adjustors

9. Failure to develop/evaluate damages concurrently with liability

a. (Ignoring damages in pursuit of a liability/coverage defense);

10. Failure to give the insured the benefit of the doubt on coverage “coin flips.”

What “deadly sins” of claims-handling (or mishandling) would you add to the list?

Think Twice Before “Going Nuclear” Against Your Insurer

In late April, Business Insurance ran a series of articles in one issue for risk managers about litigating coverage disputes against insurers. The prime target market of Business Insurance is risk managers, so these articles plated to its audience well, one imagines.

As a claims guy, though, my reaction was that the article’s and quoted experts’ focus on pitched warfare against insurers was imbalanced. Many of these articles quoted lawyers who specialize in coverage litigation against insurers.

Of course, when your main tool is a hammer, everything starts to look like a nail. If there is no litigation against insurers, the quoted attorneys would have to find other areas of the law to practice in or other targets to sue.

While litigation has its place in the risk manager’s toolbox, the articles gave scant mention to more informal ways to try to resolve such disputes, short of litigation or even ADR. Insureds should exhaust informal avenues before “going nuclear.” There are – or should be – other resolution tools in the risk manager’s toolbox. Use these first before escalating into pitched warfare.

What tools and options are available? Such means include

  • Scheduling an in-person “meet and confer” session with the adjuster.
  • Going up the claim department org chart to appeal a groundless coverage stance.
  • Enlisting the broker’s help and leverage to bring an intransigent insurer to heel.

These are curative approaches, though. We use them after a coverage dispute arises. Maybe the carrier cites a policy Exclusion. Or it claims that the insured has breached a policy Condition. Or it asserts that the date of loss fell outside its policy.

To render curative approaches moot, a preventive approach is better. More importantly, many claim clashes result from inadequate buyer due diligence at the insurance placement and renewal stage. In my experience, too often buyers and brokers fail to address claim issues at the insurance placement and renewal stage. This may be due to

  • Inordinate focus on price of quote as the key driver of buyer decision-making
  • Wishful thinking – “We won’t have claims ..”
  • Not wanting to “spoil the mood” by talking about claims – “The carrier may get nervous and gun-shy about the risk if we open the discussion to claims …”
  • Eagerness to close the deal without putting a “fly in the ointment” by discussing losses
  • Hoping that “everything can be worked out later”

Nailing down the meaning and application of key policy terms and provisions in advance is key. Examining claim processes and discussing “what if” loss scenarios are neglected in the rush and zeal to do the deal. Coverage buying decisions driven by price and “the cheapest quote” crowd out serious consideration of claim issues. In claim service and coverage determinations, you get what you pay for. Skimping on claim issues at the placement/renewal stage is a recipe for disaster. Proactive approaches can save risk managers heartache, heartburn and avert some (albeit not all) coverage litigation.

Litigating against the insurer is not a course to choose lightly. Litigants on both sides may ponder Voltaire’s quote, “I was never ruined but twice: once when I lost a lawsuit and once when I won one.”

Book Review: “The Right and Wrong of Writing” by Gary Blake

e-book Published by Gary Blake, Ph.D., 70 A Manor Drive, Great Neck, NY 11020, 151 pp., $39.95.

“The difference between the right word and the almost right word is like the difference between lightning and a lightning bug,” according to Mark Twain. Doubtlessly, Twain did not have in mind the profession of claim adjusting when he penned those lines, but he could have.

The arena of claim communication is sadly under-served. Most adjusters enter the job with little training or coaching on clear and appropriate claim communications. If they receive technical instruction on subject matter claim knowledge they can consider themselves lucky. As a new adjuster, I sheepishly admit that I aped the style of attorneys I worked with by starting letters with “Please be advised…” or “Attached herewith …” This may have impressed a few people but in hindsight, I’m sure such legal-ese was off-putting to many insureds, claimants and witnesses.

Filling the void here is Gary Blake’s new e-book, The Right and Wrong of Writing. The subtitle is, “Quick and Practical Answers to 91 of the Most Common – and Frustrating – Questions About Claims Writing Style.”

Author Gary Blake is a New York area consultant and trainer whose niche is the realm of claim communications. His website is www.writingworkshop.com.
Blake understands the power of written words as wielded by adjusters. The right words can facilitate claims resolution. The wring ones can put gravel in the gears, slow down claims, torpedo settlements and even invite expensive bad faith suits.

In nine major sections, Blake covers the gamut of claim writing in 150 pages. This is an excellent resource for every insurer claims unit and TPA. The sections are short and sweet, making it easy to read and digest in manageable chunks. If the tips contained in this book facilitate one settlement or avert a single bad faith claim, the return on investment will be huge.

To write right as a claims professional, order, read and HEED Gary Blake’s new book!

Adjusters — Know the Power of `No’!!

To be effective as a claims professional, sometimes the two most effective words in our vocabulary must be, “No thanks.” Clint Eastwood’s character in Dirty Harry movies uttered the signature line, “A man’s gotta’ know his limitations.”

Good advice! So does any effective adjuster or claim professional.

Hey — can you serve on the office Social Committee? “No thanks!” (Maybe you’re holding out for a spot on the Party Planning Committee.)

Would you like to accept a volunteer slot with a trade or professional organization that will entail extensive travel? “No thanks!”

Can you take on a project that will wreck your beach vacation plans with your family? “No thanks!”

Can you meet with this group at 5:30 PM to go over a new claim account? “No thanks!”

See, it’s not that hard to say. Practice makes perfect.

The point is to set limits. This is not to be a prima donna, or to come off as one. It is a matter of setting priorities and living intentionally. For every new “yes,” something’s gotta’ give. Often, that “something” is an important project or priority in your life.

Of course, use this “no thanks” selectively. There are times when using it can be career-limiting or job threatening. I realize that. I get it. That’s where good judgment enters in. Every guideline has exceptions.

If the boss asks you to take on some duty or project, you may feel that you have no choice. You do have a choice, though.

Think long and hard before telling your boss or a client, “No thanks!” You want to be known as a can-do person, but also take care that your energies are not depleted by becoming over-committed. Remember – a laser beam is more powerful than a flashlight because of the intense focus of the light beams.

In your claims work, are you a laser or a flashlight? Your degree of focus dictates the difference.

Some adjusters have a tough time saying “No.” Many of us are people-pleasers. Insurance claims is a service business. In a service business in a competitive job marketplace, the work culture is very conducive to saying “yes” to every request. You may get the feeling that such a stance will come back to haunt you during performance review time. Effective adjusters know they have limits. Everybody has limits. When one new thing is added to your plate, something else must come off. What will that be? Saying “yes” all the time leads to professional burnout for over-extended adjusters.

Beware of becoming known as “Dr. No.” It’s always best, though, if you can respond to requests with something other than, “No thanks, period.”

Try, “No thanks, but . . .” After the “but,” offer a suggestion or solution. Have professional goals as a claims person. Know what you want. Evaluate each request in light of whether it will help or hinder you reaching your goals.

With the boss, you can always

  • Negotiate for additional time. “Can I get an extension on these other projects …?”
  • Ask what deserves top priority. “Can we re-prioritize the claim analytics project that I have been working on…?”
  • Bargain for removal of some other job task. “If I take this on, can we re-apportion the Smith account to …?”
  • Respectfully decline and explain the reason “I’d love to, but I don’t think I could give it the time and effort it deserves because of …”

In bygone days, it was a given that employees would do just about anything the company asked of them. Demographics – and times – have changed, though. Claim professionals – like others – want balance in their lives. They won’t unthinkingly accept every new adjusting assignment or project. So do not be reluctant to deploy the Nancy Reagan School of Time Management occasionally, “Just say no.”

Have you found it career-limiting or job-threatening to say no? Have you found certain ways of saying “no” to be more effective than others? Is it realistic to say “no,” given the uncertain state of employment these days? Sound off by posting here or responding to claimscoach@gmail.com.

Does the Claims World Favor Extroverts?

I just finished reading a recently published book, Quiet: The Power of Introverts in a World that Can’t Stop Talking by Susan Cain. She makes the point that most of the world puts a higher value on extroversion and that subtle or not so subtle pressures exist to handicap quieter types.

Cain’s book prompted me to wonder if the claims profession follows this mold. Does the claims world favor extroverts? Can an introvert survive, or even thrive, in the world of claims?

This transition hit me in the face like a wet towel when I entered the claims world. I attended my grad school commencement ceremony on a Saturday afternoon. On Sunday morning, I flew to Atlanta to attend Crawford & Company’s five-week adjuster boot camp. As a grad student, I had lived a bookish existence.

The last four months in grad school, I spent writing out a 200-page Masters thesis on comparative political theory. (Subsequently read only by my mother and some chronic insomniacs seeking a cure …) After graduation, armed with a freshly minted M.A. in Government, I plummeted into the claims world. I was dealing first-hand with people from all socio-economic strata. Most of them were stressed out by their loss and wary of this new kid who showed to adjust their claim. I got yelled at, chewed out, questioned and second-guessed.

And those were the nice ones …

Handling claims wasn’t anything like grad school. In the halls of academia, introversion served you just fine.

In the claims world, shrinking violets get stomped on. I realized that, if I was going to make claims a career, some adjustment (no pun intended) was needed.

So, the questions remain. How do introverts grab their “air time” and advance their careers? Can introverts put on a persona of extroversion in order to advance their claims career?

I don’t claim to have the answers, though I can hazard a few theories.

Much of what adjusters do relies on traits we commonly associate with extroversion. Forcing yourself to deal with people who have suffered loss is no role for shrinking violets. You need not only the hide of a rhinoceros but also the self-assertiveness to jump into situations that most people would avoid. Selling a settlement figure to a reluctant claimant or policyholder, entering the rough and tumble of a settlement negotiation with claimant’s counsel, presenting the second-quarter claim results to upper management – these roles call upon the extrovert.

On the other hand, there are adjuster roles that require quieter, more reflective approaches. These include traits we more often associate with introverts. Examples include:

  • Thoughtfully analyzing a packet of demand documentation to fine tune a reserve and develop a target settlement figure
  • Conduct a thoughtful performance review of claim staff
  • Listening empathetically to an employee, a claimant or insured who has gone through a traumatic event

In some settings, the claims professional is better off closing the mouth, opening the ears and being on “receive” mode. In other roles and settings, the adjuster will be more effective assuming a take-charge, vocal and assertive approach.

One key to job and career success is to size up which approach works best in different situations. Possessing this situational awareness can separate average adjusters from the extraordinary. I’m not saying it’s easy, but it is doable.

So … what is your take? Is there room in the claims business for introverts? Is being an extrovert ever a liability when performing claims work? For those at one end of the spectrum of extroversion or introversion, do you think it’s possible to re-mold your traits to adapt to job demands and situations?

Please share your thoughts here or reply to claimscoach@gmail.com

Claims Coach Podcast Features Interview with Chantal Roberts of Affirmative Risk Management

This week’s Claims Coach blog is augmented by a podcast interview with Chantal Roberts, Vice President of Claims for Affirmative Risk Management in Little Rock, AR. You won’t want to miss this lively and interactive conversation, part of our “Spotlight on Leaders” series that features leaders in the world of claims and risk.

Chantal is a claims executive who works for a family-owned TPA. Many of the claims she handles arise from accounts underwritten by the London market. In addition to being a claims executive, she is a wife, mother, and an athlete in training. A Toastmasters devotee, she gives speeches in a variety of forums, including career pitches to college students on nearby campuses.

Between preparing for 5K races, 50-mile charity bike ride fundraisers and contemplating tackling a triathlon, Chantal studies guitar. (I do believe she also leaps tall buildings in a single bound.)

How does she do it all? Listen to the podcast! Chantal offers insights on:

  • The special challenges of being a TPA in today’s environment
  • Why having the hide of a rhinoceros is a handy adjuster trait
  • What high-tech and low tech tools help her stay on top of her work
  • Achieving work/life balance for busy claim professionals, and
  • Why an adjuster’s best stress-reduction tool might just have four legs and fur.

Drop in on the conversation and this FREE podcast at http://bit.ly/IguCSN !

The Importance of a Focused Litigation Plan

[NOTE: “The Claims Coach” welcomes a guest post by friend and CLM Advisor colleague John Conlon. John Conlon is an attorney and former insurance claims officer. He presently consults with insurers on litigation management and fee billing issues and blogs about those issues @ http://legalbillreviewerblog.com/. He can be reached at jconlon@conlonassociates.com or at 317-258-0671. From the time I was a child, I heard the adage, “He who fails to plan, plans to fail.” In this post, John Conlon explains why the maxim is especially true in the realm of litigation management.]
Harking back to my days as a litigation claims manager, manager of in-house staff counsel, and now consultant to insurers on litigation management issues, I probably have reviewed thousands of legal files in cases throughout the United States on a variety of issues. One thing I consistently notice in many files I reviewed is the lack of a focused litigation plan.

Collaborating on the Litigation Plan

One of the first things I note lacking in a focused litigation plan is that the adjuster is not sufficiently engaged in the planning process. This lack of engagement usually contributes to a lack of follow through on the plan. While it is okay for the defense attorney to take the lead in coming up with a proposed litigation plan, the adjuster should maintain active engagement in the planning process. Too often, I have seen “okay” or “proceed” as the only adjuster comments to an attorney’s proposed litigation plan.

I have noted that the more experienced the litigation adjuster is, the more likely it is that probative questions will be asked or meaningful comments or changes proposed to the proposed litigation plan. But, even less experienced adjusters, who have little to offer but questions, can add meaningfully to the planning process. Sometimes simply asking the attorney why certain things need to be done or why will certain things take so long to accomplish may serve to help the attorney re-think the proposed steps.

Changing the Litigation Plan

A focused litigation plan must always be viewed as a living document that will need to be updated as circumstances warrant. As developments do occur in a case, they must be viewed strategically through the prism of the litigation plan. How does a particular new development affect the litigation plan from a strategic standpoint? Do major revisions in the litigation plan need to be made? If no changes need to be made in the plan, do the target dates need to be revised?

If a development is not of strategic importance, why waste time (and the company’s money) on changing the plan or reacting to it in some way? Remember it is not always necessary that the defense attorney research every issue the plaintiff attorney raises or vigorously oppose every motion filed.

Conclusion

It is possible to achieve a good result on a litigated file in an efficient and cost effective manner without a focused litigation plan just as it is possible to walk outside and find a $10 bill on the sidewalk. However, the chances of either happening – at least on a consistent basis – are rare.

Achieving a good result in a litigated file can only be accomplished on a consistent basis through developing a focused litigation plan and careful follow through, monitoring, and where necessary, revision of that plan.

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