May 25, 2019

Spotlight on Leaders: Interview with Chantal Roberts of Affirmative Risk Management

Kill Them With Kindness … but Still Deny The Claim

[NOTE: “The Claims Coach” welcomes a guest post by good friend and fellow claims professional Nancy Germond, the founder of Insurance Writer, a Phoenix, AZ risk management and communications consulting firm. A second-generation insurance professional, Nancy has authored scores of risk-management articles and white papers. Nancy holds a Master’s degree in Sociology and the AIC, the ARM, the ITP and the SPHR designations.]

Few claims professionals enjoy disclaiming coverage or denying liability. Our lives as claims handlers would be much easier if our insureds’ policies covered any loss they sustained. There is an art to writing the disclaimer or denial which can make life easier for the writer. This method also helps the recipient understand why your company will not provide coverage or accept liability. We call this approach “Kiss ‘em, kick ‘em, kiss em.”

Begin your letter with a sentence—a “kiss.” This wording thanks the insured for choosing your company or praises the claimant for his or her cooperation. Use language like this:

“We appreciate the confidence you placed in our company when you purchased your coverage and your cooperation throughout our investigation of this matter.” Even if the insured was unhelpful, use language that affirms the insured’s role in the insurance contract, such as, “We appreciate your patience during this process.”

To the claimant, you may say something like this: “Thank you for your assistance during our investigation of this matter. We appreciate your patience while we determined the facts of the incident.” This “kiss ‘em” approach affirms the insured or the claimant and stresses the positive, even though you may deliver bad news.

Next, in two or three sentences, outline the events that occurred. Here is some sample wording. “This loss occurred on February 24, 2012, when your employees moved a piece of merchandise by hand truck from your vehicle into the claimant’s location in Henderson, Nevada. This property was in your care, custody, and control while your employees unloaded this equipment from your truck. You described this merchandise as ‘a late-model Kenmore refrigerator.’”

You may want to explain where you obtained the information you rely upon for your decision. For example, “According to the information you provided to our independent adjuster on June 1, 2011, this loss occurred ….” This allows insureds or claimants to correct any misunderstandings they believe you have about the event.

Next, you must gently “kick” your insured or the claimant. After outlining appropriate language that precludes coverage, write a sentence explaining why you disclaim coverage or deny liability. Try language like this:

“Because you were in control of your customer’s refrigerator and due to the foregoing ‘care, custody and control’ exclusion in your policy, we regret that we cannot extend coverage in this matter.” For a denial, wording like, “Due to the extreme weather conditions at the time, we cannot accept liability for your fall.”

End the letter with a final “kiss.” Try language like this:

“While we regret we are unable to pay this loss, we value your trust in our company. If you have any additional information that you feel may alter our decision, feel free to contact me.” If you are writing to the claimant, try something like this:

“While we cannot extend coverage in this loss, we hope that you make a speedy recovery.”

Always add language inviting the insured or claimant to contact you if they have additional information that may alter your decision. Use wording like “If you have any facts that you feel may change our decision, please feel free to contact me.”

This simple wording helps place the responsibility on the insured or the claimant to take further action if circumstances change or they have not previously provided all the facts. This simple affirmative sentence can help prevent misunderstandings and reduce the risk of a successful bad faith claim. It may also help you if these letters become evidence in trial. A well-written letter speaks volumes about your credibility as a claim professional.

Writing the perfect disclaimer is a delicate balance of clearly outlining what the coverage states and how it does or does not apply to the loss facts. Too much explaining can cloud the issue, which can be problematic if you must defend your coverage decision. Writing the perfect liability denial is a bit simpler, especially when you can help point the claimant toward the appropriate party.

For example, in a sidewalk case, the city may be responsible for maintenance in that area. You can furnish a phone number, mailing address or even a hyperlink to a URL where the claimant can download a municipal claim form. Pointing the claimant in the proper direction can help prevent a lawsuit and prevent legal spend.

The “kiss ‘em, kick ‘em, kiss ‘em” approach respects the ongoing relationship you have with your insureds and can help them accept the disclaimer more positively. For claimants, remaining firm but polite and helpful can reduce the chance of the claimant filing suit.

“Where’s my adjuster?!?!” Internalizing Claims for Better Access

[This continues our series examining some of the reasons that clients – risk managers, self-insureds, etc. – bring the claims function in-house. This is not to “bash” TPA’s or insurer claim departments. We are simply recapping various motivations that drive clients to bring the claim function in-house, either totally or partially. In future posts, and in the interest of even-handedness, we will examine the DIS-advantages flowing to these same entities from internalizing the claim function.]

Risk managers often get frustrated in trying to connect with their adjuster handling a file. Phone calls are missed. Phone tag takes the place of genuine communication. Phone tag can even give way to email tag! The adjuster may be on the road, on vacation, at an offsite training session or otherwise inaccessible. With an outside adjusting service (or in dealing with an insurer claim department), all the client can do sometimes is keep on trying and waiting .. and waiting .. and waiting.

With in-house adjusters, however, the client has a greater degree of access to the claim staff when needed. To get an opinion regarding a case, to get a quick update or to make a request, one need only walk down the hall and ask the adjuster. Admittedly, in-house adjusters are not going to be around all of the time. Still, it is one thing if a client needs to get in touch with you, and another thing if your boss needs to talk with you.

To the independent claims adjuster, the client is really the risk manager’s entire company. In a sense each operating unit of the company is a client, with its own agenda. A company can benefit when individual managers have direct access to in-house adjusters.

This kind of ready access is less realistic when an outside adjuster is charging by the minute. Cost effective use of outside adjusting services requires that referrals be channeled through one person, rather than having each department make adjusting assignments willy-nilly. Sadly, the lack of direct communication prevents the type of give-and-take dialogue that often resolves problems. Such dialogue is more frequent with in-house adjusters.

Where I live in the Washington DC area, the lobbying industry is big business. Part of what clients get when they hire a lobbyist is “access.” In this context, it is access to the corridors of Congress and the top government decision-makers.

In the realm of risk, clients also seek access. Internalizing the claim function can enhance such access without the need to hire expensive lobbyists!

Internalizing Claims to Strengthen the Adjusting – Safety Connection

As talented as they may be in handling claims, many claim adjusters are not tuned in to loss prevention. They handle a claim, settle a case, close their file, submit their bill, and move on to the next case. There may be any number of reasons why claims people – even very good claims people – are reluctant to offer loss control feedback. Here are three:

• They are often just too darned busy to do much beyond handling the claim. Spending time trying to pan for nuggets of loss prevention “gold” can seem like a luxury they cannot afford. Dabbling in loss control may seem like a frill or an intrusion, adding to their list of already daunting job duties. Let’s just get the case settled, close the file and move on!

• Some may feel that this is just not in their job description

• They may feel they lack the expertise: “I’m not a `safety person’ – where do I come off giving loss control advice?”

Ideally, adjusters can offer a post-mortem, advising the client on how such an accident or claim can be averted in the future. In reality, time and cost pressures militate against this type of synergy between claims adjusting and loss prevention.

Furthermore, an adjuster’s familiarity with any one account is limited, so the opportunities for meaningful loss prevention insights are often lost. Cynics could also argue that loss prevention is not in the economic self-interest of the claims adjuster. When you get paid by the loss, you want more losses. Or, at least you may not work too hard to prevent them.

The in-house adjuster, however, can be an invaluable aid with regard to loss prevention. They are more familiar and up-close with the situations spawning claims. They can take a more long-term outlook than the outside adjuster, who may handle only two claims for a risk manager in any given year. The in-house adjuster, to be sure, does not want to work himself out of a job, but does have a vested interest in stemming the tide of rising claims. Thus, in-house adjusters can be counted on to a greater extent to provide “nuggets” of loss prevention wisdom which can help the risk manager improve her bottom line.

This is not to say that we are trying to remake adjusters into loss control specialists or to turn them into something that they are not. Having said that, there are many instances where adjusters can add value to a safety program by alerting management to conditions which, if corrected, can lower loss frequency or severity. In an insurance company context, adjusters might give such feedback to underwriters. In a self-insured or in-house claims context, this “intel” can go to upper manager and safety personnel.

However, when a corporation internalizes the claims function, adjusters see operations on a recurring basis and can hone their ability to spot situations that can create future claims or make such claims more expensive. In such situations, in-house adjusters can directly reach the ear of management by giving feedback such as:

• “We are saying an uptick in low back strains. Perhaps we should invest more in training workers on proper of lifting techniques or providing abdominal belt supports.”

• “We are experiencing a 20% increase in repetitive stress injuries and claims for carpal tunnel. Perhaps we need an ergonomic redesign of those employees’ workflows.”

• “While visiting our Dayton facility, I noticed debris on the floor which could create a slip and fall hazard…”

• “Four company vehicle accidents over the past year have involved distracted driving. Perhaps we need to retool corporate policy with regard to texting and cell phone use while behind the wheel of company cars…”

Having in-house adjusters may help the claim professional identify more with the ultimate client and hone specialized expertise that enables claims people to spot little problems and trends before they become BIG problems.

Internalizing the Claims Function – Honing Specialization.

Companies that bring the claims function in-house are often motivated by a third factor: specialization in claims-handling ability. In-house adjusters are more attuned to the claims management philosophy and procedures of the client employer. Such adjusters also develop expertise in a particular aspect of claim investigation through repeated handling of certain types of cases. The more you do something, the better you tend to get at it. We understand this in most every vocation and walk of life.

Near where I live, a local plumbing contractor has a fleet of vans with signs on the side that read, “We fix all of your plumbing problems … including your husband’s repair jobs!” If you have a genuine need, you want a specialist.

The outside adjuster may be a jack-of-all trades, but that is becoming rare. Those days are gone. Specialization in adjusting fields has become the norm. However, some policyholders have claims that are so specialized that they chafe at having their losses “serviced” by generalists. They often feel they are reinventing the wheel each time a new claim arrives. They spend loads of time trying to educate the claims person to the nuances of their particular niche.

Such clients may feel a strong temptation to bring the claim function – wholly or partially – in-house. Many TPA’s may tout specialization of expertise. With some, the boast is genuine. For others, it is marketing puffery. Hiring adjusters in-house is one way to cultivate expertise that an adjuster might not earn during a lifetime with ABC Generic Adjusters.

For example, one municipal transit authority brought all of its liability claim investigations in-house. Its staff quickly developed expertise in escalator accidents at subway stops. This specialization is tougher to find among outside third party administrators (TPA’s) because, realistically, they rarely have a brisk volume of escalator claims.

Whether we agree or disagree with the wisdom of this approach, we can see that some risk managers and commercial policyholders want to pull in the reins and bring the claims function in-house. Here, they hope to either hire specialists and hone their skills or to hire a claims person with a knowledge base and mold them into a specialist. Rather than “buy” the skill sets retail, they opt to purchase them wholesale.

One upshot for insurer claim departments and TPA’s: be prepared to make a convincing case for your specialists and their availability in selling your services to skeptical policyholders and brokers.

Internalizing the Claims Function – Release Your Inner Control Freak

“Control freak.”

This is a term, often pejorative, applied to a person who is detail oriented and who seems to want to call the shots on everything.

Being a control freak may not necessarily be bad, though. One reason why companies bring the claim function in-house is due to their desire to exercise more control over the claims process. It often boils down to a “make or buy” decision. Do you pay retail or wholesale?

Beyond that, companies find that they have more control over how their claims are handled by internalizing the function. Tighter control over the process can often lead to better outcomes as a result. These controls might include service standards relating to claimant contacts, completion of investigations or subrogation pursuit. Better outcomes represent “the bottom line,” both figuratively and literally.

As a client of an independent adjusting service, the risk manager is still one fish – often a small fish — in a big pond. He or she still competes for the time and attention of an outside adjusting staff. Sometimes clients may have “dedicated” adjusters. Typically, this means that the adjuster is handling only the cases generated by Client ABC. Realistically, the client needs to have a certain brisk volume of claims to make this cost-feasible for an outside claim service provider.,

Another way to define “dedicated” adjuster, though, is to say that only Adjuster X will be handling my claims. The caseload of adjuster X may be comprised of file assignments from other clients, but the distribution of caseload assignments from Client ABC will not be sprinkled amongst seven different adjusters.

With a wide range of adjusters handling claims for a particular client, adherence to a client’s claim procedures may be spotty. Inconsistency looms. From one case to another, the risk manager may not know which adjuster is going to handle a loss. Constant turnover of personnel is often epidemic among insurer or TPA claim staffs, frustrating clients.

Internalizing the claims process can often address these problems. Having the adjuster as an employee instead of an outside service provider can enable the client to exert a more powerful influence in getting the right things done, and getting them done right. Claims could be handled the way they should be procedurally, with greater accountability for results. The on-staff claim adjuster has no competing constituencies. He or she has but one client: the employer. The field adjuster working for an independent claim service is juggling dozens of demands from many clients. None of them sign the adjuster’s paycheck. Some take priority and others may go to the bottom of the priority pile.

When the claims staff is in-house, though, the client’s name IS on the paycheck. Through the power to hire and fire, through performance reviews, coaching, physical proximity and compensation systems, the client can better “mold” the claim-handling activities of internal adjusting staff.

While cost savings often drive the decision to bring the claim function – wholly or partially – in-house, control issues also often factor in.

"Down With Lawsuits!! (Unless it’s MY Lawsuit)"

GOP presidential candidate, Rick Santorum, is coming under fire on a tort reform issue. Candidate Santorum endorses caps or limits on medical malpractice lawsuit recoveries by aggrieved plaintiffs. In 1999, though, Senator Santorum testified for his wife in a medical malpractice lawsuit she filed against a Burke, VA chiropractor. (See article in the Washington Post, 1/29/12, http://www.washingtonpost.com/todays_paper?dt=2012-01-29&bk=A&pg=6 )

In 1999, Sen. Santorum’s wife gave birth prematurely to a baby boy, who died that same day. Suffering from back pain post-delivery, Santorum’s wife sought relief from a Fairfax County, VA chiropractor. That chiropractor performed what he and other experts later argued was a standard spinal manipulation, usual for such symptoms. Soon thereafter, Mrs. Santorum was diagnosed with a herniated lumbar disk, necessitating surgery. Karen Santorum sued the chiropractor and won a $375,000 jury award. Post-trial, the judge reduced it to $175,000.

Some now criticize Candidate Santorum for being hypocritical, suggesting that there is one standard of recovery for the masses and a different one for the politically elite.

Santorum counters that his proposed cap is on general damages of pain and sufferinhttp://www.blogger.com/img/blank.gifg, not on special damages.

I don’t intend to get political here or throw bricks at Rick Santorum. The vignette spotlights an interesting issue, though. Sometimes our public policy leaning – often influenced by our profession – clashes with our real-life habits. As a claims person, I tend to favor tort reform, or most variants of it. If, however, my wife or my kids were seriously injured due to another’s negligence, I would likely “sue for the max” to make them whole, unconstrained by any analytical arguments for tort reform.

For example, despite all the jibes about lawyers, if you or a loved one find yourself in a tough jam, you definitely want a lawyer and the best one available.

We can joke around and quote Shakespeare who wrote, “First, kill all the lawyers…” When the shoe is on the other foot, though, and you are in crisis, a good lawyer is often what you need and want. There are scads of lawyer jokes but, as I often point out, the lawyers often get the last laugh, all the way to the bank.

That does not make us – or Rick Santorum – hypocrites, at least not in my view.

Have you ever had a personal experience that prompted you to reassess your “professional” view as a claims/risk professional on the tort and legal system?

New Year’s Claim Resolutions – Set Your Goals!

A Radical Notion? Pay Lawyers for Results, Not for Time …

The following quote jumped out at me as I was reading the latest book from marketing expert Jeffrey Fox in his book How to be a Fierce Competitor: What Winning Companies and Great Managers Do in Tough Times:

Lawsuits are expensive, risky and an enormous expenditure and diversion of management time. (So manage and pay your lawyers for results, not hours billed.)

What a radical notion?

Have you had success in transitioning your outside legal counsel from an hourly billing arrangement to an alternative fee arrangement or “pay-for-results arrangement?

New “READJUSTED” Book Offers 20 Traits for Claims Unit Success

READJUSTED: 20 Essential Rules to Take Your Claims Organization from Ordinary to Extraordinary by Christopher Tidball, © 2011, CT&A Publishing, Jacksonville, FL.

Author and claims guru Chris Tidball has penned “Readjusted,” the functional equivalent of “Chicken Soup for the Adjuster’s Soul.” Tidball’s subtitle is “20 Essential Rules to Take Your Claims Organization from Ordinary to Extraordinary.”

In READJUSTED, he spotlights twenty “rules” – each the focus of its own chapter – he believes can transform a claim operation. These rules range from Change Management (#10) to Attitude (#12) to Shooting for the Top (#20). Tidball decries the sloppiness and superficiality he sees in many claim operations. He advocates for a back to basics approach to recapture the essence of quality claims adjusting.

One nice feature of READJUSTED is that each chapter is a standalone essay, ranging in length on average from four to six pages. You can dip and graze from this claim-themed buffet line at your leisure and finish the book during one plane flight.

Alternatively, you can easily savor one chapter at a time. READJUSTED is a small (145 page) book that packs a big punch.

One theme that comes through from Tidball is that hiring for subject matter expertise is over-rated. In many cases, he has found it more effective to “hire for attitude and then train for skills.” Too often, he has seen seasoned adjusters hired, adjusters who brought with them more baggage than an O’Hare skycap. Better, he feels, to take someone with an open, eager and receptive attitude and mold that unformed lump of clay, sculpting that person into the claim professional that builds sound habits from the get-go.

Sports enthusiasts will relate to READJUSTED, as Tidball – a volunteer youth football and lacrosse coach — sprinkles his advice with examples from the world of sports and quotations from prominent athletic coaches. In fact, the book closes with a quote about professionalism . . . from none other than Joe Paterno. (In fairness, READJUSTED was published before the Penn State disclosures hit the fan.)

Doubtlessly, Tidball sees multiple parallels between building winning sports teams and molding highly effective claim units. (Perhaps if any adjusters slack off, we can order them to “Drop and give me twenty Proofs of Loss!”)

As a bit of cherry-on-top reading dessert, Tidball includes a closing section of Afterthoughts – Crazy Claim Stories and Wacky Accident Report Descriptions.

So, in the end, what is it that needs readjusting in order to elevate your – and your claim unit’s – adjusting “game”? What is needed to, as the celebrity check Emeril Lagasse might say, “kick it up a notch”!

Note: For more tips, listen to Kevin’s FREE podcast interview with author Chris Tiball at http://claimscoach.podbean.com

YouTube You Tube     Facebook Facebook     Twitter Twitter     Linked In Linked In
Disclaimer   |   Sitemap   |   CLM Advisors
Quinley Risk Associates, LLC © 2012. All Rights Reserved.
Website support provided by Aivilo Web Solutions, LLC.