June 16, 2021

7 Ways to Get Max Value from Your CPCU or IIA Class

Short (11-minute) video from The Claims Coach, Kevin Quinley….

https://vimeo.com/manage/535594916/general#privacy

New Podcast: The Perils (and Rewards) of Reporting Incidents to Insurers

Link to “The Claims Coach” podcast: https://www.buzzsprout.com/190163/8227273

>https://www.buzzsprout.com/190163/8227273

Bad Faith Myth: “Claims Should Not be Adversarial”

Many bad faith cases involve plaintiff allegations that an insurer treating the process as an adversarial one acts in bad faith.

I’m not buying it.

America’s system of civil jurisprudence, which many view as the best and fairest of any system, is based on an adversarial process. Each side in litigation presents its case to a judge or jury. They do so in the strongest possible terms. By a process where each side advocates as strongly as possible its positions, the judge or jury receives both sides of the story and can use that information to arrive at a just and equitable decision. Our entire system of civil jurisprudence is based on the notion that the most fair and just result comes from an adversarial process. Why this would be legit for our foundational legal system but illegitimate in the context of differences of opinions on claim disputes is beyond me.

This bad faith argument often arises in uninsured/underinsured motorist claims. Plaintiffs argue that such claims should not be adversarial. Like it or not, however, handling uninsured motorist claims involves aspects of an adversarial process. The damages an insured can recover under his or her uninsured coverage equal the damages he or she might recover in a third-party liability claim against the tortfeasor.

Of course, third-party liability claims are quintessential examples of claims resolved through adversarial processes. In a third-party liability claim, an injured person asserts a claim, often initiating a lawsuit, against the other driver. The other driver’s insurer defends its insured against this third-party claim. If the claim goes to litigation, that insurer hires a lawyer to defend its policyholder against the claim or lawsuit.

The purpose of uninsured/underinsured motorist coverage is to try to put an insured in the same position he or she would have been in, had the other driver/tortfeasor possessed liability insurance or adequate coverage limits. Therefore, insurance claim industry practice recognizes that handling uninsured/underinsured motorist claims will include adversarial processes inherent in handling of third-party liability claims, since the purpose of the coverage is to put the insured in the same position as if the tortfeasor had adequate liability coverage.

Additional disputes often arise in property damage claims, representing honest differences of opinion. No claims industry standard, no industry consensus claim-handling “rules of the road” tells adjusters that the claims must never be adversarial. Usually, they are not. However, honest disputes and differences of opinion arise that can reasonably and predictably spawn adversarial situations. While many if not most claims progress smoothly, by their very nature they can become adversarial through no fault of an adjuster or the insurer.

Conflict and clash of opinions is an occasional fact of life in the real world of insurance claims. Absent evidence that the clash of opinions was motivated by (a) adjuster animus toward the plaintiff or (b) adjuster expectation of financial gain from the insurer’s stance, it is a Gumby-like stretch to equate this with a breach of insurance claim industry customs, standards or norms.

While many if not most claims resolve without litigation or conflict, inherent in the claims process are frequent differences of opinion. These can be differences of opinion regarding coverage, damages or both. At the policyholder or third-party claimant decides to initiate a lawsuit, then the claim enters a new forum. That forum is the litigation process which is inherently adversarial. The policyholder or the third-party claimant typically topples that first domino culminating in the litigation, and adversarial process. No consensus insurance claim industry standard requires that the claim process not be adversarial, nor does any consensus insurance claim industry yardstick equate a claim’s evolution into an adversarial process as bad faith claim-handling.

Thanks for reading. I am a claim consultant who helps nationwide clients assess insurance claim-handling to improve litigation outcomes through expert evaluation and testimony on high-stakes cases. If you have a comment, a suggestion for a future topic, or a question about your own case, contact me at kevin@kevinquinley.com or claimscoach@gmail.com

Why Adjusters are Cognitive Athletes…..

Claim professionals are knowledge workers. They are expected to have competency in insurance coverage, liability and damage assessment. This involves a rudimentary familiarity with reading insurance policies, determining and apportioning fault, evaluating injuries, possessing fluency in medical terminology and the ability to evaluate if not generate damage estimates on real and personal property. It may involve a nonlawyers familiarity with local laws and the legal environment.

The spectrum of topics and subject matter domains within the adjusting field is daunting. Likely no one will ever master all. Adjusters are expected to assimilate large volumes of material – – medical, legal, investigative, damages documentation, settlement demand packets, lengthy defense attorney evaluations, applicable court cases, local unfair claim settlement practices regulations – – and make informed decisions as to coverage, liability and damages.

Adjusters don’t tighten widgets. Each claim is unique with its own complexion of circumstances and features. As a result, effective adjusters need analytical abilities and the ability to understand, often under tight deadlines, substantial chunks of information and to convert that information into the key issues that drive case defense, evaluation and resolution.

In designing work environments for claim professionals, we need to ask the question: “re we establishing a work environment that maximizes or degrades the cognitive abilities of adjusters to do deep work, thoughtful and reflective work or dropping them into a Pavlovian setting for their responding to beeps, chimes another audible cues?”

With the prevalence of remote work and telecommuting in the era of Covid, will employers wash their hands of the task of designing work environments for claim professionals that foster their ability to do deep work and perform at their cognitive peak?
A

Become a Sought-After Client: Assess Your Own “Payment Culture” With Outside Counsel

Recently I shared thoughts about specific questions that adjusters should pose to outside defense counsel to gauge the “billing culture” within the law firm.

This got me thinking about the “payment culture” within the insurance company or TPA overseeing claims and working with defense counsel. If it’s legitimate for claims people to poke and prod with regard to the law firm’s billing culture, it is legitimate as well for attorneys to inquire about the payment patterns of the insurer or claim department.

Admittedly, this is a delicate topic. Candidate law firms trying to win or keep business referrals from insurance companies do not wish to come across as being obsessed about billing. However, law firms — like insurance companies or businesses — and survive (or die) due to cash flow.

It’s no secret that some insurance companies (which will remain unnamed here), whether intentionally or through benign neglect, drag their feet and paying defense attorney bills. As a claim adjuster and supervisor, I knew of one multibillion-dollar insurance company that had an unwritten rule that no law firm Bill was considered for payment until it was 90 days old. Other insurance companies appear to operate on the basis that “the squeaky wheel gets the grease” (and the bill payment).

Tip: be a good client by paying bills on time.

Set expectations with outside counsel as to when bills get paid, within “x” number of days for example.

If there is a problem or question about a bill, communicate that quickly to the law firm so it can address it.

Consider issuing payment for the undisputed portion of the bill.

Help defense counsel maintain reasonable cash flow by not foot dragging bill payment.

Don’t put them in a bad spot vis-à-vis their firm management, which notes that there is a receivable problem with your files.

Avoid developing the appearance or reputation of a “deadbeat” client or a source of business. It’s going to be harder for the attorney to argue on coverage disputes that your company keeps its promises, knowing that the company drags its feet with regard to paying bills on time.

Claims people may be unaware that in many law firms, Insurance Defense Practice is looked down on by other departments of the firm. It can quickly be perceived as the orphaned stepchild of the different practice groups in a larger firm. Hourly billing rates for insurance work are much lower than those for other types of high prestige or cachet practices such as transactional work, tax, M&A, commercial litigation, intellectual property, etc. I’ve spoken to many attorneys in larger firms who do insurance work who privately tell me the pressure that they get from firm management to increase the rates.

Do you want to attract the best legal talent to your cases?

Do you want to be able to summon high-quality legal assistance on short notice in time-sensitive situations?

Do you want to be viewed as an attractive client, the kind that lawyers want to work for?

Set clear expectations with outside counsel as to payment cycles.

Honor those payment cycles.

Pay defense attorney bills promptly.

If there are issues or problems with the bill, communicate that quickly to outside counsel so that they can either explain the bill or consider writing it off or writing it down.
Assess your own corporate and departmental culture with regard to bill-paying. Strive to be a sought-after client by not creating undue financial hardship on the cash flow of your outside counsel and firms.

In the short run, you’re helping them.

In the long run, you’re helping yourself by demonstrating that you keep your promises and that you are a good business partner and somebody that high-quality law firms and attorneys want to work with.

Seven Questions to Ask Candidate Law Firms to Assess their “Billing Culture”

One huge aspect of shopping for legal services involves fee discussions. It is common to gather hourly rate information and fee schedules from candidate and incumbent law firms. Whether you are a claims professional, risk management, insurer employee, TPA rep or an in-house general counsel, you need to make sound cost decisions when selecting outside counsel for your legal needs.

A simple review of hourly rate or fee schedule may not tell you all you need to know, though, in managing litigation, controlling costs or assessing a good economic “fit” between yourself and a law firm. What hourly rates and fee schedules will never tell you is the “billing culture” within a firm. Hourly rate tells you nothing about how efficiently a lawyer works. It masks the situation where the firm low-balls the hourly rate but “makes it up” by laying on charges with a heavy pencil. If the firm arranges to take twice as long to draft a motion or research some point of law, the 10% reduction in fees you won are now offset.

That is a false economy.

While it’s easy to determine hourly rate, discerning a firm’s billing culture is notoriously difficult. That does not mean that it is impossible, however, or that the discerning buyer of legal services shouldn’t try nonetheless.

How do you get to the issue of a firm’s “billing culture,” the degree of pressure within a firm to pump up the volume on billings? One approach comes from asking the right questions during the “courtship phase.” This is part of doing due diligence on any attorney or law firm that you are considering. These may be out of the norm from the usual list of interview questions posed by risk managers, adjusters and other buyers of legal services.

Nevertheless, these questions can poke beneath the surface gloss, to probe the depths of the billing culture of the law firm in question. Consider these questions to discuss fee issues with any firm you are considering using. True confession time. I cannot take credit for these. They come from Chicago attorney Mitch Orpett of Tribler Orpett & Meyer.
Orpett rightly observes that few clients pose the following questions to law firms:

• What is the minimum number of hours your associates and partners are expected to bill? (We hear of some firms that have minimum billing quotas of 2000, 2200 or 2400 hrs. per year. That puts a premium on heavy billing.)

• What are the bases of attorney compensation and advancement? (Is work quality considered? How? What percentage of the evaluation is driven by production of billable hours?)

• Are billing minimums used, particularly by new attorneys who often handle the firm’s motion call for each day’s scheduled court appearances?

• What kind of training do new lawyers receive from the firm and who pays for training time? This tells you the commitment that the firm has or lacks with regard to ongoing continuing education.

• How are attorneys supervised? What is the firm’s general culture?

• Do your attorneys engage in non-billable activities? Who is responsible for reviewing and approving bills? Is there some kind of quality control or quality check on bills before they go out to the client or the insurance carrier?

• Do attorneys receive bonuses for hitting certain billing targets?

By posing these questions, you are putting yourself ahead of probably 90% of all clients. Many (most) client meetings with firms are “grip and grin” glorified social calls. It need not be this way. You do not have to transform yourself into The Grand Inquisitor, but pack the exchange with substance.
Let’s be clear and not dismiss out of hand the relevance of hourly rate as one data point to capture. None of this means that checking out the attorney’s or law firm’s hourly rate is irrelevant.

Do not throw away the fee schedule. Factor in those quantitative data points but leaven them with answers to these searching questions. Listen carefully to the answers. Then and only then decide if, financially, you and the law firm are a good fit.

What is missing here? What do you find are other ways to assess a law firm’s billing culture in order to help manage litigation costs? Share your thoughts here.

My Top 10 Books of 2014 …

Reflecting on 2014, I wrap up this year’s Claims Coach blog series by offering my end-of-year list of favorite books I’ve read over the past twelve months. (As you can see, none of them directly related to claims adjusting.) Nevertheless, here they are:

#1. A Guide to the Good Life by William Irvine. A philosophy professor from Wright State applies the ancient philosophy of Stoicism to modern life

#2. So Good they Can’t Ignore You by Cal Newport. Newport, a computer science professor and Georgetown University, punctures the myth that if you simply follow your passion, money and success will follow. Instead, he endorses the view that you become exceedingly good at a skill that can be monetized. Then, nurture that the point where you can set your own price and work terms.

#3. An Altar in the World by Barbara Brown Taylor. The former Episcopal priest who left the clergy explores the sacred in everyday life and ways to integrate faith into daily practices, transporting the practice of faith from the four walls of the church into the larger world.

#4. Being Mortal by Atul Gawande. I have read (and would strongly recommend) all of Gawande’s books and this one discusses the fundamental problem of aging, particularly in American society. Reading it should inspire anyone

to prepare a Living Will and an Advanced Directive.

#5. Pain Don’t Hurt: Fighting Inside and Outside the Ring by Mark Miller and Shelby Jones. This is a memoir of a kick-boxer who can write as well as deliver a roundhouse punch. An absorbing read of a cage-fighter who succeeds despite being diabetic and having a heart valve implanted. An amazing tale

of triumph over difficult life circumstances.

#6. Blue Mind: the Surprising Science that Shows how being Near, in, on or under Water Can Make you Happier, Healthier, more Connected and Better by Wallace Nichols. This book makes the case that being near water or in the water positively impacts your endorphins and quality of life. Since I live on a lake and read the book sitting beside a pool, this past summer, it was not a tough case to make.

#7. Untamed: The Wildest Woman in America and the Fight for Cumberland Island by Will Harlan. Hard to put down this true story of an iconoclastic woman who is a passionate environmentalist fighting to keep a relatively unspoiled island off of the Georgia Coast free from commercialization and development.

#8. The Elements of Legal Style by Bryan Garner. Not exactly the book that you curl up with and read cover to cover, but I found this book useful in my own consulting practice as an expert witness in insurance litigation, developing written reports for disputes in Federal Court. I am not an attorney and do not play one on TV. Nevertheless, I found the precepts of this book useful in crafting reports as an expert witness.

#9. A Factory of One: Applying Lean Principles to Banish Waste and Improve Your Personal Performance by Daniel Markovitz. I love being self-employed, but one downside of being a one-person shop is that the operation is not scalable. This book explains ways to optimize your efficiency, even if you’re a one-person operation.

#10. Another Great Day at Sea: Life Aboard the USS George H. W. Bush by Geoff Dyer. This is a rollicking good yarn that is a true story about daily life aboard a huge navy aircraft carrier. Dyer’s enthusiasm about the day-to-day workings of shipboard life is contagious.

A word about my reading habits. I average reading about eighty books a year. This year, I will come in at the low sixties. In other years, I’ve topped one hundred. I have been for any particular number, but have tracked my reading since 1986. I always have at least two books going at the same time and rarely work on three. I find it just too much to juggle.
I try to read at least twenty pages a day in each one of the two books. This lets me finish about three books every two weeks. If it takes longer, fine. If the book fails to grab me after about fifty pages, I’m more inclined to “bail” than in years past, were I would’ve greeted my teeth to the bitter end.

In any event, the Claims Coach wishes you a happy holiday and a successful new year!

Q: What were YOUR favorite or most impactful books of this past year?

Requiem for an (Insurance) Heavyweight: Don Malecki

I stray from my “usual” blog topics to pay tribute to a genuine titan of the insurance industry, Don Malecki, who passed away after a long illness on December 12th. The phrase “thought leader” is bandied about indiscriminately. In the case of Malecki, however, the shoe fits.

Malecki

It is no exaggeration to say that Don was a titan of the insurance industry. He was a authoritative source on insurance coverage matters and a prolific author. Malecki was most recently a Principal at the risk management consulting firm of Malecki, Deimling, Nielander & Associates. He was a frequent contributing author to various publications from the Dallas-based International Risk Management Institute (IRMI).

His insurance career spanned 50+ years, starting as a underwriter trainee with Fireman’s Insurance Company. He authored or co-authored 15 books, including three textbooks that have been used in the CPCU curriculum. He was a past President of the Cincinnati Chapter of the Society of CPCU and was an active member of the Society of Risk Management Consultants. Many may not know this, but Don was also a veteran of the U.S. Air Force, where he served from 1951 1955.

Don’s résumé is lengthy and astounding but he was anything but pretentious. I don’t pretend to have known Don as a close friend, but I did know him and enjoyed his prodigious intellectual content output, and his down-to-earth style.

I first met Don in the 1990s, when we were both speaking at one

of IRMI’s Construction Risk Management conferences. We had a speakers dinner the night

before the program. After dinner, Don proved to be a compelling raconteur and entertained the table with a trick that involve him being able to get a dinner spoon to stick to his nose. (After a few glasses of wine, this seemed hilarious…)

It encapsulates the fact that Don was anything but a pretentious egghead. Our paths intersected over the years at various insurance conferences and meetings. In 2008, I began to entertain the

notion of launching my own consulting an expert witness activists. One of the first individuals. I went to was Don. Don was extremely helpful in giving him his advice as to how to go about launching such a consulting practice. I deeply appreciated his thoughts and insights.

As an aside, Don said he was trying to wind down his own consulting an expert witness practice by jacking up his rate to $650 per hour. He observed wryly and ironically that, ever since increasing his hourly rate, is number of engagements had actually increased.

I last saw Don in October 2013, when we were both attending a conference in Charlotte, North Carolina of the Society of Risk Management Consultants. He was in good cheer, and I had no insight at the time of any health issue.

This did hit my radar screen, however, in December of 2013. I approached Don about the referral of an expert witnessing engagement from a Michigan attorney who sought an expert in underwriting and policy interpretation. The first recommendation that came to my mind was Don Malecki. I called Don about the prospective engagement and he explained that you just returned home to Cincinnati from a lengthy plane flight from the West Coast, and developed medical problems from that. He politely declined the engagement, citing his doctor’s advice that he not travel or take on any new work. At some point in early 2014, I learned of Don’s illness.

Don exemplifies a life well-lived — not just professionally but personally. He touched so many in the insurance industry but it would be difficult to underestimate his impact. His legacy perpetuates not only through his prodigious intellectual content in the field of insurance, but in the relationships in the lives of individuals that he touched. One risk professional, writing on an interest group listserv, commented “Everyone else in the insurance industry just moved up one notch.” Don was at the pinnacle and the likes of him are unlikely to be seen again in a very long while.

While we underfstandably mourn Don’s passing, we can celebrate his life and the ongoing, positive ripple effect of the legacy he leaves for the insurance industry.

Farewell and Godspeed my friend…

Confessions of a Claims Manager: 10 Ways Attorneys can Avoid Billing Tussles

Some of my best friends are defense lawyers.

To a person, however, they almost all feel frustration over insurance company cost pressures. Insurance companies face exquisite cost pressures. These filter down to claim departments and adjusters. In turn, they also filter down to defense attorneys.

How can defense attorneys whose practices focus on insurance claims foster improved relations with adjusters who assign cases and avoid contentious billing issues? Here are 10 tips from my years in the trenches of reviewing and paying legal bills:

#1. Read and follow the carrier’s guidelines! Virtually every firm at the courtship stage insists that they have seen all guidelines and will adapt happily to all guidelines. Often, this proves to be more lip service than substance. If you take on a new assignment for a carrier, study those guidelines as you would for a final exam.

#2. Avoid block billing, which is a red flag for auditors. One way to stay off the radar screen of bill auditors is to itemize each billing entry and avoid block building, where you describe a paragraph of activities and then put a bulk time charge next to it.

#3. Show “no charge” tasks on your bill with the notation “N/C.” There may be certain research or like tasks you have conducted in connection with the case for which – – for whatever reason – – you do not intend to charge. Include these on the bill, so that the client can see that you are handling the case frugally.

#4. Proactively revise budgets when case dynamics warrant. To paraphrase a popular car bumper sticker, “Stuff happens.” Budgets are useful disciplines, but they are subject to the caveat that circumstances change that can blow a budget to smithereens. Litigation is a dynamic setting, where factors beyond the defense attorneys control can necessitate additional work that would exceed an outdated budget. Do not wait for the client to ask for a revised budget. Part of your job is to scan the horizon for change in the circumstances. When these occur and drive a need for a revised budget, do that revised budget and send it to the client with some commentary.

#5. Quality check all bills before they leave your office. The client should not be the one catching billing errors.

#6. Never surprise the bill payer. Before sending forum achat cialis net out a “whopper bill,” pick up the phone and speak to the recipient. “The current bill is hefty and I wanted to prepare you and offer some context around it …”

#7. Provide context for expense accumulation. Further, if the bill is large, recap in your cover letter the factors that drove the significant activity on the case. E.g., “this billing period was a phase of intense activity due to the following

factors …”

#8. Make the proper introductions before having “strangers” bill on the file. Call the adjuster or the client to say, “If you have no objection, I’d like to involve Joe Blow on part of this case to do … I think this will be cost effective because …”

#9. Keep an eye on the Big Picture and the likely case value in the context of your bill. Do not run up a $50,000 bill on a case that has clear maximum exposure of, say, $25,000.

#10. Know thyself. Assess whether you really, really want to do insurance defense work. Hey — if billing guidelines and bill audits drive you crazy, consider another line of legal practice.

There are lots of other areas. If you chose to practice law in this space, though, understand the “ecosystem” in which you’ll operate and aim to cheerfully adapt! This is a whine-free zone!

Adopting these tips don’t guarantee that you will be free from all friction regarding legal fees. However, embracing these practices will go far toward getting paid, getting paid promptly, and avoiding being delisted from the carriers panel because of billing missteps.

Adjusters, has the policyholder hijacked your claim process?

In a past life as a claims-executive overseeing commercial lines liability accounts, a huge source of frustration was policyholders who — without authorization or communication — attempted to self handle their own claims. Then, when the claim blew up or bumbling attempts to resolve cases failed, they would transfer the wreckage to the insurance company claim department to somehow try to clean it up.

Handling claims was not their core expertise. Manufacturing wheelchairs, implantable heart valves or catheters was their core expertise. Such clients were no more qualified to handle product liability claims then I was to tell them how to design or manufacture a portable defibrillator or left ventricular assist device. Nevertheless, there were those accounts and clients – – often egged on by brokers – – who believed that they could do it better.

Perhaps part of the genesis for this is

the fear that if they report a claim, their insurance premiums will rise. Sometimes it may be because they have been burned by a bad experience with a prior insurance company and its inept claim department. Or, it could be because they believe that their superior product or technical expertise with regard to the product and technology carries over to their ability to adroitly navigate the claims process and bring a case to conclusion. Or, it could spring from hubris in believing that claims adjusting is not rocket science and that anyone can do it.

Sometimes, however, there’s a fine line between self-handling and self abuse. Further, in some cases corporate accounts have the in-house expertise and savvy to handle and manage their own claims.

(Although, if this is the case, why buy insurance? Why not just self-insure?)

Self handling a liability claim is fine if there is an understanding and agreement that the policyholder is authorized to self handle claims within their deductible or self-insured retention. In the absence of such agreement, many commercial accounts which are leaders in their market niche do not have the skill sets to adroitly handle claims.

Once, I saw a plumbing contractor’s van with the following assurance etched on its side, “We fix all your plumbing problems .… including your husband’s repairs.”

I had to chuckle. Sometimes the job calls for a pro, not a amateurish DIY attempt. Insurance claims fall into this category.

Russell B. Ross, president of the American Medical Association in the 1970’s once said, “Passengers who insist on flying the plane are called hijackers.”

Has your claims process ever been hijacked by well-intentioned but misguided policyholders who think that they can do a better job than the professionals in managing liability claims? Are the inmates running the asylum?

Question: How have you handled situations where a policyholder is attempting to self handle its own claims but is in over its head?

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