The Claims Coach

Internalizing the Claims Function - Release Your Inner Control Freak

2012-02-12T11:46:00.000-05:00

“Control freak.”

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

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

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

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

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

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

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

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

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

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

2012-01-29T17:59:00.005-05:00

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

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

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

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

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

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

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

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

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

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

2012-01-22T10:53:00.000-05:00

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

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

What a radical notion?

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

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

2012-01-16T15:36:00.003-05:00

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

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

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

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

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

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

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

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

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

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

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

Bringing Claims In-House? The Cost-Savings Factor

2012-01-09T16:04:00.000-05:00

“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?

Special Events Risks: Accident Calamities Spawn Insurance Claim Opportunism

2012-01-03T10:14:00.003-05:00

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.

4. 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?

16 Examples of Claim Professional’s New Year’s Resolutions

2011-12-27T15:13:00.001-05:00

Dick Clark. Times Square and the descending ball. Popping champagne corks.

All these are signs that the a new year is upon us, ready or not, like it or not.

This time of year offers a great opportunity for claims professionals to sit back, reflect on the past twelve months and plan for the upcoming year. In the context of goal-setting, take this time to ponder what you want to do professionally with your claims career in 2012.

Are you happy and satisfied with the course you are on? If not, what specific steps will you need to change your trajectory?

If you are on the right course, what steps can you take in 2012 to accelerate your journey and make it more fun?

What skills do you need to acquire and hone in 2012?

Goals should be specific, measurable and time-bound.

“I plan to pursue continuing claims education in 2012” is a lame-oh goal. Better: “I plan to complete two courses b y 12/31/12 that earn credit toward the AIC designation.”

“Planning to network more” is a weak goal. Instead, consider something on the order of, “In 2012, I will grow my LinkedIn contacts to 200 members and to attend at least three local claim association gatherings.”

“I plan to get a better job next year” might be replaced by, “I will update my resume, locate a headhunter and make a specific overture/application for a new claims position at least once a month in 2012.”

Should you keep your goals private or publicize them? There is no one right answer here.

Whether you share the goals with anyone other than yourself, I strongly recommend putting pen to paper – or fingers to the keyboard – and reducing to writing some specific, measurable goals for 2012, with specific target dates. No one can tell you what your goals should be. Here is a sampling of possible professional goals for 2012, meant only to spur your own thinking along these lines:

1. “I will find ways to capture a 10% savings in my claims department budget.”

2. “I will schedule monthly lunches with peer-level claims professionals within and outside my company.”

3. “I will conduct an employee satisfaction survey within the claims department and identify five action items for the year.”

4. “I will organize four in-house continuing education sessions for the claims staff.”

5. “I will strive to contain the growth in the organization’s overall claim costs by no more than X%.”

6. “I resolve to write a short article (750 to 1000 words) on a claims topic and submit it to publication in an industry newsletter, publication or trade magazine.”

7. “I will heighten my industry visibility by volunteering for one speaking role at a trade conference or claims seminar.”

8. “I will spend 30 minutes per day to professional reading in claims, legal developments, coverage, etc.”

9. “I will identify five work tasks that I currently do that are no longer necessary and will either discontinue or delegate them.”

10. “I will initiate quarterly informal meetings with my boss to gauge my progress on professional goals and to ensure we’re on the same page.”

11. “I will – on my own time -- update my resume quarterly and will make sure I speak with my friendly headhunter at least twice during the year.”
12. “I will prepare a concise claims management report for the upper management team and (if appropriate) Board of Directors quarterly.”

13. “I will conduct a thorough review of outside legal/rehab/contractor services this year to see where we can improve in quality or cost of service.”

14. “I resolve to leave the office by 6:00 PM each work day to increase my family time.

15. “I will successfully complete the following courses toward qualifying for the AIC, CPCU, SCLA, etc.”

16. “I will learn to use the following software program to help my work quality or productivity in 2012….”

OK, I said sixteen examples. Let me toss in another:

17. I will resolve to read The Claims Coach blog regularly and faithfully throughout the year…!

One final thought. Having goals is a great first step toward success. Just having them, though, is NOT enough.

Once upon a time, there were three frogs sitting on a lily pad. One of them decided to jump off.

How many frogs were left on the lily pad?

If you said two, you are probably like many of us.

The right answer: three.

Deciding to jump isn’t the same as actually jumping.

Deciding on a goal and writing it down isn’t the same as working toward it. Block out time on your schedule daily, weekly, monthly to engage in specific tasks that move you closer and closer to your 2012 goals!

Make 2012 your best year yet! Happy New Year!!

What professional goals in the claims field are you hoping to achieve in 2012?

Santa Clause Needs a Claims Adjuster

2011-12-20T17:37:00.001-05:00

Faced with a deluge of lawsuits, Santa Claus is seriously considering liquidating his business, owing to intractable risk management problems. Though his Christmas sojourns began three centuries ago, 98% of the court action has occurred within the past five years. Santa has finally decided to appoint a third-party claims administrator – The North Pole Group, Ltd. -- to bring under control a burgeoning claim volume.

Santa’ first stint as defendant involved a suit (1989) that was dismissed from court. An air traffic controller at LaGuardia Airport in New York accused Santa of violating public air space, "risking several hundred passengers' lives." Complex regulations govern LaGuardia air traffic, and these -- along with New York accents -- were poorly understood by Santa's four-legged sleigh guide. After being forced to land at LaGuardia, Santa was held up on the ground for four hours during tense negotiations over American Airlines attempt to charge him over $900,000 in excess baggage fees.

In 1997, Santa attempted to avert the airborne problem by keeping his sleigh on the ground, but was mired in traffic at the Holland Tunnel and barely completed his gift deliveries. In 2008, Santa's sleigh was towed and impounded by Manhattan Police after the sleigh stopped in front of a sign which read, "Don't Even THINK About Parking Here!"

In the early 2000’s, at least a dozen suits were filed in as many states, mostly by environmentalists. To wit: allowing twelve reindeer to fly through the air, given the "chances for accidental airborne pollution," was unacceptable. The Federal EPA threatened to cite Santa as a "potentially responsible party" and a transporter of hazardous material. A compromise was reached, requiring Donner and Blitzen to wear protective “dropping suits.”

Twelve bad boys in Austin, TX -- overlooked by Santa for failing to help with the dishes, not making their beds, and writing nasty words in public bathrooms -- won a landmark "fair share" decision in Harris County in 2008. Evidence showed that Santa had bypassed their houses in an "arbitrary and capricious way." The jury did, however, absolve Santa of having violated the Texas Deceptive Trade Practices Act. Additional plaintiffs, also overlooked by Santa, have filed suit under the Federal RICO (Racketeer Influenced Corrupt Organization Act), seeking treble damages for what they claim is a North Pole plot to discriminate against their failure to take out the trash, and playing a Snoop Dog rap version of “Muskrat Love” on their iPhones.

The early 2000’s also brought a barrage of product liability suits. "Since Santa crafts his toys," bleated Philadelphia Judge K. Kringle, "he must be held to the same standards as conventional manufacturers." Observers believed the big toy makers had stimulated these suits because Santa, using cheap elf labor and magic, had gained an unconscionable large market share. This led to opening of a formal Department of Justice investigation of Santa on antitrust grounds.

In 2009, Donner filed an "equal opportunity" suit against Santa and the North Pole Inc. Board of Directors on behalf of eleven reindeer against Rudolf. The court ruled that, with the exception of extremely foggy nights (to be determined by a court-appointed arbitration board), there would be a twelve-year rotation for the position of point-deer.

Recently, a spate of nuisance suits have embittered Santa: Spreading particulates from Chinese drywall from chimney-diving, 2007. Cruelty to animals, 2008. Wearing an inflammable red suit, 2009. Smoke pollution (his pipe was declared illegal, whether lit -- for causing air pollution -- or not -- for setting a bad example), 2009. Unlawful interstate commerce (United States vs. Claus, 2010). Violation of Section 2, Sherman Anti-Trust Act, for monopolistic practices, 2011.

Most bizarre was the 2010 suit pitting Santa against the "Cruel and Hazardous Labor Practice Act." Tragically, a four-foot elf suffocated in a nine-foot snow drift. Suit papers drafted by Lieff Cabrasser LLP asserted that Claus "knew or should have known" that unusual drifting conditions made it excessively risky for his diminutive helper. "Inexcusable negligence," said the open-minded jury with its findings.

What finally prompted to prepare a request for proposal for claims adjustment services? One elf observed, "Santa was not burned out, just burned up." Specifically, he was:

• Sickened by “Occupy North Pole” protesters who squatted near his workshop, insisting that toys “for the 1%” be instead distributed equally rather on the basis of merit for good behavior. (He refused a compromise offer of a quality-assurance committee to define "good behavior.")

• Fed up with litigators growing wealthy on the back of his generous spirit. In 2009, for the first time, the American Association for Justice (AAJ) formed a special Santa Litigation Group. As a result, about 250 firms nationwide established a network for exchanging document information obtained through discovery and production requests in dozens of lawsuits. Observed attorney Theodore S. Grinch of Yule & Tide, West Orange, NJ, "Public sympathy for Santa is such a big obstacle for plaintiffs to overcome, that this coordination is a must for injured parties seeking redress."

• Angered by cynics who question his motives for spreading joy. The worst of this sort suggested, without evidence, that the toy scheme was a "front" for international drug-smuggling. Documents produced through Freedom of Information Act disclosure in 2008 revealed that for nine months, Santa was the target of a Drug Enforcement Administration (DEA) probe. Rumors swirled of elf-staffed meth labs in the North Pole. Right-wing activists hinted that he was an Al-Qaeda cell operative. The fact that Saint Nicholas was a Russian also drew CIA attention, even in this post-Cold War age.

• Disenchanted with cash-starved local municipalities who lamented sales tax losses from free toys.

"And so," said a four-foot unemployed elf, "Santa is looking for a full-time in-house claims administrator."

Mrs. Claus, ever the realist, took no comfort from the knowledge that lawyers may no longer be able to profit so easily at her husband's expense.

"In 2012," she predicted, "they'll probably go after the Easter Bunny."

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Kevin Quinley CPCU, ARM, AIC is a claims consultant in the Washington D.C. area. You can reach him at kquinley@cox.net or at www.kevinquinley.com

How to Boost Claim Productivity during the Holidays

2011-12-15T09:49:00.000-05:00

For some claim departments and professionals, the holiday season marks a ramp-down of the pace of business. Less incoming mail arrives. The phone is quieter. Fewer lawsuits are filed and reported. Fewer emails and faxes intrude. (Your mileage may vary, again either due to the types of insurance you write or if you work for a TPA that gets overflow assignments.)

The silver lining: this temporary lull can be an excellent time for the claim staff to invest time in activities to boost productivity and get them off to a running start the next year.

For example, these include:

• Purging old materials (both hard copy and files on hard drives) that are no longer needed
• Organizing one’s desk, drawers and reference material
• Writing professional goals for the next year and embedding “ticklers” or reminders on the calendar to revisit progress on these periodically through the next year.
• Reflecting on the year that is winding down and do some “big picture” thinking about your job and career direction.
• Networking with other professionals that you had a hard time finding time for earlier in the year
• Updating your Rolodex
• Updating your resume (not while on the job, though, of course!!)
• Blocking out time for next year’s vacation and putting in your request NOW for that time off.
• Reaching out by phone, email or by card to key clients or business partners to wish then a happy holiday season and let them know how much you appreciate them.

Tip: use any “lull” presented at the end of year to catch your breath, gather yourself, get organized and get focused on what you want to accomplish as a claim professional in 2012!

The Claims Coach may scramble back up the chimney and not appear again before the end of the year, in which case, he wishes all a happy and fun holiday season!!

How do YOU use the holiday season to get ready for the next year? How have you used this time of year to catch up?

Kevin Quinley CPCU, ARM, AIC is a claims consultant in the Washington D.C. area. You can reach him at kquinley@cox.net or at www.kevinquinley.com This post is excerpted from a forthcoming book Kevin is writing on claims productivity

Special Event Risks: It’s Called “Bedlam” for a Reason

2011-12-06T10:41:00.001-05:00

http://online.wsj.com/article/SB10001424052970204083204577078742439428480.html

Many moons ago, an undergraduate at Wake Forest University, notable sports victories were celebrated by students by “rolling the Quad.” Dorms would empty as undergrads sprinted toward the tree-lined Quadrangle, armed with rolls of toilet paper. Crowds would then proceed to “TP” – “toilet paper” the branches of the stately magnolia trees. (Sometimes they streaked, but that’s another story.) Athletic victories for the Demon Deacons were rare in those days, so this quaint custom was an irregular event.

Celebrating college sports victories has, in the words of TV chef Emeril, “kicked up a notch.”

At the close of the December 3rd football game between Oklahoma and Oklahoma State, delirious celebrating OSU fans swarmed the field. The in-state rivalry is an annual match-up known as “Bedlam.” That label is well-earned.

The game had national college football implications, but the after-game stampede also has risk management implications. About a dozen people were injured in the process. Some were trampled. Others jumped down a 15-foot drop to get to the field.

Rushing the field (or, in the case of basketball) the court has become a bit of a tradition in college sports after a signature or milestone victory. That milestone may become a liability and risk millstone, however, for the college or university that allows it to happen.

Doubtlessly there will be the wave of inevitable lawsuits against Oklahoma State University, alleging negligence in security and crowd control. Plaintiffs may argue that such a swarm was reasonably foreseeable and that the University could/should have taken more steps to prevent this. The University will try to show that it took reasonable precautions. It may argue that there is virtually nothing that a college can do to absolutely thwart of determination of thousands of students to rush the field.

This episode has a number of risk management implications, not just for colleges but for all those who organize and manage special events. Those events can be football games, rock concerts or Black Friday retail specials. Implications include:

• What are reasonable precautions for colleges and universities to take in preparation for such eventualities?

• Is such a fan stampede reasonably forseeable by the school

• What responsibility do the fans play in assuming risk of injury when they swarm the field or take a leap off the stands?

The rush to the field may only be surpassed by the rush to the courthouse.

Have you ever attended a sporting event or concert that got out of hand or made you feel at risk of harm? Do you think the responsibility lies with the organizer or with the participants?

The Claims Coach is .... BACK!

2011-12-04T18:13:00.001-05:00

Claims Coach is …. BACK!

In the NFL, coaches live a perilous existence. If they don’t win, they often need to quickly find a good real estate agent. In fact, pro football joke that “NFL” stands for “Not For Long.”

I’m happy and excited to report that The Claims Coach is back!

After many years in the corporate world, I have launched Quinley Risk Associates, an insurance/claims consulting practice. Its focus will be on casualty claims, litigation management, training, writing, speaking, coaching and expert witness services.

Along with that comes the jump-start of “The Claims Coach” blog, dormant for years due to my commitment to a corporate role. Look for new blog posts to offer tips, tactics and strategies to work productively, smartly and save money (and Maalox) in handling litigation. Please also look for the resumption of risk management and claims management columns in Claims magazine.

The Claims Coach is “back in the game” and looking forward to sharing ideas with other claim and risk professionals in our vocational community!

“Due to an unusually high call volume . . .”

2009-08-09T11:05:00.001-04:00

What a bunch of BS!

I’m always skeptical when I call any business number and I get a recording telling me that my wait time is going to be prolonged because of an “unusually high call volume.” Sure!! Call me a skeptic. Especially, when you call in and every time the default mode is a recording talking about “an unusually high call volume.”

(Dude, if you always have a high call volume it’s not unusual!)

Methinks this is simply a way to hold off customers. It’s cheaper to make customers camp on hold that it is to hire adequate staff to man the phones. Just like commercial airlines. It’s easier to tell passengers to show up at the airport 90 minutes ahead of time than it is to hire sufficient customer service people to process tickets, luggage, etc. It’s all about them saving money, not about customer service.

Take a look at your own claim office or operation. Are callers met with a recording? Does the recording set them up for anticipated delays by referring to “an unusually high call volume?”

What message does that send about your commitment to customer service?

Adjusters are really in the food service business.

2009-07-18T18:18:00.000-04:00

My friend and fellow regular columnist for CLAIMS magazine, Ken Brownlee, likes to say that when he was a risk manager, his job specialty was pickles and jams. Very clever! I wish I had thought of that.

If risk managers deal in pickles and jams, that probably goes double for claim professionals. The daily challenges of claim professionals involved working with people who have gotten themselves into pickles and into jams, trying to extricate them from both.

I have often likened claims adjusters to first responders to an accident scene or to the HAZMAT crew that shows up in their special suits to clean up the aftermath of a chemical spill. They may show up to clean up the aftermath of poor risk selection decisions in some cases. They may show up to clean up the aftereffects of poor lost control decisions made by a count. In any event, it often falls to the claims adjuster to be a one-man or woman cleanup crew.

It’s summertime. Regardless of whether or not adjusters attend a county fair, there is a good chance that they are experts in pickles and jams!

7 Ways to Incentivize Adjuster Continuing Education ...

2009-07-18T08:55:00.001-04:00

Recently a friend at the Insurance Institute of America contacted me to ask for tips on how claim managers could incentivize claim adjusting staffs to pursue continuing education. The latter would include – but not be limited to – taking courses in the AIC (Associate in Claims) program, leading to the designation.

I don’t claim to have found THE key or solution, but I humbly offer seven tips on motivating adjusters to pursue continuing education:

#1 Make CE one component of annual performance appraisals. If you want it to get done, you have to measure it.

#2 Make CE pursuits one periodic (e.g. “coaching topic/opportunity” with reports). Repetition, repetition, rep .. Well, you get the idea.

#3 Publicly recognize and praise those who pursue AND COMPLETE continuing education.

#4. Enact/support corporate monetary rewards/incentives for CE program completion. $$$ is still a nice carrot, as is footing the bill to attend an annual conferment/convention event for employee and spouse.

#5. Provide a reasonable amount of time and reimbursement support for CE pursuit within the office.

#6. Offer CE classes or briefing sessions in-house, on Company time. Hey boss – roll up your sleeves and dust off those textbooks!

#7. Leadership by example – be involved in CE as a “boss” and make sure your reports know you value the activity!

One of the Dumbest Things I’ve Ever Heard …

2009-07-12T19:15:00.001-04:00

D.C.’s transit system is bracing for liability lawsuits arising from a spectacular head-on crash that occurred in June 2009. The crash killed nine and injured 80. (For recent story, see http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071102660.html)

None of this surprises me. In fact, being a claims guy, one of the first things I think about when hearing about such an event is the wave of litigation.

What caught my eye was a quote from the transit system’s former CFO and Maryland Board member Peter Benjamin. Deriding the prospect that the transit system would have to pay claims from its own funds, confident that the transit system has adequate coverage to address the flood of claims, Benjamin is quoted as saying, “The probability of having to pay enormous sums of money is relatively low. Our insurance rates will go up.”

Huh???

Sorry, but the judges and juries doling out awards could care less if your insurance rates go up. Your insurance rates going up is not check on jury awards, settlements or recoveries. It is an after-effect of those events.

It’s like saying,

“If I drive drunk and kill someone, I can’t get a big award against me because GEICO would raise my rates.”

“If my Rottweiler mauls the postman, I’m in the clear because Nationwide would jack up my premium.”

I can only hope that Benjamin was misquoted or that this comment was taken out of context. Otherwise, the Metro transit system may find itself digging into its own coffers if liabilities exceed their insurance layer. One thing is for certain – the prospect of rising insurance costs will not act as any “brake” on settlements or jury awards stemming from the June 2009 crash.

Revisiting CEO Review of High-Dollar Claims

2009-07-06T21:47:00.001-04:00

In April, the Claims Coach blogged about Evan Greenberg of ACE adopting the practice of personally reviewing all claims of $1 million or over, posing for discussion whether this was a good idea or a waste of a CEO’s limited time. One anonymous follower of the blog offered the following perspective:

“I could see the claims manager submitting a report to the CEO of a company in regards to claims reserved at or over $1,000,000. but the CEO reviewing these high $ claims? If he has limited or no claims experience himself, the poor adjuster is put in the position of give the CEO a `claims 101’ lesson (not an enviable position) and trying to justify everything he did- his investigation, damage control, evaluation, reserve recommendations. Please, let’s leave this up to the claims professionals!”

“Reviewing” covers a lot of ground. Maybe it’s one thing of a CEO wants to review each million-dollar claim. It’s another thing if the adjuster cannot consummate a settlement because the CEO hasn’t gotten around to reviewing the file.

Can you imagine being the claims rep at a judge-ordered settlement conference trying to get through to the CEO by phone for additional settlement authority while the Big Cheese is at a Board Meeting or on a flight to the coast?

Ape Liability (Continued)

2009-07-02T21:45:00.000-04:00

http://www.claimsjournal.com/news/east/2009/07/02/101919.htm

Now the victim of the enraged chimp “Travis” says she feared the ape due to its size, temperament and its tendency to damage its own cage. Charla Nash was attacked by the animal in February and was disfigured to the point where doctors at The Cleveland Clinic performed a face transplant.

Nash has filed a $50 million liability lawsuit against the chimp’s owner, Sandra Herold of Stamford, CT.

The Claims Coach speculates that Herold’s homeowners insurance coverage is triggered and that there is no way the homeowner’s liability policy limits remotely approach $50 million. The Claims Coach is not a lawyer, but is aware that often strict liability is applied to owners of wild animals, though legal counsel for Herold maintains there was no way for anyone to predict that the ape would inflict injury.

Notwithstanding those comments, it is tough to imagine that the homeowners liability carrier would not – at some point – tender its policy limits to try to get this case settled. The Claims Coach cannot imagine that the defendant would chance such a case to a dice-roll in front of a jury.

Given the horrific nature of the injury, the national publicity the case has garnered , the strict liability for injuries from domestically-kept wild animals – even the most stalwart and hard-nosed adjuster might think twice about trial and make a push to settle such a claim.

Going Bananas Over Product Liability Fraud

2009-06-28T19:18:00.001-04:00

Dole Food apparently is beset by bogus product liability claims filed by Nicaraguan banana farm works who claim they were made sterile by a pesticide, DBCP, last used in the 1970’s. An article in the latest issue of BUSINESS WEEK magazine (7/1/09 p. 16, “A Bunch of Fake Claims Against Dole?”).

Courts in that Central American country have awarded plaintiffs $2.2 billion in damages so far. Dole is not droll in fighting the claims and maintains that a mini-industry has sprung up south of the border to recruit people who never worked on the farms, give them briefings to make then credible and send them to sham medical clinics to goose up the damages.

Where are Bill Lerach or Dickie Scruggs when you need them?)

One upshot from this situation emerges for risk managers. Companies need to fine tune their mechanisms to handling foreign claims, an area that often gets short shrift. The tort lottery is most prominent in America, but other countries are finding it a tasty export from the good old USA.

Further, this vignette is a reminder that insurance fraud is not just an asbestos thing or a domestic U.S. phenomenon. Foreign claims-handling capabilities must include a search for SIU and fraud-fighting tools.

Another great articulation of “What Adjusters Do” …

2009-06-22T11:18:00.001-04:00

Few claim adjusters will ever be compared to Mother Theresa, nor do they vie for such an iconic status. Nevertheless, claim adjusters are often among the “first responders” in case of disaster and provided needed aid and succor.

For those adjusters who often wonder, “Why am I doing this?” one of the best explanations I have read comes from Pete Crosa, a claims authority who writes a periodic blog on “An Adjuster is What an Adjuster Does.” Peter hits the nail, on the head once again in his latest post, which I am offering verbatim:

"There is a great army of adjusters that swoop in right after a hurricane or a flood and, outside of a cold bottle of purified water and Red Cross personnel, they are one of the most welcomed sights to a battered and ravaged community.

"This concept of indemnity is as old as mankind. It’s not too difficult to imagine some primitive family losing their lone goat, camel, or other existence threatening asset only to be made whole by the care and generosity of other tribal members.

"Modern society didn’t ditch the concept, they merely packaged it and fashioned a legal contract called an insurance policy. How cool is that? Adjusters get to execute the terms of this insurance policy and we should feel pretty good about that. The terms are clear. Sometimes it makes them whole. Sometimes it just lessens the burden. But it always helps like it was designed to. That’s what an adjuster does."

Amen, Peter!

SIU Adjusters Needed to Fight North Korean Insurance Fraud!!

2009-06-19T17:35:00.001-04:00

Previously I didn’t know which was worse – North Korea’s burgeoning nuclear program or its Fearless Leader’s bad haircut. Now we learn that this country is a leader in international insurance fraud. Details and exploits are uncovered in a recent front page issue of The Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2009/06/17/AR2009061703852.html?hpid=topnews).

Apparently Korea National Insurance Company is renowned for procuring reinsurance and then submitting dubious claims. In fact, insurance fraud is a source of much needed hard currency.

Any anti-fraud or SIU adjusters looking for the ultimate career challenge might consider this one. Of course, taking on Kim Jong Ill might involve risking a stint in a North Korean labor camp. (Any adjuster who has flown Northwest will be well-prepared for this eventuality, however.)

Perhaps we should introduce a motion to the United Nations that it create an international SIU???

Invest in Your Career Through New CLM Lit Management Training Sessions!

2009-06-06T08:17:00.001-04:00

Vince Offer, the ShamWow pitchman, has nothing to worry about from me. You know – the scary dude on late night TV with the headset. (Actually, the economy is so bad now, I hear that some folks are knitting together Sham-Wows to fashion their own makeshift Snuggies!) ShamWows, Snuggies and Garden Weasels. We may laugh and snicker, but the pitchmen laugh too . . . all the way to the bank.

The Claims Coach isn’t given much to making product endorsements, but makes an exception now. I heartily recommend the new slate of litigation management training sessions being launched and offered by the Council on Litigation Management (visit http://www.litmgmt.org/Training.aspx ). The CLM is offering courses in 25 states, approximately 250 times from June to November 2009. Many provide adjuster CE credits.

The curriculum includes:

• “Fundamentals of Litigation Management”
• “Case Assessment and Evaluation”
• “Negotiation Strategies”
• “Structured Settlements”
• “Litigation 102: Pleasing and Motion Practice”
• “Litigation 103: Discovery Practice”
• “Litigation 104: Trial Practice”

Sadly, there has been a dearth of easily accessible training for claim professionals in the discipline of litigation management. This is ironic, as for many claim professionals this activity comprises a huge chunk of their jobs. The CLM helps fill this void.

In tight economic times, one of your best investments is to invest in your career – deepening your skill sets or broadening them. Visit the CLM website and consider registering for one of its sessions. Better still, join the CLM.

Caveat: if the session rooms are drafty, you’ve got to bring your own Snuggie….

Adjusters Have to Guard Kobe Every Day ...

2009-05-16T21:31:00.004-04:00

“Defensive specialist.”

In the NBA, a few players are known for taking on the tough assignments of guarding the most prolific scorers and unstoppable hoopsters. If your job is to guard Kobe Bryant or Lebron James, you’re in for a long night and have a thankless task. Despite the challenges, a few players rise to the mission. In current pro basketball circles, Shane Battier of the Houston Rockets is such a defensive specialist, charged with the daunting task of guarding Kobe.

A recent Sports Illustrated profile on Shane Battier (5/18/09, “Guarding Kobe”) and the rare breed of selfless defensive stoppers quoted Michael Cooper, former NBA star, saying that these stoppers are like being a “garbage collector” because “you don’t notice them until they don’t do their job. [They] handle the messes and the stinky stuff.”

“They handle the messes and stinky stuff.”

That quote jumped out at me and made me think of adjusters. You rarely notice adjusters UNTIL they don’t do their job. When they don’t do their jobs, you have irate claimants and policyholders. You have people calling to bitch and complain. You have grievances filed with the Insurance Commission. You have bad faith lawsuits filed against the company.

When claims people do their jobs, you just don’t have this phenomena. I have often said that the best managed claim offices are “boring” – no crises, no fire drills, no hot-to-the-touch complaints, no circling of the wagons due to a client meltdown.
Give me boring any day! If adjusters do their jobs, the function becomes self-effacing and less visible. Maybe that’s why it’s so easy to take it for granted, or assume they aren’t needed.

Yes, and adjusters handle the messes and the stinky stuff. They are at the side of the Interstate at 3:30 AM with the overturned tractor trailer filled to bursting with produce. They go out to investigate the three-car fatality and survey the grisly photos taken by state police. They have to explain to a pushy insured that the policy doesn’t cover all perils or loss. They have to be the lightning rods for the frustrations of consumers who want it done yesterday.

Adjusters handle the messes and the stinky stuff. Like skilled defenders in the NBA, they are the unsung heroes of the insurance world.

CEO Review of High-Dollar Claims: Best Practice or Pointless Distraction??

2009-04-18T22:02:00.000-04:00

I just read an article in Business Week (4/20/09, “One Greenberg’s Pain is Another’s Gain”) about Evan Greenberg, one of the sons of industry titan and former AIG potentate “Hank” Greenberg. Evan is CEO of ACE Insurance Company. What caught my eye was a sentence in the article that states that ACE’s Evan Greenberg still reviews every claim of more than $1 million.

This stopped me in my tracks. I’m not quite sure what to make of this.

On the one hand, it paints a picture of the fully engaged CEO. I’m not sure what kind of claim valuation background, if any, Evan Greenberg possesses. I would imagine that it is extremely rare for an insurance company CEO to exhibit this level of engagement with high ticket claims.

On the other hand, part of me thinks that a CEO is likely under-qualified to make reasoned assessments of claim liability and evaluation. Is this truly the best use of a CEO’s limited time and attention? Can you imagine being the claims adjuster at a mediation 1000 miles away, needing settlement authority above $1 million in having to call back to the Home Office and try to get the CEO of the company on the line?

Good luck!

So there you have the ACE template: the CEO reviews all claims above $1 million.

Is this a best practice or is it a distracting and pointless drain on the time of a chief executive officer who should be more engaged in managing the forest than the individual trees?

IKEA Gets no Discount on This Jury Award

2009-04-15T17:44:00.000-04:00

“You know what the word `IKEA’ really means when translated from Swedish?” asked comedian Jay Leno recently.

The answer: “Cheap particle board.”

Though the audience laughed, it is likely that few IKEA personnel are laughing over a recent jury hit that the retailer just took in the Washington D.C. area.

A Fairfax County (VA) woman was just awarded $3.2 million in damages for injuries she suffered in 2006 when a 350-lb. stack of countertops fell on her in one of IKEA’s Woodbridge, VA stores. The plaintiff, Xiaolie Zeng, suffered four fractures of her pelvis and alleged permanent injuries.
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/14/AR2009041402882.html

Fairfax County, VA -- which happens to be my home – is not known for having excessively liberal juries. From a defendant’s point of view, it is considered a fairly favorable jurisdiction. If you have a choice locally to be a defendant in Washington D.C. or Fairfax County, you definitely want your case in Fairfax County. This is no Robin Hood, “rob the rich to pay the poor” area.

It sounds as though liability here was pretty clear. The customer had been looking for a table, but did not find one that she liked Near the Exit, she stopped at the “As Is” section of leftover or bargain items but did not touch any of them. A stack of four particle-board counter tops and inside door collapsed on Ms. Zeng.

Given the clear liability, it is hard to see why IKEA did not settle the case and let it go to a jury. The article says the special damages were about $150,000. We do not know the plaintiff’s pretrial demand. Perhaps it was so high that IKEA felt that, even with a finding of liability, it stood a good chance of doing better than paying the demand.

That demand may be looking better now.

I Guess She Couldn’t Sue God

2009-04-13T18:12:00.000-04:00

“Michigan Church Faces Second Trial Over Fall at Altar” reads the headline from the Associated Press. (For the full story, http://www.claimsjournal.com/news/midwest/2009/04/13/99550.htm). Apparently Judith Dadd of Lansing, MI is suing her place of worship, Mount Hope Church. The suit flows from a July 2002 accident when she was overcome by the holy spirit, fell backwards and hit her head on the floor.

Her theory of liability: the church should have had an usher positioned there to catch her fall. That leads to an interesting idea, where churches might engage one “spotter” for each celebrant who is overcome with the holy spirit. The pews and aisles might be packed that way.

As a footnote, Ms. Dadd has added a defamation claim, saying her pastor has been wrongful stating that her injury was faked. Imagine that!

If you are the adjuster assigned to this claim, maybe one red flag would be the list of itemized special damages including a hefty bill from a faith healer …

“Michael Clayton” and the Tao of Claim Defense

2009-04-05T09:24:00.002-04:00

OK, so I'll confess don’t get to the movie theaters much.

($11 a ticket PLUS $8 popcorn? Are you kidding?!) But the wife and I watch plenty of movies on DVD, courtesy of Netflix. I know that time-wise I’m behind the curve here but last night I finally got around to watching and enjoying “Michael Clayton.” I had not realized that the movie centered on a product liability case, a class action involving a weed-killer and a mythical Nebraska-based company called U-North.

Some highlights of the plotline which may interest those in the claims realm:

• Bad documents can sink your defense (though how did these stay suppressed and secret so long?)
• Lead defense counsel strips down to his underwear during one plaintiff’s deposition (lending a whole new meaning to the phrase, “legal briefs”). Also, why did the lead defense counsel in this role have to be played by Tom Wilkinson instead of, say, Charleze Theron, just to pick a name at random.
• Defense firm of Kenner, Bach & Ledeen dances a jig when it hits 30,000 billable hours on the defense of the carcinogenic weed-killer. Yippee!
• Product defendant plays hardball on a whole new level.

OK, it’s Hollywood. I get it.

Nevertheless, if you work in the vineyard of liability claims, you may get a hoot out of “Michael Clayton.”

Claim-Handling woes are prominent in Consumer Insurance Gripes

2009-03-30T11:28:00.000-04:00

According to a recent study by the National Association of Insurance Commissioners, claim disputes and problems figure prominently among the reasons for consumer complaints. The top five reasons behind insurance complaints in 2008:

Claim delays 19.1%
Claim denials 18.4%
Unsatisfactory settlement/offer 14.2%
Premium & rating 4.7%
Cancellation 4%

What types of insurance generate the most claims?

Accident & Health 36.9%
Auto 36.7%
Homeowners 11.8%
Life & Annuity 9.5%
Commercial Multi-Peril 1.9%

Why Adjusters Matter!

2009-03-02T17:34:00.000-05:00

Peter Crosa is the President of his own independent adjusting company and private investigation firm based in the Tampa, Florida area. Among other things, he writes a periodic blog titled, “An Adjuster is What an Adjuster Does.” Lots of good stuff in there! There are very few people in the industry that I read and then kick myself, saying, “Boy, I wish I had thought of that!”

Peter falls into that skill category.

Recently, Peter’s missive discussed why claims adjusters fulfill a positive societal role. It is one of the best -- perhaps THE best – “Big Picture” perspective I have ever read on why claims people have reason to be proud and to hold their heads up high with regard to their chosen profession.

Too many times claims people have a permanent inferiority complex. I confess that I have often referred to claims as the Rodney Dangerfield’s of the insurance industry. I say that more as a description rather than legitimizing that sad state of affairs. Nobody entered the claims business for its prestige, high pay or cache during cocktail party introductions.

If as a claims adjuster you ever wonder whether you are making a difference by doing your job, please consider and ponder the following excellent articulation as to why adjusters matter. The following segment is reprinted with permission from Peter Crosa:

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

What have you given back to society? Is your community better off because you’re in it? If you’re an adjuster, the answer is yes. Here’s why.

You are given the responsibility to investigate and adjudicate contractual obligations and torts between citizens. Every claim you resolve before a law suit is filed, saves the cost of a trial. The cost of a trial includes the cost of the courtroom facilities and utilities, salaries of the courtroom staff, attorneys, jurors, witnesses and experts. It saves the time, sometimes several days, of the lives of countless people that would have participated in the trial.

So, just in case you ever feel embittered, embattled and unappreciated; just in case you get the feeling your supervisor is ready to throw you under the bus at any moment; and just in case you feel like adjusters are the un-loved step-child of the insurance industry, remember what an adjuster does.

And don’t forget to pat yourself on the back every now and then for a job well done; for being equitable and ethical. You do make a difference in this world and so does the adjuster sitting next to you. Pat them on the back too. That’s what an adjuster does.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Well said, Peter and Amen!

Two Insurers Make Business Week List of “Top 25 Service Champions”

2009-02-23T10:11:00.001-05:00

Business Week just featured its annual ranking of the nation’s top 25 “Customer Service Champs.” (Number One: Amazon.com). What caught my eye though was that two insurance companies made the list.

Weighing in at #2 -- in hot pursuit of Amazon, was USAA.

Coming in at #15 – Amica Insurance Company.

It is hard to tell how much claim service entered into these rankings. The commentary on USAA was that it handled 150,000 “cat” claims in 2008, twice its average. It enjoys a 96% retention rate, so it must be doing something good in the claims area.

Amica is lauded for investing in new technology to speed claim processing. It also notes Amica’s investment in staff and its employee turnover rate which is a measly 7% per year.

Claim service appears to be one path toward becoming a service champion!

Flo and Progressive’s Concierge Service Raises the Bar for Claims-Handling

2009-02-17T21:13:00.000-05:00

“Flo” is the irrepressible salesgirl with the tricked-out name badge in Progressive’s TV commercials. I was struck recently by one that touts Progressive’s “concierge” claim service. Many insurance commercials spout vagaries and platitudes but not too many spotlight claim service as a competitive differentiator. I am happy to see this. It comes down to more than saving 15% in 15 minutes or less.

In Progressive’s commercial, the insured brings in his damaged car, rings a call bell and a team of attendants rush out to get him a new replacement loaner. Concierge service indeed!

Apparently Progressive has even patented the process of “concierge claim service.” That process involves the policyholder reporting a claim and then,
• Dropping the damaged car off at a Progressive concierge claim center
• Driving off in a rental car
• Progressive writes a repair estimate and engages a repair vendor to come get the car, fix it and return it
• The insured is notified to come back and pick up the repaired car, which has by then been quality inspected by Progressive

Disclosure: I am not a Progressive customer or shareholder. In fact, my car coverage is with one its direct-writing competitors. I also doubt that the process always works to inspire rave reviews by policyholders.

Nevertheless, I applaud any carrier’s effort to compete on something other than price, to compete on service – namely claim service! Maybe it can inspire other insurers to raise the bar to develop their own functional equivalents of concierge claim service.

Now, if only Progressive could get Flo to use a bit less eye-makeup!

Might Super Bowl Sunday Bring Super Claims to Adjusters?

2009-01-30T21:36:00.002-05:00

WARNING: Football Helmet and Pads Could Make You Hot!!

In late January, the widow of NFL player Korey Stringer settled her liability claim and lawsuit with the NFL following her husband’s heatstroke death at the Minnesota Vikings training camp in the Summer of 2007. Stringer’s wrongful death lawsuit alleged that the NFL had not done enough to ensure that the equipment used by players protected them from heat-related injuries and deaths.

Strnger’s string of lawsuits included an earlier medical malpractice suit against the hospital that treated the lineman after e collapsed in the 100+degree heat. That lawsuit had already been settled.

But the lawsuits are not over. Still open is a claim and product liability lawsuit against Riddell Inc., the maker of the football helmet and pad. Apparently these products were defective because they lacked warnings to the effect that wearing helmets and pads in hot temperatures could be dangerous. Incredible!

Come to think of it, this could open the way to further litigation. Examples:
• Suits against General Motors for not putting written warnings on accelerator pedals.
• Litigation against Harley Davidson, for not designing motorcycles with roll-bars.
• A potential class action against Sarah Lee for irresponsibly baking with BUTTER for the last 30 years.

As Super Bowl Sunday approaches, hazards abound. That’s the bad news.

The good news: there are deep pockets to sue!

Recent studies show that Super Bowl Sunday brings a spike in drunk driving accidents and stomach ailments due to the mix of booze and bar food.

Further, doctors report that people who drink too much during the game and fail to go to the bathroom develop urinary retention, possibly warranting later catheterization. Come to think of it, most of the target audience for those Flomax commercials may be off making a head call at the very moment the ads air!

Other Super Bowl mishaps include:

• A guy getting so drunk he broke his teeth trying to open a beer bottle
• Fans who strained their backs while jumping up to cheer
• An upset fan so ticked off with his team’s performance, he tossed his TV set out the window of his third-floor window.

And we haven’t even gotten to the scourge of wardrobe malfunctions!

All these folks might form a class action lawsuit against the NFL, alleging that the League failed to warn them of the various hazards attendant with watching the game.

I just hope my cardiologist has adequate medical malpractice limits in case my ticker goes haywire while I’m watching that sexy PETA commercial …

Safe US Airways Landing May not Avert Claims Splash and Courthouse Dash

2009-01-27T21:50:00.000-05:00

When I first heard of the miraculous landing of the US Airways Flight 1549 jet in the Hudson River two weeks ago, my first reaction was, “Oh boy – here come the lawsuits.” True confessions from a hard boiled cynical claims person. Even though each passenger survived the landing due to pilot “Sully” Sullenberger’s heroics, I assumed lawsuits would be filed. Grounds might include soft tissue injuries from the bumpy maritime landing, to mental anguish from fearing a crash to exposure to cold during the rescue process.

Now it looks like I may have been premature in my suit-happy assumptions. (See, “Savvy US Airways Pilot May Have Grounded Lawsuits,” http://www.insurancejournal.com/news/national/2009/01/23/97196.htm

Some say that the pilot may have not only averted a tragedy, he may have averted lawsuits. Moreover, flying into a flock of geese might be termed an “Act of God.” Still, I figured lawyers would find some theory of liability, like a different jet engine design would be more impervious to bird strikes, or that the aircraft lacked equipment to detect bird flocks or that the airport authority knew of the bird peril but failed to alert the airline. God forbid that there be no deep pocket to sue! This is, well, un-American!

Pundits are having fun with the splash, though, some suggesting that . . .
• US Airways’ new marketing slogan should be, “One if By Land – Two if By Sea!”
• Each flight will now have an on-board cruise director as well.
• To generate revenue for the cash-starved airline, US Airways might consider charging $25 apiece for each personal flotation devices used.
• All on-board music courtesy of the group, “Flock of Seagulls.”

Since all passengers and crew survived, we can now chuckle . . . at least until the Summons and Complaints are served.

Too bad the aviation lawyers cannot sue the geese, especially since it is rumored that the birds were distracted in flight by text-messaging each other … Alas, no liability coverage on the geese. (This coverage gap may be an issue befitting the Loyal Order of the Blue Goose, come to think of it.)

Other aviation lawyers are having none of the “Act of God” spiel. By golly, there has got to be someone to blame! (Better still if they have liability insurance coverage.) I often quote the anonymous sage who once said, “Death is not the end; there remains … the litigation.”

When it comes to aviation mishaps, perhaps we can say the same about safe landings.

Practice Checklists: If Surgeons Can Benefit, Why not Adjusters?

2009-01-17T09:17:00.000-05:00

This week a number of articles emerged about how simple surgery checklists improve patient care, save lives and reduce adverse patient outcomes. (For starters, see http://www.time.com/time/health/article/0,8599,1871759,00.html)

The idea is that before surgery, the surgical team as a group completes a checklist that includes
• Verifying the patient’s identity
• Confirming the site and type of surgery to be performed
• Confirming availability of backup blood supply “just in case”
• Post-surgery – accounting for ALL sponges used during the procedure

A recent study published by the New England Journal of medicine shows that the use of such checklists can cut patient mortality rates nearly in half and complications by over one third.

This has implications not only for medical malpractice risk management and claim defense, but may have broader implications for claims handling and management across the board.

For example, if surgeons can improve their own risk management practices by using checklists, perhaps a claim offices can as well. Does your claim office have as resources checklists readily available for of the claim staff, checklists that are customized to handling all of the various types of claims that come across you were desks?

Yes, I can anticipate retorts that good claims handling amounts to much more than just working from a punch list were a checklist. I also anticipate surgeons arguing that good medicine involves much more than simply working one's way down a punch list or a checklist.

Fair enough. Nevertheless, as a framework for surgical practice or adjusting practice, perhaps there is a kernel if not more than just a kernel of a sound idea here.

How many client lapses were botched assignments might have been averted had the adjuster had access to and used a thorough checklist that encompassed all of the major contours of claim handling?

If it works for surgeons, why not for claims adjusters?

Insurance Renewals: Seven Ways to Assess Claim Service

2008-12-19T21:34:00.000-05:00

Great American Insurance Company is catching flak from some policyholder and legal quarters for a coverage stance it has taken on a Houston office fire. Three people died in a 2007 blaze and their estates are suing the building owners, who are insured by Great American. The insurer is disclaiming coverage based on the policy’s “pollution exclusion,” arguing that smoke is a pollutant and the smoke caused the fatalities. At issue is $25 million in claims. Is this a smokescreen or a legit coverage defense?

Those voting “smokescreen” seize on this vignette as an example of bad claim service and the need for insurance buyers to factor in quality of claims-handling when making insurance buying decisions. I will not endorse or excoriate Great American’s coverage stance. Rather, my focus is on how risk managers and insurance buyers can assess claims-handling quality in the buying equation.

Call me a cynic, but I wonder how many risk managers or buyers would still take an insurer’s price if the quote was low enough. Put differently, I wonder just how much – if at all – a “bad claims reputation” really weighs materially in buyers’ decisions if they can save dollars on coverage cost. Too often lip service is paid to claims-handing quality, but too often in the real world marketplace -- when push comes to shove -- it’s more often all about “getting the lowest quote.”

Premiums are expressed in dollars and cents. The cost is measurable. Financial rating agencies like A.M. Best and Moody’s provide quantitative assessments of financial strength.

Measuring quality of claim service? That sounds pretty warm and fuzzy. Here, however, are seven suggestions for risk managers and insurance buyers in trying to assess the quality of claims handling for a prospective insurance partner:

1. Ask for client references and contact information. (The obvious drawback here is that the insurer would have to be an idiot to give anything other than cherry-picked, glowing references.)
2. Have your insurance broker assess the industry perception and “scuttlebutt” about a candidate carrier’s claim service.
3. Check with the state Insurance Department regarding the number of complaints filed against a carrier. (In some states, you can do this on-line.)
4. Ask the insurer for the resumes of the claim professionals who would be handling your claims. If it balks or says it cannot determine who would be in charge of your claims, that is a bad sign.
5. Ask the insurer rep to give you three reasons why their claim service is better than the competition. If they bumble stumble or harrumph, move on to the next candidate.
6. Request a copy of any written customer/claim service standards that the insurer has that governs claim-handling procedures
7. Have an attorney do a quick Lexis-Nexis search on the carrier to gauge how often it is engaged in coverage litigation, the fate of such cases, the frequency of bad faith suits, etc.

Price-driven insurance buying decisions are not necessarily bad. However, some risk managers and buyers may find out that the coverage quote was cheaper for a reason. By the time they get stuck with crappy claim service or a farfetched coverage disclaimer, no one is likely to console them by reminding them that they got a 10% discount on the cost of coverage.

Measuring and assessing quality of claim service is probably never going to be as easy, measurable or quantitative and is comparing costs or financial ratings. Nevertheless, astute buyers can elevate the caliber of their due diligence in ferreting out this crucial component of the buying decision. Further, astute insurance companies and adjusting firms can assess these suggestions and proactively package their proposals to demonstrate a commitment to high caliber claim service.

And that’s no smoke job

“YES WE CAN!” may be new Plaintiff’s Bar Mantra Starting in January ….

2008-11-22T16:53:00.001-05:00

For claim adjusters, the tort landscape is their battleground. It shapes and frames the rules of the game. Those rules can mean the difference between a boxcar reserve or a nuisance value number, between a defense verdict or a runaway award. A recent Business Insurance article (BI, 11/10/08, “Risk: Future of Several Issues Debated,” p. 25) cites three factors that may cause the Obama Administration to impact the tort landscape.

First Supreme Court appointments likely to be made within the next four years may influence areas of employment law.

Second, an Obama Administration may take a more circumspect view on Federal preemption. This arcane defense has huge financial implications for sectors including but not limited to pharmaceutical and medical devices. Preemption is the notion that, in some cases, Federal approval of a tightly regulated product renders that product immune from state tort claims saying that a product is defective. Billions of claim and defense dollars ride on this issue.

Third, Vice President-elect Joe Biden has been a consistent opponent of tort reform.

So, while the build-up for the January inauguration continues, claimants and members of the personal injury bar may ask, if only rhetorically, “Can we be more successful in pursuing claims starting in 2009?”

The likely answer is, “Yes we can!”

Jay Leno Gets Comic Relief from Insurance Claims

2008-11-18T15:49:00.002-05:00

Jay Leno’s opening monologue on November 17th included two insurance jokes.

One poked fun at NBC. Leno said that, if the raging Los Angeles wildfires got too close to the NBC studios, audience members should do nothing to quell the flames because, “NBC needs the insurance money!”

He also observed that, after an LA-area disaster response simulation on November 14th, scientists had now figured out a way to give citizens 30-seconds of notice prior to an earthquake. “Of course,” Leno quipped, “that won’t give you much time to do anything but it will give State Farm enough time to cancel your policy!”

Who knew that insurance claims provides so much comic relief?

Does Speed of Claim Processing Correlate with Customer Satisfaction?

2008-11-10T15:33:00.001-05:00

At one point during the movie Top Gun, Tom Cruise’s character – Maverick – turns to his fighter pilot buddy Hondo and yells, “I feel the need for speed!”

Claim adjusters may merely climb into the cockpits of their company cars instead of an F-15, but many still feel the need for speed. They feel it from bosses, from corporate service standards, from policyholders, claimants and attorneys.

Does faster claim service correlate with heightened customer satisfaction? A question on a LinkedIn discussion group among P&C Claim Professionals got me thinking on this topic.

The type and texture of the claim may dictate greatly the correlation between speed of processing and customer service. For example, if it is a straightforward first-party property loss, speed and customer satisfaction may directly correlate.
The insurer that can handle that claim in 24 hours or so will likely get high marks from me in customer service and satisfaction.

If I am a commercial policyholder facing a complex third-party property claim with time element features and find that my adjuster, in the interests of speed, has settled a claim in three days I may be tempted to think I got screwed because the adjuster
(a) did little or no investigation and/or
(b) over-paid the claim to slam the file shut quickly.

The context of the claim may a factor in correlating speed vs. customer service; in some instances, those factors may be inversely related. It’s tempting to give a lawyerly “It depends” answer to the question. Depending on the type of claim, though, adjusters could say “Speed Thrills” while others could accurately say, “Speed Kills.”

Faster is better … except when it’s not.

If Dems Win, Adjusters Can See Silver Lining in Resurgent Tort Bar

2008-11-03T12:18:00.001-05:00

Today’s Wall Street Journal has an article (“Lawyers Aim to Roll Back Curbs on Lawsuits”) that addresses a theme the Claims Coach discussed a few weeks ago.
(http://online.wsj.com/article/SB122567159552291829.html)

It examines the implications of a prospective Democratic victory at the polls tomorrow. Apparently tort lawyers are licking their chops and refueling their Gulfstreams at the prospect of an Obama Administration. Financial contributions from law firms weigh heavily toward the Democratic side. Curbs on lawsuits, tort reforms, caps on recovery for non-economic damages, mandatory arbitration clauses in consumer agreements are all at risk.

Tort reform has not been a hot campaign topic in the McCain vs. Obama race. No surprise there. Amidst the panoply of more oppressing issues – the tanking economy being foremost – it’s hard to make any case for tort reform being a big deal.

Adjusters and claim professionals may lament the prospect of their jobs being rendered more challenging if the tort climate evolves into a more pro-plaintiff atmosphere.

On the other hand, to the extent there are more claims and loss severity grows due to changes in the legal environment, perhaps those factors will drive a stronger need for employing good claims talent.

Here lies a possible silver lining: whatever provides full employment for the plaintiff’s bar may as well provide full employment for claim professionals!

Will your claim file be the subject of the next consumer blog?

2008-10-31T22:37:00.000-04:00

Time was you urged adjusters to consider the New York Times test in assessing their actions. You told them, don’t write anything in the claim file that you wouldn’t want to have on the front page of the morning New York Times. Don’t do anything you wouldn’t want reported in the New York Times, either.

That is still sound advice. In the Internet Age, though, it might bear some tweaking. Nowadays, if you shortchange a consumer – or (perhaps more importantly) – if a consumer thinks he or she has been mistreated by an adjuster, there’s a chance you could wind up as the subject of a blog.

Over the past month, the Claim Coach has seen at least a half dozen blogs fueled by steam coming out the ears of disgruntled policyholders and claimants. It has been said that nowadays the three most feared statements are,

“Here’s a letter from the IRS …”
“The doctor wants to discuss your test results ..” and
“Would you like to read my blog? …”

Many blogs are very specific in naming names, companies and excoriating claim practices. The Internet provides an electronic pulpit for disgruntled consumers to rant about how the adjuster never returns phone calls, wants to replace the quarter-panel with substandard parts or is balking at paying for smoke damage to the kitchen.

Have a good consumer experience and you may tell three other people. Get burned by a claim adjuster and you can let thousands know through the electronic bully pulpit of the blogosphere. This is an era where there are websites with URL’s such as www.dellsucks.com or www.ihatewalmart.com If you wanted to be famous on the web, I doubt that any adjuster, insurer or TPA had that in mind!

None of this is to inspire paranoia on the part of adjusters or their companies. If they are on solid ground, stick to their guns. It highlights the reality that companies, adjusters and an industry sector has a reputational risk at stake due to how we treat policyholders and claimants. If all your actions, inactions and statements were reported on the blogosphere, would you still feel comfortable?
Consider that as one yardstick for assessing your file-handling.

Adjuster fame through an irate consumer flame-job is no way to become well-known!

My Fellow Americans ....Is there an "Adjuster's Candidate"??

2008-10-11T11:17:00.001-04:00

Which Presidential candidate stands to improve the lot of claim adjusters? Is one of the am “Adjuster’s Candidate”? Seriously, I don’t pretend to know. Nor should any of the following comments be seen as an endorsement for one candidate over another, not that such imprimatur would sway anyone’s vote. However, we can hazard some projections on how political issues might align with adjusters’ interests.

One issue that engages many claims people is tort reform. Adjusters toil in the vineyards of the tort system every day. For them, it is not some ethereal policy debate. Adjuster have to open their company’s checkbooks regularly because of the tort rules, and often end up feeling – rightly or wrongly – that those rules are stacked against the adjuster and for the claimants and their lawyers.

Historically, Republicans have been more congenial to reforming the liability system. By contrast, Democrats tend to see tort reform as a guise for pro-business interests and a way to shortchange consumers. Plus, the personal injury bar is historically a huge financial contributor to Democratic candidates.

One problem with this stereotype is that, against the backdrop of economic crisis and foreign policy challenges, it is unlikely that either candidate is going to be focused on tort reform as a burning domestic policy issue. Further, Sen. Barack Obama was a supporter of the Class Action Fairness Act. Amidst all the domestic and foreign policy hot potatoes, it is difficult to see any type of tort reform legislation getting much traction. This, coupled with the growing public image of big businesses getting government bailouts, throwing a tort reform “bone” to big business will not win any politician brownie points.

Bottom line: adjusters should not expect any Federal movement on tort reform in the near future.

This may be a good news/bad news situation, though. Should tort reform become a relatively dead issue and liability claims proliferate in a tough economy, more claims might portend a higher demand for claim personnel. View it as a Full Employment Act for Adjusters!

Perhaps that is one silver lining that merits bipartisan support.

Nothing Succeeds Like Excess (Coverage) ….

2008-09-19T17:00:00.001-04:00

Occasionally I am called to serve as an expert witness on insurance coverage disputes. A disproportionate number of them have involved matters of reporting to excess and umbrella carriers.

Well, maybe I should say matters of NOT reporting or late reporting to excess and umbrella carriers.

In one case, the policyholder did not report a general liability loss to an upper level excess carrier until a freaky trial result delivered a multi-million dollar plaintiff award. In truth, the first defense attorney had evaluated the case as having modest “legs” on liability, but the damages were significant. There was much dispute later over the wording of the excess policy CONDITIONS, as to whether it required reporting if the insured had reason to believe that the claim would never penetrate the excess.

In another case, a primary insurer failed to notify an umbrella carrier of a personal lines auto claim which – you guessed it – blew north of the primary limits. The primary’s adjuster made some quick phone inquires to the agent and broker, was told that they couldn’t locate an excess policy, and the adjuster then assumed there was no such coverage; this despite the policyholder’s insistence that he did in fact pay for coverage with a specific named umbrella carrier. Rather than report it on to the umbrella (“throw it up against the wall and see what sticks …”), the adjuster assumed that absence of evidence (“We can’t locate the policy…”) equals evidence of absence (“There is no umbrella coverage …).

In both matters, literally hundreds of thousands of dollars in legal and related fees could have been saved had the risk manager (in case #1) or the adjuster (in case #2), invested just five or ten minutes to draft a letter to the excess/umbrella carrier. Five to ten minutes!

A sound risk management – and loss reporting -- adage is, “When in doubt, report it out.” There may be many reasons why insureds and primary carriers don’t do so. They may be too busy. They may have an oversight. They may be guilty of wishful thinking. They may have legit grounds to think it is a bogus claim. They may not want to come across as an alarmist. They may be worried that reporting a loss will cause the excess/umbrella to jack up the renewal premium. They may think the policy does not require them to. They may fear that the plaintiff’s demand will ratchet up once he learns of the added insurance limits. They may chafe at the prospect of some new upper layer insurer galloping in, nosing around and telling them to settle the case.

I understand all the reasons. Not all of them are flawed. Still, investing five to ten minutes to draft and send a letter to avert the huge risk of a coverage problem seems like a sound bargain to me. There is a huge upside (preserving coverage) versus a small downside (five to ten minutes of time).

Sounds like a good investment to me!

When they don’t invest the time, they are certainly providing full employment opportunities for coverage lawyers.

Gustav Gives Insurers Get Another Chance – Along with FEMA And NOLA

2008-08-31T19:55:00.000-04:00

Some may think that I’ve beat up on State Farm and its brand management lately. Actually, that is not the case. What I did a week ago was to post a link to a blog by an unsatisfied State Farm policyholder. State Farm may have ticked off the wrong guy because he also writes business blogs on brands.

Recently I was reading a book on marketing and branding which singled out State Farm for doing an excellent job of pitching its brand – that State Farm is THERE. It commends State Farm for its response after Hurricane Hugo in 1992. (See The Invisible Touch: The Four Keys to Modern Marketing by Harry Beckwith (2000, Warner Books, p. 101).

With Hurricane Gustav bearing down on New Orleans and the Gulf coast now, we have heard a lot about how FEMA and the City of New Orleans have learned various lessons from the nightmarish Katrina experience three years ago. Katrina will also test the mettle of insurers – including but not limited to State Farm -- to see if they too are better prepared to avoid some of the servicing and coverage wrangles which followed the wake of that storm’s devastation.

Claim Service Drives the Brand … or Destroys it

2008-08-20T11:40:00.000-04:00

Insurance companies have reputational assets from the goodwill, image and brand they try to project in the consumer marketplace. One insurer is like a good neighbor. One puts you in good hands. Another is on your side. Yet another might be able to hook you up with a caveman… or a gecko.

The flip side: insurers have reputational risks that can take a hit if an insurance company botches a claim. In the age of the Internet, where it seems that everyone has a blog (including claim commentators!), one client’s dissatisfaction with an insurance claim can quickly reach tens of thousands through the power of cyberspace. Such is the case with a recent blog by one John Fergurson in his August 12, 2008 blog, “State Farm is Where???”
http://brandinsightblog.com/2008/08/12/state-farm-is-where

Here, Fergurson relates the pain of a homeowners insurance claim he filed with Stare Farm. He quickly found that his soothing agent was not the one who handled his loss. In fact, he was surprised to learn that agents have little to do with the adjusters who “service” policyholders. / The agent is a local; guy or gal, part of the local community.

The adjuster is off, hundreds of miles away.

Whether you agree or disagree, I’d recommend you take five minutes to read “State Farm is Where?”

The point here is not to pile on State Farm or any other insurer. The point is to understand how claim service can either strengthen a brand or undermine it. Filing a claim is, for policyholders, where “the rubber meets the road.” Insurers who project warm and fuzzy treatment but who deliver hard-nosed, ball-busting claim service may find their brands tarnished.

They might even find themselves the target of criticism on the blogosphere.

Trial Lawyers Name Top Ten Worst Insurers: Hatchet Job or Food for Thought?

2008-07-23T13:13:00.001-04:00

David Letterman has a Top Ten list. Now, America’s trial lawyers have theirs.

The trade group formerly known as ATLA – American Association for Justice – has released a list of the ten worst insurance companies in a free white paper, “The Ten Worst Insurance Companies in America.” (Download at http://www.justice.org/docs/TenWorstInsuranceCompanies.pdf)

Drum-roll, please … Here is the list

1. Allstate
2. Unum
3. AIG
4. State Farm
5. Conseco
6. WellPoint
7. Farmers
8. UnitedHealth
9. Torchmark
10. Liberty Mutual

Some observations. First, the list contains a mix of P&C carriers, health insurers and specialty niche carriers.

Second, claim services (or lack thereof) figure prominently in making the list. Other factors include marketing and underwriting practices, poor corporate governance, etc.

Third, a unifying theme of many case studies is the existence of strong financial incentives for adjusters to deny claims. It refers to incentive plans where adjusters get free portable refrigerators for leading the office in claim denials. For example, it asserts that AIG locks claim checks in vaults, delays paying defense attorneys for a year and holds pizza parties to destroy documents.

Three of the Top Ten had retained management gurus McKinsey to come in and figure out how to pay fewer claims.. The “good hands” were replaced by boxing gloves in campaigns designed to delay, deny and defend claims. Good hands? No, but some consumers did think they got the good finger.

It will be interesting to see what if any industry response is forthcoming. Folks within insurance often wonder why that industry does not enjoy a better public image. I have heard and seen no rebuttal to the AAJ white paper. Surely there is an insurance trade group that can muster a response. To let this critique go unanswered would seem to be damming.

To be sure, this is one side of the story only. “The flattest pancake has two sides” and perhaps each company on the list has its own response. If so, let’s hear it. Insurers have no monopoly on problems. When it comes to excoriating greed, the plaintiff's bar can be caught living in their own glass houses as they toss rocks. Witness the shenanigans of Dickie Scruggs and Bill Lerach, for instance. At least CEO’s usually have shareholders to answer to.

When I first heard of the AAJ Top Ten list, I tended to dismiss it, unread, thinking maybe it was a badge of harbor being so named. So personal injury lawyers hate insurers. Big news!

On further reflection, I urge all claim folks – especially those in upper management – to read the report to gauge how financially driven metrics can be over-weighted to produce dubious results.

Of all People, an Adjuster Should Know!

2008-07-20T10:38:00.000-04:00

Apparently in St. Paul, MN a young girl was riding her bike when hit by a car driven – and then drive off – by a Farmers Insurance Company claims adjuster. (You can check out the story yourself at http://kstp.com/article/stories/s514421.shtml?cat=1) 13-year old Sydney Carlson was beneath the car which, fortunately, came to a stop. The driver got out, apologized but then drove on without checking for injuries or calling 911. The girl recalled that the car had a Farmers Insurance logo on its side.

Contacted by the girl’s father, Farmers acknowledged that one of its claim adjusters was driving the car and that the Company was investigating.

Incredible. You would think that if ANYONE knew to stop and stay at the site of an accident, it would be an insurance adjuster. Isn’t that advice given by every insurance company to its own policyholders? This just shows perhaps that no one is immune to a brain fart. The skills and advice we apply in our professional lives sometimes flees us when it comes to our personal lives. This is not, however, to justify the adjuster fleeing the scene.

Maybe the adjuster was en route to investigate a traffic accident when he ended up having one of his own. It reminds me of a story told about a bus operator in England. After weeks of customer complaints that he drove right by the bus stops without stopping, management called him in and demanded and explanation. Unrepentant, the bus driver stated, “There is no way I can make my time checkpoints if I have to stop and actually pick up passengers!” Maybe the adjuster had certain time standards for completing claim investigations and he simply could not hit his “best practices” benchmarks if he had to stop after every pedestrian or bicyclist he ran over.

Of course, now the Farmers adjuster will need his own adjuster. Physician, heal thyself.

Likely he will need his own defense attorney as well.

The Few, The Proud, The … Adjusters?!

2008-07-13T23:18:00.000-04:00

I’ve always said that claim adjusters were like the Marines of the insurance industry. Marines represent the country’s “tip of the spear,” translating highfalutin policies into real action.

Similarly, it falls to the claims people on the front lines to translate those lofty marketing assurances and policy provisions into concrete service.

Now, it turns out that the Marines and insurance adjusters may have more in common than I ever thought. A recent article in the Los Angeles Times (“Marines Act as Paymasters to Afghans”) (http://www.latimes.com/news/nationworld/world/la-fg-helmand6-2008jul06,0,5963950.story) describes how the Marines in Afghanistan are reimbursing Afghanis for property damage and business interruption occasioned by fighting the Taliban.

The article quotes Marine 1^st Lieutenant Shaun Miller as saying that paying claims was not exactly what he signed up for when he became a leatherneck. At times, he says, he feels like an . . . insurance adjuster!

Marines playing claims adjuster in Afghanistan raise a number of interesting case-handling issues, none of which are likely addressed in any of the Insurance Institute’s Associate in Claims texts:

· What kind of receipts are acceptable in processing a herdsman’s business interruption claim from destroyed poppy fields that would have yielded him a profitable drug crop?

· If you pay for a killed goat, do you value the loss on an ACV or replacement cost basis?

· In the event of a “total loss” of the goat, is there salvage value in using the goat’s remains for a dinner roast?

· Has ATLA (or, excuse me, Lawyers for Civil Justice, or whatever they call themselves this week) set up a branch near Kabul to make sure that the Marines abide by fair claim practices?

For now, these will have to be rhetorical questions. Adjusters may occasionally find themselves in tough situations, but none so tough as those faced by the brave Marines in Afghanistan and elsewhere who must add “claims adjuster” to their repertoire of professional skills!

Even in Claims, It's Sometimes WHO You Know, Not What You Know ...

2008-06-18T09:13:00.001-04:00

We’ve all heard the expression, “It’s not what you know it’s who you know.” In the realm of claims adjusting, this was recently illustrated by the Washington, DC transit Authority. Seems that former Washington, DC Mayor Marion Barry sits on the Board of Directors for the Washington Metropolitan Area Transit Authority (WMATA), the subway and bus system that runs in the nation’s capital. Allegedly, a Metro bus collided with, damaged and then drove off from Hizzoner’s private passenger car recently.

A full month after the alleged accident, the ex-Mayor telephoned in and filed his property damage claim with WMATA. There were no witnesses to the collision and the bus driver allegedly involved knew nothing about it. Nevertheless, the Transit Authority fast-tracked Barry’s claim and ended up paying him over $3000 in reimbursement for damage to his car.

Keep in mind that this is from a bureaucracy which normally could not find its own posterior if you spotted them two hands. The Metro system is replete with complaints of broken escalators, random service, late and overfilled trains, and incredibly poor response to derailments and power outages. The Authority just cannot get its act together.

Nevertheless, it acted with incredible alacrity in processing a property damage claim which, asserted by any other private citizen, would have probably been laughed out of the proverbial ballpark. If Joe Q. Citizen had phoned in a unwitnessed property damage claim one month after the date of the alleged accident, doubtlessly it would have been a case of denied liability. The poor claimant would have been lucky to receive a form letter denying his or her claim, months after the loss report.

Of course, both the ex-Mayor and the Transit Authority staunchly deny that politics or pull had anything whatsoever to do with the remarkable speed with which the claim was processed.

It just goes to show that, even in the realm of claims -- or perhaps especially in the realm of claims -- it’s not just what you know but who you know!

Adjusters Go Hollywood! Ciao, Baby!!

2008-05-20T08:18:00.000-04:00

Claims adjusting – the new glamour profession in Hollywood?

NOT!

OK, so maybe we are not going to see claim folks on TV in prominent roles. We can, however, turn on the DVD player and see that adjusters have had a variety of movie parts through the years. Cases in point:

Edward G. Robinson in Double Indemnity Robinson plays a claims adjuster who goes on a memorable rant to Fed MacMurray about the many roles that adjusters serve.

In The Truman Show, an insurance adjuster played by Jim Carrey discovers that his life was a television show; his every move monitored by cameras; every person in his life a performer, and his world a gigantic soundstage.

The Incredibles. Mr. Incredible, a/k/a Bob Parr (voice by actor Craig Nelson) is relegated to working as a claims adjuster at an insurance agency after a rash of lawsuits result from the former superhero rescuing a train from a major calamity.

The Adjuster Claims adjuster Noah Render spends his waking hours serving clients, from arranging temporary housing to … fulfilling their sexual desires. Enter affluent couple Bubba and Mimi, who -- under the pretense of making a film -- trick Noah and his wife into renting out their home. Little does Noah realize that he's about to learn an ironic lesson in this disquieting independent film.

Low and Behold Insurance adjuster Turner goes to work in New Orleans, sifting through insurance claims in the aftermath of Hurricane Katrina. He ignores the people around him until he meets Nixon, whose simple request in finding his daughter's lost dog will change how both men view strangers, the disaster and each other.

Black House An insurance claims adjuster investigates a decrepit house and discovers terrible secrets inside involving suicides and murder. The more he learns, the more the terror mounts, building to a blood-soaked ending. Time to call in a restoration specialist!

Future movie – Get Him to the Greek. A fresh out of college insurance adjuster is assigned to accompany an out of control rock star who is traveling from London to his next gig in Los Angeles. (How do we get an assignment like THAT?!)

Next time someone tells you that claims adjusting is a boring job, just remind them of all the "glamor" that our profession has on the silver screen!

Solution to Claims “Brain Drain”? Likely NOT in New Tech Tools…

2008-05-05T15:11:00.000-04:00

Don’t look now, but even insurance claim execs say they are worried about an imminent “brain drain” in the claims area. A recent Towers Perrin survey of P&C claim officers reveal that 82% feel that attracting and retaining top talent is the Number 1 priority for success in the claims industry (“Recruitment a Priority for Claims Officers: Survey,” Business Insurance, 3/24/08).

What to do? Interestingly, Towers Perrin concludes its study by urging insurers to deliver better outcomes via new technology. It does not exactly specify the nature of this “new technology” or how it can stem the incipient brain drain among seasoned claim professionals. Towers Perrin mentions better analytics as an example of the technology solution.Maybe I’m the only one curious and skeptical here. Towers Perrin cites high-level concerns over an exodus of claim expertise. Its solution is …. New technology.

Methinks this may have something to do with the fact that it’s easier for a consultant to sell “new technology” than to sell the ideas of: treat your claims people better, pay them more, enrich their jobs and institute better mentoring programs for younger adjusters with attractive career paths. The latter are squishier and take time to implement. They may not involve any whiz-bang technology.

A “brain drain” in the claims area is likely due to the graying of the workforce, job burnout, a sense of compromised career options and inadequate investment in mentoring, training and succession. The root cause of the claims brain drain does not (primarily) lie in technological factors. Even though selling tech solutions may yield higher margins for consultants, I don’t think technology – at least by itself -- will solve the brain drain phenomenon in claims.

Your thoughts?

Claim Adjusters Too Risk-Averse???

2008-04-15T19:53:00.000-04:00

Andrew Kaufman is a medical malpractice defense attorney with Kaufman Borgeest & Ryan in New York City. Recently, he authored a provocative article in the monthly newsletter of the Professional Liability Underwriting Society, perhaps better known as PLUS. The article was titled, “Behavioral Finance: What lessons can be learned by the insurance claims professional."

One point made by Kaufman is that claims people tend to be exceedingly risk averse and this creates a bias toward settlements, generous settlements, and a reluctance to take cases to trial. Kaufman argues that the “potential fear and embarrassment of reporting an unanticipated loss to one's superior can, on occasion, create a level of anxiety in the attorney and claims representative that is statistically unjustified. One can imagine how multiple layers of management may serve to magnify this phenomenon."

Kaufman suggests that claims people are quicker to forget their victories and successes then that they are to forget setbacks and defeats. Because of the potential of having to report an adverse jury trial outcome to one's boss or supervisor, a subtle but powerful momentum exists to eliminate any risk of trial by settling cases. Let me emphasize that Kaufman is not indicting or criticizing claim adjusters here. He is simply making behavioral observations.

So what do you think? Do reporting structures within claim departments create biases toward settling cases so that adjusters and claim handlers can avoid the stigma of having to report an aberrant result to upper management? Have we become so risk averse in not wanting to be associated with a corporate setback that there are subtle but powerful incentives to over reserve and over evaluate cases to justify higher settlements that would avert the risks of trial? What could insurance companies and claim departments do to remove such a stigma and enable greater but well reasoned risk-taking on the part of the claims staff?

All provocative questions suggested by Kaufman's article in the March 2008 issue of the PLUS Journal.

The Flip Side - Do Adjusters Make Good Lawyers?

2008-04-04T16:56:00.000-04:00

How about the flip side – Do adjusters make good attorneys?

Some adjusters get bitten by the law “bug” when they work in claims. They may work with attorneys so closely they start to think, “Hey, I could do that!” I have known a few attorneys who started out as claim adjusters, went to law school, got their J.D. degree, passed the bar and then entered private practice. One down side is that this process may take a minimum of three years, maybe longer. There may be an opportunity cost to the adjuster-turned-law student in that while they are attending law school, they cannot maximize their earnings from being a claims adjuster.

Some adjusters are gnawed by the perceived lack of pay, prestige and cache that goes with being “just an adjuster.” They may romanticize the life of a lawyer (even if they don’t see days spent by associates in windowless conference rooms, tediously going through boxes of documents under the guise of production!).

On the other hand, adjusters are often used to handling high caseloads. Typically, they are no strangers to hard work or difficult clients. Having been a buyer of law firm services, they may have a better insight once they are a provider of law firm services and be that much more adept in meeting client needs.

So … what do YOU think? Do adjusters make good attorneys? Weigh in on the issue by taking our latest poll!

Do Lawyers Make Good Adjusters?

2008-03-30T13:46:00.000-04:00

Occasionally an attorney comes to occupy a claims position for an insurance company, self-insured or TPA. Some coverage programs that underwrite specialized lines of coverage may seek claim staffers with law degrees or practitioners who have worked in private legal practices. There are conflicting views as to the “fit,” however. A recent discussion thread on a risk management list serve (RiskList) veered briefly in this direction and got The Claims Coach to thinking.

Do attorneys make good adjusters?

Here are some thoughts on the pro’s and con’s of having attorneys transition into a claims role:

Pro’s

· Solid grounding in legal principles, especially tort, liability and contract principles

· Ability to analyze what liability and coverage defenses may fly and which ones are losers

· ork well with outside counsel since they “speak the same language” and have common frames of reference

· Effective review of outside counsel billings, knowing where the “fudge factors” might lie and having some sense of how long legal tasks really should take if done efficiently

Cons

· Paralysis by analysis. Constipated decision-making by never quite having enough information or facts. Decision-making is no longer done by the client, but by the claim-handler.

· Difficulty in adjusting to higher caseloads of claim staff, perhaps multiples of what counsel handled while in private practice.

· “Circle the wagons” affinity with outside counsel in relating to them so much that objectivity is lost.

· May over-compensate as a former attorney by bearing down too hard on outside legal bills, becoming outside counsel’s worst nightmare.

So what do you think? In your view, do attorneys make good adjusters and claim-handlers?

Help! Oprah Needs a Claims Adjuster!!

2008-03-22T09:23:00.000-04:00

Sounds like a premises and operations claim to me. Apparently Oprah and her production company – Harpo Enterprises – are the targets of a recent lawsuit by one Orit Greenberg. The latter seeks at least $50,000 in damages, claiming that Harpo Studios negligently failed to exercise adequate crowd control during an “open seating” scramble on 12/5/06. The company told audience members to sit wherever they wanted. Allegedly, this triggered a stampede for the front row. The stampede knocked Greenberg down a fight of stairs, causing severe and permanent injuries.

No word on whether Greenberg eventually made it to her seat during that show. If so, perhaps there is some ready-made surveillance tape to scrutinize in assessing whether the plaintiff really looked injured or not.

Celebs – along with pro athletes -- are frequent targets for lawsuits. This is nothing new. They have money, perhaps few as much as Oprah, so they represent “deep pockets.” No telling how many civil suits Oprah has had filed against her, though I know of no “Oprah Class Action.” This is not the first civil suit against the big “O.” Years ago she was sued for defamation by the Texas cattle industry for making an anti-beef tirade on her show. Oprah eventually prevailed but it was during the trial that she came to know a jury consultant, Dr. Phil McGraw, later to become famous in his own right as “Dr. Phil.” Maybe this is an opportunity for a claims adjuster to become the next offshoot celeb (I wouldn’t bet on it, though).

The allegation against Oprah is reminiscent of civil suits years ago filed by plaintiffs injured in Cincinnati during an “open seating” concert with the classic rock group, The Who. Some patrons actually died in the trampling. Oprah’s melee pales in comparison but may draw from some of the same theories of liability, i.e., inadequate crowd control.

No word yet as to whether Oprah has liability coverage, a large SIR or is self-insured. Not only claim questions but litigation management issues abound. For example, does Oprah get to pick her own defense attorney or “settle” for the approved panel counsel assigned by her liability carrier? Will counsel be held to “panel rates” or bill at a gaudy stratosphere rivaling Skadden Arps? Will she be entitled to Cumis counsel if her insurer reserves coverage rights?

For those interested in becoming the next Dr. Phil – or Dr. Claims – step right up and offer to adjust Oprah’s claim. If you do well, maybe you will be the subject of a future Oprah show, “The Ultimate Adjuster”!

7 Ways to Recession-Proof Your Claims Career

2008-03-19T19:01:00.000-04:00

In a recession, claims people can be at risk for job loss. To trim expenses, insurers and others may look to the claim department for staff reductions as part of overall belt-tightening gestures. Less economic activity may manifest itself in the form of fewer claims. In turn, this phenomenon may create less of a need for claim professionals, prompting companies to lay off staff. How as a claim professional can you recession-proof your career? No failsafe techniques exist, but here are seven tips:

Work your network. Vigorously. Attend claim association meetings and conferences. Get involved. Consider joining a business-networking oriented social networking site such as LinkedIn (www.linkedin.com) Attend continuing education conferences when you can. While there, not only learn but mingle. Do more than swap business cards, though that’s a start. Follow up. Tend to relationships. The time to work your network is not after you are laid off or canned.

Treat the boss as customer client #1. Build good karma and positive constituencies throughout your company.

Be an ambassador for your company if you get the chance. If you get an opportunity to speak at an I-Day event, claims conference or participate in an industry function, do it.

Be visible within the company. Get face time. Volunteer for projects or committee work that addresses key parts of the claim operation.

Attend to your personal finances and get them in shape. Build a six-month emergency reserve fund consisting of liquid assets. Nuke all those high-interest credit cards. Take out a home equity line of credit, even if you do not immediately need it.

Update your resume. If it has been a while since you looked at your resume, get it out and dust it off. Bring it current. Update your references.

Dig your headhunter "well" before you're thirsty. Initiate and maintain a relationship with at least one placement specialist, a/k/a “headhunter” while you are gainfully employed. Again, the time to seek one out is not after you get a pink slip.

In today’s economic straits, perhaps the only certainty for claims people is … is the existence of growing uncertainty. By adding value every day, demonstrating one’s worth to the company and heeded the preceding steps, claim professionals can go far in recession-proofing their careers.

Coping with the “R” Word … and it’s not Risk

2008-02-16T13:20:00.000-05:00

It’s “R” as in recession.

Many economic pundits predict that the American economy will drift into recession in 2008. Others believe that the economy is already in one. Put aside temporarily whether they are right or wrong. (One pundit once said that, if you took all the economists in the world and laid them end-to-end, they would still point in every direction…).

Assuming the Cassandra’s are accurate, we can speculate on six areas of impact for claim professionals:

Tough economic times might produce an uptick in insurance claims, as folks with marginal claims have a heightened financial incentive to collect from insurance

Increased insurance fraud, for the same preceding reasons. (Perhaps a favorable time to be positioned in an SIU)

Less economic growth may equal lower sales which, in turn, lower insurance premiums. This might increase pressure on insurers to squeeze expense ratios by trimming claim staff and foregoing referrals to outside TPA’s

Companies may belt-tighten and view a full-time risk management job as a “frill,” eliminate the job and outsource the role to their insurance broker

Possible spike in workers compensation and employment practices claims if companies enact sizable workforce layoffs

Claim managers may be under greater pressure to “rank and yank,” shedding departments and staffs of performers viewed as marginal or lacking in growth potential

What other “claim fallout” do you see from an economic recession?

Another follow-on question is, how can savvy claim professionals “recession-proof” their own jobs and careers? We will tackle that issue in a forthcoming blog post.

Steamed at Claimant’s Counsel? Write Right!

2008-02-01T13:31:00.000-05:00

"That @#$# claimant attorney! And that ^&*% adjuster at XYZ Mutual!!!"

When writing to claimant/plaintiff counsel or to another insurer toward which your interests are adverse, strive to keep the tone both courteous and professional. Your relationship with the opposing attorney or carrier may impact the efficiency – and transaction cost (read: attorney fees) associated with the claim.

Cultivate a positive relationship that lets the claim develop with a focus on your insured’s or client’s interest, not the adjuster’s personality. While “chumminess” is unnecessary (and night be seen as unprofessional), cooperation and politeness will further the prompt resolution of the claim on its ,merits without the cost and headaches that policyholders can endure when adjusters needlessly spar or let their egos get the better of them.

The content of the adjuster’s communication to the opposing lawyer or insurer hinges on the purpose of the communication. A letter conveying a settlement offer has one tone. A letter responding to a deadline might have another. A message transmitting information should be concise and polite.

Never write a letter or email to the claimant/plaintiff attorney or to another insurer that you wouldn’t want a jury or the policyholder to see!

Government Slip-and Fall Claim Illustrates Double Standard of Tort Responsibility

2008-01-19T16:33:00.000-05:00

Fairfax County, VA – coincidentally the area that I call home – is up in arms and crying “Ouch!” from the sting of the tort system. On January 31, 2005, Richard Thaxton was walking into court after a weekend snowstorm. Though county maintenance officials had just shoveled and salted the walkways.

But they missed a spot.

Thaxton – who had just had rotator cuff surgery two months earlier – slipped, fell and reinjured himself. So he did what any red-blooded American citizen would do. He sued the County government for $300,000, plus attorneys fees.

By a 6-4 vote, the Fairfax County Board of Supervisors decided to reject a proposed $100,000 settlement recommended by an independent mediator. The County was indignant that it could be found liable for having missed a spot and asserted the defense of sovereign immunity.

I must confess that such cases leave me conflicted. On the one hand, I think that the claim is ridiculous and that the County exercised reasonable care. In the event of a large settlement or award, I – as a Fairfax County taxpayer – stand to fund such a dubious settlement.

On the other hand, ever day businesses are held to these same standards and no sense of government outrage or injustice is offended. Governments always seems indignant at having to drink from the same bitter cup that they have prepared for the rest of us to take.

Legit slip and fall claim or snow job?

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

2008-01-09T16:25:00.000-05:00

"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.

Profiles in Professionalism: Interview with a Work Comp Claims Guru

2008-01-05T19:04:00.000-05:00

As a periodic feature, the Claims Coach this month conducts an interview with w claims and risk management guru James Moore of J&L Risk Management of Raleigh, NC. Moore is the E.F. Hutton of workers compensation – when he talks, people listen! His website and blog are packed with insights and strategies for taming your claim costs in the realm of workers compensation. You can access these at http://www.cutcompcosts.com and his blog at http://www.cutcompcosts.com/www/blog.html. Let’s hear what Jim has to say on claim audits, workers compensation claim costs and the state of the claims profession.

Quinley: In doing claim audits, are there recurring issues or problems you see with claim-handling?

Jim Moore (JM): There are two that we see the most which heavily affect the outcome of a workers compensation file. Those two are Immediate First Contact and Poor Communications. Often we see where an adjuster writes the injured employee, employer, and treating physician a form letter and then documents that there was immediate three point contact. Talking with the employer, doctor, and employee about their workers compensation claim ASAP is a great way to start the proper communications in the file.

The other related area is adjusters working the file, but not making any contacts with all of the or at least some of the parties involved. Good communication is the main job of the adjuster. If this is not done as shown by a trend by an adjuster or by a TPA/Carrier, we become very concerned.

How should claims people prepare for an audit before undergoing one?

JM: Quit stressing when they hear their files are being audited. Some file audit firms consider a very nervous adjuster as a “red flag.” There is nothing that can be done to do a “quick-fix” on the files. The one thing that I recommend is to be friendly and smile at the initial meeting. Do not EVER put the auditor on the defensive if they ask you a question. Auditors that are on the defensive tend to be more subjective in their file appraisals.

What “red flags” do you look for when doing a claim audit?

JM: We do heavy statistical analysis on the 33 areas that we look at for trends. If there is a trend by adjuster or insurance carrier, then we red flag that one area. This happens very rarely except in one area. Over-reserving or under-reserving the files is a red flag that we notice very quickly. We do stat analysis to confirm our findings. The numbers speak the loudest.

Over the years, do you sense any differences in skill among the claims profession in general? Is claim service getting better or worse?

JM: Claims adjusting has followed a definite trend. It is how the industry or a certain carrier decides on the file loads for adjusters. An overloaded adjuster cannot do the job that the insureds are relying on them to do on their files. When the industry/carrier trend is to lighten loads, the file handling improves proportionally.

For a firm looking to tame its workers compensation claim costs, what is the ONE thing they can do to deliver the greatest return on investment?

JM: Time Management training pays big dividends. Stress management seminars seem to help. The old “claims roundtable” is also a great meeting to have for adjusters to discuss difficult files. We can tell the difference on file reviews between trained and untrained adjusting staffs. The one word is training.

How do workers compensation claims people avoid getting burned out?

(JM) They must remember that they ARE NOT claims adjusters. That is their job. In other words, leave it all at work. That is the secret to surviving in claims. Forget the files when you walk out the door every evening.

In a blind taste test, can you tell much of a quality difference between TPA claim services and insurer/staff claim services? Comment, please.

JM: Yes, when we compare files where a carrier also functions as a TPA. Flat-fee files seem to receive less attention.

If there is indeed a “brain drain” of seasoned claims people retiring, how can companies counteract that trend to salvage acceptable levels of expertise?

JM: There are carriers that do a great job of training incoming recruits. They also weed-out recruits that will not make it in the adjusting world. Liberty Mutual has an outstanding training program. Training and screening will fight the brain drain.

What are employers’ biggest complaints about workers compensation claim service?

JM: It is poor communications. They often do not know what is happening on their files. I always tell employers to request online claim access as they can follow the files without having to disturb the very busy adjusters.

What is the ideal caseload for an adjuster handling lost-time workers compensation files?

JM: Oh, this is a loaded question. It depends on the state, but I would say 100 for a claims trainee, 150 – 175 for an experienced adjuster, and 200-225 for a Senior Adjuster. In my career, I have had to handle 250 files in 7 jurisdictions/states. I juggled it very well until I burned out from fighting fires.

If Adjusters and Attorneys Re-wrote "The Night Before Christmas"

2007-12-21T09:51:00.000-05:00

-- THE NIGHT BEFORE CHRISTMAS, LEGALLY SPEAKING --

Whereas, on or about the night prior to Christmas, there did occur at a certain improved piece of real property (hereinafter "the House") a general lack of stirring by all creatures therein, including, but not limited to a mouse.

A variety of foot apparel, e.g. stocking, socks, etc., had been affixed by and around the chimney in said House in the hope and/or belief that St. Nick a/k/a/ St. Nicholas a/k/a/ Santa Claus (hereinafter "Claus") would arrive at sometime thereafter.

The minor residents, i.e. the children, of the aforementioned House were located in their individual beds and were engaged in nocturnal hallucinations, i.e. dreams, wherein vision of confectionery treats, including, but not limited to, candies, nuts and/or sugar plums, did dance, cavort and otherwise appear in said dreams.

Whereupon the party of the first part (sometimes hereinafter referred to as "I"), being the joint-owner in fee simple of the House with the parts of the second part (hereinafter "Mamma"), and said Mamma had retired for a sustained period of sleep. (At such time, the parties were clad in various forms of headgear, e.g. kerchief and cap.)

Suddenly, and without prior notice or warning, there did occur upon the unimproved real property adjacent and appurtenant to said House, i.e. the lawn, a certain disruption of unknown nature, cause and/or circumstance. The party of the first part did immediately rush to a window in the House to investigate the cause of such disturbance.

At that time, the party of the first part did observe, with some degree of wonder and/or disbelief, a miniature sleigh (hereinafter "the Vehicle") being pulled and/or drawn very rapidly through the air by approximately eight (8) reindeer. The driver of the Vehicle appeared to be and in fact was, the previously referenced Claus.

Said Claus was providing specific direction, instruction and guidance to the approximately eight (8) reindeer and specifically identified the animal co-conspirators by name: Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner and Blitzen (hereinafter "the Deer"). (Upon information and belief, it is further asserted that an additional co-conspirator named "Rudolph" may have been involved.)

The party of the first part witnessed Claus, the Vehicle and the Deer intentionally and willfully trespass upon the roofs of several residences located adjacent to and in the vicinity of the House, and noted that the Vehicle was heavily laden with packages, toys and other items of unknown origin or nature. Suddenly, without prior invitation or permission, either express or implied, the Vehicle arrived at the House, and Claus entered said House via the chimney.

Said Claus was clad in a red fur suit, which was partially covered with residue from the chimney, and he carried a large sack containing a portion of the aforementioned packages, toys, and other unknown items. He was smoking what appeared to be tobacco in a small pipe in blatant violation of local ordinances and health regulations.

Claus did not speak, but immediately began to fill the stocking of the minor children, which hung adjacent to the chimney, with toys and other small gifts. (Said items did not, however, constitute "gifts" to said minor pursuant to the applicable provisions of the U.S. Tax Code.)

Upon completion of such task, Claus touched the side of his nose and flew, rose and/or ascended up the chimney of the House to the roof where the Vehicle and Deer waited and/or served as “lookouts." Claus immediately departed for an unknown destination.

However, prior to the departure of the Vehicle, Deer and Claus from said House, the party of the first part did hear Claus state and/or exclaim: "Merry Christmas to all and to all a good night!"

. . . Or words to that effect.

Use The Holiday Season to Elevate your "Claims Game"!

2007-12-10T13:20:00.000-05:00

Christmas time is one time of year when I’m glad to be a claims person and not an underwriter. With so many insurance renewal dates at 12/31 or 1/1 on the calendar, the underwriters are at peak workload at this time of year, scrambling to address new and renewal business. Underwriters are besieged by the need for insurance quotes or brokers who want to cut deals. In fact, it is downright hard for underwriters to take much time off during the holiday season.

Not so for the claim folks. If anything, our volume drops this time of year. There are likely many reasons for this. One may relate to the fact that we only handle product liability claims. If we were dealing with personal lines losses – autos or homeowners for example – December might be a busier time. In the world our claims department occupies, though – commercial liability – the folks at insured companies who report claims are often out on vacation themselves. Attorneys who generate much of the paper and activity on litigated cases are in a wind-down mode. Judges do not seem too keen to schedule mediations or trials during the Christmas season, though I have been in a couple of nail-biters during yuletide, worried that the jury was going to turn into a gaggle of twelve Santa Clauses.

For some claim departments, the holiday season marks a ramp-down of the pace of business. Less incoming mail arrives. The phone is quieter. Fewer emails and faxes intrude. (Your mileage may vary, again either due to the types of insurance you write or if you work for a TPA that gets overflow assignments.)

This can be an excellent time for the claim staff to invest time in activities that will boost their productivity and get them off to a running start the next year. For example:
• Purging old materials (both hard copy and files on hard drives) that are no longer needed
• Organizing one’s desk, drawers and reference material
• Writing out professional goals for the next year and embedding ticklers or reminders on the calendar to revisit progress on these periodically through the year
• Networking with other professionals that you had a hard time finding time for earlier in the year

Use any “lull” presented at the end of year to catch your breath, gather yourself, get organized and get focused on what you want to accomplish as a claim professional in 2008!

The Claims Coach may slide down the chimney and appear again before the end of the year but, in any event, he wishes all a happy and fun holiday season!!

Two-Faced Legal Fee Management? Defense Counsel vs. Coverage Counsel Costs

2007-11-21T21:48:00.000-05:00

A common complaint leveled against insurance companies is that they pay one (low) rate for their defense counsel and another (higher) rate for their coverage counsel. The idea is that insurers skimp on legal services when it’s their insureds whose fate is on the line but spare no expense when their own hides are at stake in a coverage or bad faith dispute. The undercurrent is that insurers are being inconsistent if not two-faced by observing two separate tracks of rate structures.

One claims specialist recalls a meeting of claims executives years ago wherein the subject for discussion was attorneys' fees (as it often was and is). One vice president (and pundit ) was overheard remarking, "You care about 'how much' when it's the insured who is being defended, but when it's YOU who's the defendant, or the subject of a subpoena, then you care about 'how good.'"

Let’s look at this knock on insurers, though. First, comparing general insurance defense counsel with coverage counsel may not be an apples-to-apples comparison. General insurance defense counsel often defend policyholders against garden-variety kinds of claims that many (many) law firms could handle competently, by contrast, there are not nearly as many coverage lawyers around. The two kinds of practice call for somewhat different skill sets, and their respective supply and demand curves are different.

Let’s also note that most litigated coverage cases involve larger stakes than the run of the mill litigated case (exceptions abound). Second, the macro/precedent impact of a coverage matter – broader impact on other cases and policies -- makes the consequences more sweeping. Third, coverage expertise is often more specialized than general litigation defense, commanding premium rates.

Just as partners in firms are paid more than associates for a host of (legit) reasons. Partners are more specialized and more seasoned. They are in greater “demand” due to their business development skills. Thus, they are paid more than associates. Does this suggest that law firms are two-faced or inconsistent?

The quip from the Claims VP is telling and perhaps somewhat tongue-in-cheek, but nevertheless there is nothing inherently two-faced or nefarious (nor surprising) that coverage counsel often command higher rates than run-of-the mill defense attorneys, no disrespect intended to the latter either.

In some cases, defense counsel possibly should command equally high fees or even higher fees than coverage counsel. On balance, though, a fee disparity here may be rational and have a legitimate rationale.

What’s in a Name? For Claim Professionals, Plenty!!!

2007-11-10T10:05:00.000-05:00

Juliet:
"What's in a name? That which we call a rose
By any other name would smell as sweet."

-- Romeo and Juliet (II, ii, 1-2)

Clearly, Shakespeare’s Juliet had never served a stint as a claims adjuster. She was a smooth one with words, however. Even Claim Coaches stumble and bumble. Last Friday I was emailing a request for a settlement check on a resolved product liability claim in Texas and incorrectly referred to my client as Bridget when her name is Gretchen. (Background: for years, this client’s in-house risk manager was our claims contact; her name was Bridget. She found love and happiness in Australia, though, and left the corporate world for Oz years ago.) That is no alibi, though.

Her successor was named Gretchen. I knew that. Should have known that. Terrific lady and client. Old habit die hard and brain cells die off as you age. At the end of a long day and week, though, the Claims Coach had a brain fart (not covered by my HMO and not listed in DSM III) and referred to the client as Bridget. To help matters, I cc’d the client in on the email.

Ouch!

She called me on it. What could I say? Throwing myself on the mercy of the court/client, I apologized and told her that – as penance for the transgression -- she could call me “Kelvin” or “The Idiot” for three days – her choice. Fortunately, she was a good sport about the whole thing and assured me that she “was just messing with me.” Not every client is going to be so good-natured about it.

Names are Important to Relationship-Building

It prompted me thinking, though, about the role of names in claims handling and customer relations. The take-away is that names are vitally important to people. Make sure you get them right (do as I say and not as I sometimes do!). Adjusters and claim professionals need to build good, strong, interpersonal relationships to succeed in their jobs. One way to do this is to sweat the details and get names right. This involves not just calling a Gretchen Bridget, but also taking time to try to pronounce names correctly. Adjusters will likely have some claimants, insureds and clients with odd names. Take time to ask the person how to pronounce the name. What works for me is something like, “Ms. XXX, I want to be sure I pronounce your name right, so can you help me?”

Just because you are sweating those details does not mean that others will necessarily get your name right. Reciprocity may be elusive here. As a Quinley, I have been called Quincy, Quinney, Quigley, Kelvin, Calvin and other terms likely best gone unmentioned in this blog (let’s keep our PG Family rating). Perhaps I have been referred to by the initials S.O.B. as much as by the initials CPCU.

As a neophyte adjuster at Crawford & Company, one day I returned to the claim office from taking a statement (this was at a time when adjusters actually did such things), only to find the staff laughing, hooting and hollering over my arrival. When I asked, “What’s the deal?” my coworkers responded that while I was out on the road, a claimant had phoned, complaining about her adjuster and the paltry settlement he offered. She said she could not recall the guy’s name but that “He was a little red-headed white dude!” From then on, the claim staff jokingly referred to me as “The Little Red-Headed White Dude.” I could not shake the moniker, as I explored claim office openings and transfer opportunities in garden spots such as Three Mile Island, Juneau, Alaska and Kurdistan.[1]

Remembering Boosts Adjuster Credibility

People who forget names can erode their credibility. Recall Vice Presidential candidate Adm. James Stockdale beginning one of his campaign debates with the rhetorical question, “Who am I and why am I here?” Voters were not impressed. Maybe they could not answer Stockdale’s rhetorical question, either.

Occasionally our claim office receives feedback surveys from defense law firms that we employ. I applaud this discipline and wish it were more widespread (the subject of another blog, perhaps). One of my right-hand people is a very talented claims professional whose last name is Khin, a somewhat unusual name I grant. She has received law firm feedback surveys which butchered her name – Kihn, Kine, King, you name it. She was not impressed. “Gee, if they can’t get the name right, what does that say about the law firm’s client orientation?” The laudable gesture of sending a Feedback Survey is undercut by the failure to get the client’s name right.

As a freshman on my high-school cross-country team, the cheerleaders couldn’t remember my name amidst the team’s fast-legged and much better looking luminaries, of which I most certainly was not one. So on the “Spirit Posters” hung in the cafeteria they wrote, “Go – Little Red!” Those friends who knew me and knew I was on the cross-country team whooped and hollered about me being – much to my mortification – “Little Red.” (A taller carrot-topped runner was known as “Big Red.”)

Regardless of whether you are dealing with clients, insureds, claimants, witnesses, co-workers – pay attention to names. Strive to not only call people by the right name, but take pains to get the spelling and pronunciation right. Before calling someone by their first name, pause. Some people might find that off-putting, too familiar and presumptuous. Others may welcome it. (One tip: do they call you by your first name?) Do not hesitate to ask, “Mr. Jones – do you mind if I call you Jim…?”

Moral: Sweat the details, especially if you “are not good with names.” Many people fall into this category. There are many mnemonic tricks and memory devices to help people remember names – I just can’t remember them all for purposes of this blog. (For seven specific tips advocated by CareerBuilder.com check out http://www.cnn.com/2005/US/Careers/07/22/names). Your effectiveness not only as a claim adjuster but as a claim professional – and professional networker – is enhanced if you pay attention to names.

To each person, the sound of their name is the sweetest sound they will hear, though I used to joke that, until the age of 13, I thought my name was “Turn it Down!” because that is what my parents used to yell at me all the time while I played my Monkees albums on the stereo.

Don’t turn it down, though. Instead, tune in . . . to proper names. Sweat the details. Get the name right….

[1] Now, I just wish my (remaining strands of) hair was still red. I’m more likely to be called a Silverback than Carrot-Top.

Can you REALLY Survive a Claim Audit????

2007-11-04T12:36:00.000-05:00

Surviving a Claims Audit (Part 1)

By Kevin Quinley

For any claims manager, supervisor or adjuster, claim audits are inevitable. They are also about as much fun as a root canal. Claim audits need not be frustrating or mysterious, however, if the claim staff has prepared properly. What follows is a discussion to help you prepare for a claim audit, anticipate what the auditors may need, and develop a procedure for handling claim audits.

DEFINING FOUR KEY ROLES

In any claims unit, a minimum of roles must be defined ahead of an audit. In small companies or in small claim departments, one person may hold multiple roles.

For any audit, there should be a most responsible person. This may be defined by the hierarchy of the insurance company, TPA or claim department. The most responsible person is the individual with the most accountability for claim operations. The critical function of this role is to provide leadership and to communicate to the auditor or constituency that the company or claim department intends to comply with all rules and regulations.

Another role, one that must be chosen in advance, is the escort. This role may be key to the success of an audit. The escort should be familiar with the everyday operation of the claim department, know who will have answers to the auditor's questions, and understand the company's policies regarding specific situations. The escort should be prepared to accompany the auditors at all times. The escort's job includes meeting the auditor’s needs, guiding the auditor to appropriate subject matter experts (SME’s) and communicating internally within the insurance company, TPA or claims department as to how the audit is progressing.

When an auditor has asked for something that the claims team is not prepared to provide, best practice is to have defined ahead of time a person who can explain the company's policy on such matters.

Additionally, one or more subject matter experts should be identified. These are specific individuals who may be called upon to answer or questions from the claim auditors. A list of all subject matter experts with their areas of expertise and authority should be created and updated as claims personnel change. Role-playing before a claims audit help prepare subject matter experts for the kinds of questions they are likely to face. Preparing subject matter experts and ensuring that the list of subject matter experts is accurate or some of the most highly leveraged preparation activities in which a claims unit can invest.

It may also be necessary to have one or more designated “runners.” Among other duties, runners locate documents, find subject matter experts and tell them when to appear, and notify department managers if the auditors are going to enter their area. It may be less difficult to recruit a runner once you sell the fact that they will be “in the know” about the claims audit.

When a claim on order contacts you to notify of an upcoming visit, you may or may not have the ability to negotiate timing. Nevertheless, let auditors know if there is some extraordinary event about to occur, such as an all-day meeting occupying the entire claim team, a huge renewal, office move, change in computer operating system, etc. The auditor may then change his or her plans, or may not.

A winning football team has clearly defined roles. Same with a winning claims team. Assign these four roles in advance of a claims audit to apply some pain-killing Novocain to the claims equivalent of a root-canal!

Welcome to The Claims Coach!

2007-11-04T12:35:00.000-05:00

Welcome to The Claims Coach!

The Claims Coach is a periodic blog on the wild, wonderful and always fascinating world of insurance claims. It strives to delivers practical tips, insights and musings to today’s property-casualty professionals.

The Claims Coach is written by Kevin Quinley, CPCU, AIC, a claim executive, trainer, speaker and author of over 600 articles and ten books, including Time Management for Claim Professionals.

We promise not to don a gray sweatshirt, put a whistle around our neck and never say, “Drop and give me 20 …. Proofs of Loss”! We do, though, promise never to bore you and to offer ideas and insights to help you elevate your claims-handling “game”! Welcome!