Post Number: 76
|Posted on Saturday, July 27, 2002 - 11:47 pm: |
Jerry's question as the start of a companion thread to this one has caused a valuable data base of information to be created thanks to Jim's efforts and committment to our industry.
However, with this thread in particular, I suggest everyone should print off "Some Tips For Avoiding Bad Faith Claims" and paste it to the wall in front of wherever their desk is this week. These are down to earth, common sense, everyday criteria for proper claims handling for anyone who touches a claim file. To be familiar with these guides, believe in these guides, and practice these guides; we will be better people, more professional, and better adjusters.
Some of you may incorrectly think that it is not your job to do, or cause to happen some of these valuable tips. However, whenever we work within the big picture of the insurer / insured contractual framework; we are exposed and we are vunerable - and we must be constantly aware of all these guides.
Take any scenario of so called "cat work" doing typical weather related claims.
If for whatever reason you felt a claim should be denied and your diary notes reflected that, did your notes also recommend / suggest the insurer send out a reservation of rights letter, while they took the time internally to decide on your recommendation?
For proper investigation and claims handling techniques, I get so irritated when I hear someone who calls themself an adjuster, boast that they saved the carrier a bundle of money by not mentioning (for example) ALE coverage to the insured but in the next sentence saying they would not live in the loss conditions the adjuster encountered. That is stupidity on the part of a fee schedule adjuster and also concealment / failure to disclose benefits by any adjuster.
You may have offered up in your notes what you believe to be factual and reasonable information that could be a basis for denying a claim. Did you search out and disclose any facts that may counter those facts? Did your notes also clearly document the findings used to make your determination, and again was that investigation broad enough?
If your denial conclusion and recommendation had any daylight at all, did your notes suggest that perhaps a legal opinion to assess your findings may be justified?
Reporting on a claim that may be denied, did your notes reflect the ramifications of such a decision? This is especially critical on commercial losses, due in part to other elements of loss that may weigh heavy on the total claim.
Where you get into a "debate" with carrier examiners regarding your file information and whether the claim should be denied (regardless if you were yes or no), have you respectfully suggested in your notes that perhaps a third opinion - that of the Claims Supervisor or Manager - be sought?
Accept these guides as how a professional adjuster operates. A few more notes in your diary entries or reporting - other than the template entries - will go a long way towards avoiding yourself becoming embroiled in a bad faith claim.
Post Number: 371
|Posted on Thursday, July 25, 2002 - 12:19 pm: |
SOME TIPS FOR AVOIDING BAD FAITH CLAIMS
The following is a list of tips that can help claims professionals avoid bad faith claims:
Know your state's Unfair Claims Settlement Practices Act. Almost every jurisdiction sets forth various statutory guidelines that should be followed when managing claims. One should be especially cognizant of regulations concerning the response time required for demands made by an insured. The failure to follow these provisions may give rise to bad faith. Following the statutory guidelines can support a defense to allegations of bad faith.
Reservation of rights letters and formal denials of coverage should generally be sent to an insured as soon as possible. However, specific day requirements will vary from state to state. Unfair Claims Settlement Practices Acts will typically indicate the required time frame.
Use proper investigative and claims handling techniques. To this end, what courts view as illegal, fraudulent, intrusive or harassing methods include some of the following: the concealment of and/or failure to disclose benefits, coverages or other provisions that are pertinent to a claim; making intentional misrepresentations of fact, law or policy provisions; refusing to pay claims without conducting a reasonable or thorough investigation; failing to promptly provide a reasonable and proper explanation of the basis for a denial of claim; making threats of dire consequences to force the insured to agree to an unfair settlement; making false accusations or oppressive demands; the exploitation of an insured's vulnerable position; unduly restrictive policy interpretations; and failing to appropriately advise a claimant of their rights under the law, including any relevant statute of limitations.
Make sure there is a reasonable factual and legal basis before denying coverage. Interview the appropriate individuals to determine whether they possess any knowledge relevant to coverage, and document the results of the investigation. Also make sure all facts relied upon in making a decision are accurate. Advice of legal counsel can help support a defense to a claim of improper refusal to defend or denial of coverage.
Check with counsel to determine whether the policy provision relied on to deny a claim has been held invalid or unenforceable by any state or federal court.
If a claim is related to an individual's health or personal injury, make reasonable efforts to obtain all available medical information relevant to the claim. Use skilled personnel in evaluating these documents.
Consider carefully the ramifications before refusing to settle a claim. If you believe a claim should be settled, do so promptly. A delay can (and has) resulted in bad faith liability. The tendering of limits after an unreasonable delay may not protect the insurer from excess liability.
Where there is any concern over potential bad faith ramifications, have a claims supervisor analyze and oversee the management of the claim. In this regard, supervisors should be well-trained in spotting potential problems and/or bad faith issues. The worst cases have often occurred where the claims analyst delayed getting help from superiors when there were potential problems. The sooner a potential bad faith issue is identified and addressed, the less likely problems will arise in the future
(Source: Zurich North America Bad Faith Study)