Wednesday, January 9, 2008

Reserving Coverage Rights does NOT Equal "Bad Claim Service"!

"Quinley" is an Irish name and my descendants doubtlessly hailed from Hibernia. My Irish acted up as I scanned the results of a recent Greenwich Associates study on claim service. Perhaps I was the only reader doing a double-take recently, reading the Business Insurance article of 12/10/07, “Claims Service Quality Varies Widely: Study.” On one level, this would seem to be a dog-bites-man story. The fact that there is variation amongst claim service quality by carrier is no more surprising than, say, underwriting expertise varies by company or investment management savvy, etc. Tell me something I don’t know. This is akin to headlines reading,

"Gravity Causes Objects to Fall to the Ground"
"Stocks Vary on Return and Yields"
"Britney Enters Rehab Again"

Thank you for delivering this hard-hitting news!!

But that is not what got my Irish up.

The article quotes an anonymous construction risk manager as pointing to one piece of evidence for lamentable claim quality the fact that commercial insurers “are quick to issue reservation of rights letters on some claims.”

Say what? The innuendo here is that such letters are invariably groundless, a claim which is unsupported at best and ridiculous at worst. Sending a reservation of rights letter is not tantamount to poor claim service. In many complex construction losses, legit coverage issues abound. Insurers are justified in notifying policyholders regarding the existence of coverage questions. Courts stand ready to “nail” insurers on waiver and estoppel if they do not meticulously reserve rights. Further, many states have exacting time guidelines within which insurers must reserve rights, lest they be estopped. If they fail to reserve promptly, they may be forced to cover gray area – or even uncovered – claims. Ultimately, the costs of such claims are passed on to the insured.

Sending a reservation of rights letter is no more bad claim service than submitting a gray area claim makes one a “bad” policyholder. Doubtlessly there are instances of specious reservation of rights letters. There is also no doubt instances of farfetched coverage tenders by insureds who are “fishing” for coverage that they knew they never really had or paid for. There are doubtlessly instances of sloppy brokering which leave risk managers exposed to perils which they thought were insured.

The reflexive notion that reserving coverage rights quickly signals “bad claim service” strikes me as ridiculous. It does underscore, however, that insurers could do a better job in making sure that such letters do not rub policyholders the wrong way. For example, claim reps could give the insureds an advance heads-up by phone call to discuss and explain what they were doing and why. They could do the same with the broker. They could emphasize the time requirements they have which force them to reserve rights in the face of incomplete information. They could make the letters’ tone more conversational and less legalistic. These are ways to soften but not emasculate the import of reservation of rights letters.

If foregoing the exploration of potentially valid coverage defenses is the price of good claim service, I submit that price is too high. Claim reps should look at other ways to “sell” the reservation of rights so that insureds will not reflexively assume it represents an effort to evade coverage.

5 comments:

Anonymous said...

Hello !.
might , perhaps very interested to know how one can reach 2000 per day of income .
There is no initial capital needed You may begin earning with as small sum of money as 20-100 dollars.

AimTrust is what you haven`t ever dreamt of such a chance to become rich
AimTrust incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.

Its head office is in Panama with structures around the world.
Do you want to become really rich in short time?
That`s your choice That`s what you really need!

I`m happy and lucky, I began to take up real money with the help of this company,
and I invite you to do the same. It`s all about how to choose a proper partner utilizes your savings in a right way - that`s AimTrust!.
I take now up to 2G every day, and my first investment was 500 dollars only!
It`s easy to get involved , just click this link http://iramugoquv.lookseekpages.com/ydopit.html
and go! Let`s take this option together to feel the smell of real money

Anonymous said...

Hello everyone!
I would like to burn a theme at this forum. There is such a nicey, called HYIP, or High Yield Investment Program. It reminds of ponzy-like structure, but in rare cases one may happen to meet a company that really pays up to 2% daily not on invested money, but from real profits.

For quite a long time, I make money with the help of these programs.
I'm with no money problems now, but there are heights that must be conquered . I get now up to 2G a day , and I started with funny 500 bucks.
Right now, I managed to catch a guaranteed variant to make a sharp rise . Visit my blog to get additional info.

http://theblogmoney.com

Anonymous said...

Hi!
You may probably be very interested to know how one can make real money on investments.
There is no initial capital needed.
You may begin to get income with a money that usually goes
for daily food, that's 20-100 dollars.
I have been participating in one company's work for several years,
and I'll be glad to let you know my secrets at my blog.

Please visit blog and send me private message to get the info.

P.S. I earn 1000-2000 per day now.

http://theinvestblog.com [url=http://theinvestblog.com]Online Investment Blog[/url]

Anonymous said...

Good day!

Sure, you’ve heard about me, because my fame is running in front of me,
my parents call me James F. Collins.
Generally I’m a venturesome gambler. for a long time I’m keen on online-casino and poker.
Not long time ago I started my own blog, where I describe my virtual adventures.
Probably, it will be interesting for you to find out how to win not loose.
Please visit my blog. http://allbestcasino.com I’ll be glad would you find time to leave your opinion.

business insurance quotes said...

Nice forum. I appreciate that you have thought of sharing so many posts related to the working and functionality of adjusters. This one is a very interesting post, this point is not valid at all and I also don't agree with it.