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

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

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 ….

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

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?

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

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?

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!