Monday, June 11, 2012

Establish Good Claim Relationships BEFORE The Loss!

“Sorry we had to meet under these circumstances..” Such is a comment heard at funerals and during insurance claims. One of the tough aspects of being a claims person is that we meet people under circumstances which are very stressful fir them. By definition, we are not going to engage with a policyholder unless and until he or she suffers a loss.

But … does it HAVE to be this way? Might there be a role for claim professionals before a loss occurs. Could it be that relationship building before a loss might make relationships (and claims) progress more smoothly after a loss?

The point, and somewhat radical notion fir claim departments is .. establish relationships before claims arrive. Typically, by the time a policyholder has any dealings with a claims adjuster, it’s because some kind of calamity has occurred. In this situation, the policyholder is stressed out and perhaps even antagonistic.

As claim professionals, though, why must we wait until there is a loss before reaching out to policyholders?

Be proactive in seeking ways to reach out to accounts and policyholders outside of the context of the claim. This could involve in-person visits. It might involve phone calls. It might involve doing brief in-service training sessions on claim reporting tips, etc.

Step back and think about how you can avoid situations where the only time a policyholder hears from an adjuster is when there is a loss.

Periodically demonstrate the value that you or your claims team has delivered to an account. Some might call this a stewardship report. Of course, this is certainly challenging if the account has had no losses. If an account has had claims, however, the time span leading up to the renewal date is a prime time to itemize the value. This presumes that you have added value during the preceding year. To demonstrate added value, you may want to point to:

Favorable settlements that have been obtained on behalf of the policyholder

Quick claims that were resolved for first-party losses

On liability claims, successful denials

Successful trial outcomes, measured either by defense verdicts or by awards
significantly below the reserve •
Any kind of visit, survey or training conducted by the claims staff

Periodic conference calls or sit-down meetings to review claims status and reserves

These are all part of a recap that you can develop in order to demonstrate value. Do it proactively BEFORE an account leaves.

Think of new ways to deliver value. Philip Lieberman of Lieberman Consulting Services recommends assembling a “claims kit.” According to Lieberman, this is a folder or file containing various documents: general liability claim report, automobile claim report, instructions on how to report different kinds of losses, etc. Further, Lieberman recommends that as part of a first meeting with new clients, while they are in a pre-claim phase, deliver the kit and discuss what the company should do and not to in the event with a loss. Further, schedule a special meeting with new clients and have a claim representative come and deliver that same message.

When is the best time to plant a tree? About thirty years ago.

When is the best time to start building good claim relationships with policyholders? Maybe the answer is, before a loss occurs!

Sunday, May 27, 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: . 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?

Tuesday, May 22, 2012

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.”

Wednesday, May 9, 2012

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
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!

Monday, May 7, 2012

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

Sunday, April 29, 2012

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

Tuesday, April 24, 2012

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 !

Monday, April 16, 2012

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 @ He can be reached at 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.


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.

Monday, April 9, 2012

Five Risk Management Lessons from Steve Jobs’ Life .. and Death

Like many other folks, I just finished reading Walter Isaacson’s bestselling biography of Steve Jobs. Jobs was and is a fascinating character, a visionary who changed the paradigm in multiple fields – personal computing, movies, music, cell phones, tablets. He successfully navigated multiple risks and obstacles, leaving Apple as perhaps the world’s most valuable company.

Isaacson’s compelling biography has shot to the top of current non-fiction best-seller lists. Interestingly, Isaacson will be a keynote speaker at the annual RIMS Conference, held this year in Philadelphia. Someone else must also think that Jobs’ story has lessons for risk professionals.

The success of Jobs’ biography has spawned a new generation of CEO’s who are Jobs wannabees – sporting black turtlenecks, turning minimalist and peppering their conversations with the Jobs-ian phrase, “Oh, just one more thing …”

In terms of navigating external risks in the business environment, Jobs was a genius.
In terms of navigating risks in his personal space, though, Jobs’ track record falters. Ultimately, Jobs succumbed to a form of pancreatic cancer which he had dealt with for years. Long before his demise in October of 2011, though, Jobs’ cancer was diagnosed in 2003. According to Isaacson, his doctors did a biopsy and were overjoyed to learn that Jobs had an unusual form of pancreatic cancer that was treatable through surgery. They – and many of Jobs’ friends and confidantes – recommended immediate surgery to stem the disease’s progression. His doctors lobbied for it. His family urged him to have the operation. Friends prevailed upon him.

Jobs refused.

He did not want “his body to be opened up.” Instead, he delayed and dallied. He explored holistic regimens to address his cancer: alternative therapies, including diet and visualization. Throughout his life, Job had experimented with offbeat diets and regimens. He fasted regularly. He was a “fruitarian” for one phase. Perhaps one of these regimens could address his pancreatic cancer.

They did not work.

By the time Jobs was willing to undergo surgery in late July of 2004, the window of opportunity for effective intervention had passed. The cancer had spread. He bought time with a liver transplant and various other treatments, but he failed to heed the advice of doctors and others that could have saved his life or extended it well beyond the span that he lived.

Five risk management lessons emerge here:

1. Weigh the advice and counsel of experts. Here, virtually everyone around Jobs suggested surgery. He discounted the advice, having succeeded in “willing his way” around most every other problem he had faced in his life. His “reality distortion field” did not extend to willing away pancreatic cancer cells. You don’t need to be an oncologist to understand that cancer cells don’t stop metastasizing because you are on a macrobiotic diet. In the realm of risk, if your defense attorney and policyholder are telling you to move to settle the claim, NOW, maybe you should listen.

2. Listen to your gut, but don’t always trust it. Instincts are not unerring. Experts are not infallible, but then neither are your instincts. No one wants to undergo surgery. No one wants to die, either. By undergoing surgery, though, he might have avoided premature death. Is it your gut that’s talking or is it the whisper of wishful thinking?

3. Human will is strong, but you cannot “will away” certain risks.
Companies may wish to ignore risks because they resent having to deal with them. The Ostrich Approach of sticking your head in the sand leaves you exposed. Companies targeted in lawsuits may resent finding themselves as defendants. “This is a bogus claim!!” They can become so mentally wrapped around the axle with indignation, they cannot view a claim unemotionally. Around a boardroom or conference room table, they convince themselves that they have no liability exposure. There is boardroom reality, though and there is courtroom reality. Unfortunately for companies, claims are tried in the latter, not the former.

4. Risk mitigation opportunities often have short windows. Seize them. Individuals – and companies – often have to seize the moment. Once passed, the window of opportunity may close and forestall opportunities to change one’s fate for the better. Timing is critical when it comes to mitigating emergent risks. Failing to address an employee unsafe practice on a “near miss” may open the door to more serious accidents down the road. It may also compromise the ability to later deny claims due to violating a safety standard. The toothpaste won’t go back in the tube. Carpe diem!

5. If you neglect personal risks – especially those regarding your health – you won’t be able to address external, macro risks. Put bluntly, you cannot continue to make ”insanely great” products if you are dead. In a sense, personal risk management – starting with managing one’s health – is the bedrock. Neglect that, and everything else that you set out to do can become moot. Before an airplane’s takeoff, flight attendants go through their safety instructions. They tell you that, in case of lost cabin pressure, put your own oxygen mask on first before trying to assist a child. This advice underscores the reality that you cannot help others without first taking care of yourself.

Steve Jobs was undoubtedly a genius. Perhaps it is unfair to expect a person to exhibit genius in all phases of his life. When it came to his own health and weighing medical risks, though, Jobs’ decision to forego rapid and decisive action deprived Apple of his continued leadership and deprived the public of an ongoing stream of innovative products which he might have developed through a longer lifespan and more sensible personal risk management.

Kevin Quinley CPCU is Principal of Quinley Risk Associates in the Washington D.C. area. He is the author of ten books on various aspects of claims and risk management. You can reach him at

Saturday, March 31, 2012

Litigation Management: Are Defense Litigation Budgets Billable??

A huge part (maybe too much, but that’s the subject of another post) of litigation management is cost control. One key tool in controlling costs is requiring that outside counsel submit periodic budgets. Some of these budgets may be quite detailed and involved.

Further, budgeting is not a one-time discipline. Ideally, budgeting is a recurring discipline on defense counsel’s part. The adjuster or client should have an initial budget within, say, 90 days of the assignment to counsel, at least. Further, budgets have a limited shelf-life, too. Like potato chips, just one won’t do.

Circumstances change which can render a budget out-dated. Responsive and astute counsel should be attuned to this, reporting not only on the changed circumstances, but the implications that those changes have on (a) case value and (b) cost of defense. Sometimes Budget A is predicated on the Judge ruling one way and Budget B is predicated on the Judge ruling another way. Having both scenarios budgeted for helps the insurer or client make both tactical and strategic decisions regarding defense versus resolution. Further, budgets help insurer and clients fine-tune Expense reserves.

In short, defense counsel may have considerable time wrapped up in preparing budgets. A good budget, done right, requires thought … and time! Attorneys may fully intend to bill for such time.

A potential friction point, though, comes when counsel includes in the bill time charged for budget preparation. Some insurers and clients balk at this line item in a bill, thinking that this is something counsel just ought to do anyway and not bill for. Some may refuse the pay any charges related to bill preparation.

Defense counsel bristles, feeling that this is a justified billable task. The insurer or client feels that the lawyer is over-reaching. It can become a distracting frictional issue, even if the amounts in contention are not huge.

Tip for insurers and clients: If you do not intend to pay for budget prep-time, so note this in advance with your client guidelines.

Suggestion: A fair approach and reasonable middle ground, in my view, is to include in litigation guidelines verbiage to the effect that, “We will pay for reasonable time spent preparing a budget. Generally, though, we do not expect counsel to spend more than one (1.0) hour on this task. If you feel more time will be needed, please discuss with us beforehand.”

Tip for counsel: If the client has given you guidelines, read through them carefully! Don’t assume that all guidelines are created equal. If there is anything that is problematic from your standpoint – such as no billing for budget prep – discuss that up front before accepting the assignment or agreeing to be placed on an approved panel. Either negotiate, in a friendly way of course, some leeway here, agree to absorb this time or respectfully decline the assignment.

Litigation is enough of a battle without distracting side-skirmishes with counsel over billing for budgets. Budgets are meant to curb costs, not hike them! Deal with the issue up-front so it is out of the way at the outset of the assignment and avoid it festering during the life of the case.

Sunday, March 25, 2012

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.

Tuesday, March 6, 2012

“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!

Monday, February 27, 2012

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.

Sunday, February 19, 2012

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.

Sunday, February 12, 2012

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.

Sunday, January 29, 2012

"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, )

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 sufferin, 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?

Sunday, January 22, 2012

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?

Monday, January 16, 2012

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

Monday, January 9, 2012

Bringing Claims In-House? The Cost-Savings Factor

“Show me the money!!” was wide receiver Rod Tidwell’s (played by Cuba Gooding) refrain in the movie, Jerry McGuire.

It is also often THE prime motivator for companies to decide to bring the claims-handling function in-house. In this blog series, let’s look at reasons why companies, self-insureds and risk managers are tempted to internalize the claims function rather than leave it to an insurer or a TPA.

Reduced costs often factors in as a prominent reason. At some break-even point, the risk manager finds the notion attractive to save money by bringing the adjusting function inside. By so doing, the risk manager buys the in-house services wholesale rather than retail. Whether shopping for Christmas gifts or claim services, wholesale prices are cheaper than retail prices. The costs for the self-insured entity or risk manager are then salary and benefits for the staff adjusters. These are fixed costs, however.

For example, if a company is paying, say, $750,000 per year in outside adjusting fees, the risk manager may figure that three quarters of a million dollars per year can buy a sizeable adjusting payroll, and still leave some money left over.

However, the company is now paying salary and benefits instead of adjusting fees. For a company which has less than twenty claims a year, hiring an in-house adjuster or claims overseer may not make economic sense.

However, if a company has a high volume of claims, then this option may start to look increasingly attractive. It is a “make or buy?” decision. As with any "make or buy" decision, making the service yourself is often cheaper, but you often lose some convenience. Many companies, however, become disenchanted with the billings and results of outside adjusting services. They are frustrated with turnover, superficial investigations, claim-handling lapses and unmet promises.

As a result, risk managers often believe they can do the same job better, and more efficiently. Whether or not their hopes for internalizing the claims function bear fruit is another story. This is, however, how it is supposed to work in theory.

What has been your experience in internalizing the claims function? Has it proved to be cost-effective? Did it attain the financial goals that drove the decision?

Tuesday, January 3, 2012

Special Events Risks: Accident Calamities Spawn Insurance Claim Opportunism

Indiana prosecutors have charged two Indianapolis women with insurance fraud arising out of the Indiana State Fair stage collapse in the Summer of 2011. Authorities report that Stephanie Murry and Sandra Hurn have been charged attempted theft, forgery and perjury.

Allegedly, each woman each submitted claims totaling $22,500 to a private relief fund and the State’s tort claim fund. Authorities also claim that both women submitted falsified hospital records describing injuries they alleged to have suffered at the Aug. 13th concert. The collapse killed seven people. According to prosecutors, neither woman actually attended the concert.

Claim adjusters know all too well that calamities can bring out the best in people and the worst in people. Put attempted insurance fraud in the latter category.

Learning of this sad vignette reminded me of a story I heard about the Philadelphia area transit system, SEPTA. One claim manager told me that, when a SEPTA bus had an accident, one of the first priorities was to cordon off the surrounding streets near the collision. This puzzled me – why was there such an edict?

“Simple,” he replied, “it was to prevent other people from running and jumping onto the bus after the collision, hoping to collect money from the claim.” Before this protocol, imagine the puzzled SEPTA adjuster wondering how one bus could possibly hold the 227 passengers claiming injury from a low-speed impact!

Years ago, Aerosmith had a hit song, “Jaded.” Claim professionals can become similarly jaded when they read of such opportunism. It is easy to become jaded and callused when reading about the calamity du jour. In one tongue-in-cheek list titled, “Top Ten Signs that You May be a Claims Adjuster,” one sign was, “You read about a catastrophe in the morning paper and exclaim, `Boy, I wonder how many claims will come out of THAT?’” Sorry, but that reaction can become an occupational hazard.

Four take-aways for claim operations:

1. Weave fraud-fighting into your claim-handling culture. Do you have an SIU unit? Is there an adjuster evaluation yardstick tied to fraud fighting and awareness. Remember the management maxim, “That which gets measured gets done.” When it comes to fraud fighting and awareness, are you measuring it? Do you tie it to adjuster performance reviews as one piece of the puzzle?

2. Be alert to “red flags,” but don’t assume that they all signal insurance fraud. Vigilance does not mean assuming that every question mark implies a fraud. Just because someone has had a prior claim (or two) doesn’t necessarily signal a professional claimant. Just because an accident was unwitnessed doesn’t necessarily mean it was staged. Fraud awareness must be tempered with good sense. Hyper-vigilance can lead to over-reaction which can lead to lost customers and bad faith lawsuits.

3. Train and train again. How often do you offer training in fraud-fighting? Sporadically? Regularly? Training can take many forms: in-house case studies. Inviting in guest speakers. Lunch and learn sessions. On-line modules. Circulating articles. Putting it on the agenda of claim staff meetings. It is not a “one and done” activity where you cross it off a checklist and assume that adjusters are now “inoculated” against insurance fraud encroachments.

Monitor – and limit – caseloads. When adjusters are overwhelmed with volume, there is a powerful temptation to cut corners. Adjusters are so busy putting out (figurative) caseload fires, they may not have the time, inclination or bandwidth to investigate questionable (literal) fires. They may pay claims and ignore fraud-fighting investigative avenues simply as a coping mechanism, the path of least resistance as they struggle to stay atop a 200+ file caseload. Adjusters with manageable caseloads are more likely to apply a learned “smell test” and follow up when something about a claim just doesn’t seem right.

Special event calamities can spawn not only tragedy and legit claims, but also fraud. Commit your claim operation to detecting and fighting fraud.

Make this an ongoing commitment, not a one-off “special event”!

In what other ways can claim operations show an ongoing commitment to fighting insurance fraud?