mented simple several liability that holds
parties responsible only for their proportion of fault. Regardless, it is very important to understand the laws of the state of
jurisdiction, as they can have a profound
impact on negotiation strategy.
This is a delivery of goods in trust upon
a contract, express or implied, that the
trust shall be faithfully executed on the
part of the bailee. In simpler terms, bailment is the delivery of tangible personal
property to a person on the condition that
it be returned by the bailee to the bailor as
soon as the purpose of the delivery is complete. Consider situations such as checking
baggage with an airline or leaving your vehicle with a mechanic for repairs.
JDetail the duties breached by each
J List the primary considerations
J List the secondary considerations
Going back to the liability scenario
at the beginning of this article, we es-
tablished that the insured was making a
turn in front of the claimant. In this situa-
tion, there are several duties owed, which
should be addressed in the liability write
up, including yielding right of way, main-
taining proper lookout, taking evasive ac-
tion, respective traffic controls and rules
of the road.
The purpose of the
liability write up is
to make a decision
that will not only
determine a more
but provide a negotiation
strategy to amicably resolve the claim. It
is also important to assess the degree by
which duties were owed and breached.
For example, the insured owed a greater
duty to yield the right of way to oncoming traffic. However, once the insured
had established control of the intersection, the claimant owed a duty to cede
the intersection to the party in control.
The insured owed a greater duty to adhere to traffic controls that allowed for
the passage of the claimant, but the
claimant also had a duty to maintain a
As the duties are laid out, breaches assessed and to which degree, it becomes
clear that this is not a 100-percent liability situation. As is the case with most intersection accidents, and most non rear-end accidents for that matter, it is one of
shared liability. Herein lies the challenge
of not only recognizing the opportunity
by resolving it accurately.
Once liability and damages have been
established, the next task is to formulate
an effective negotiation strategy. Let’s
face it. One knows it is a lot easier to pay
someone 100 percent than to tell them
that they bear some responsibility for
their own damages. This is especially true
in a day and age when adjusters are busy
and claims disposition is a key metric.
But it can be done.
Having worked with a large number of
insurers on accuracy improvement projects, such as liability, achieving 35-per-
cent comparative negligence assessment
in pure comparative states has proven
to be a reality. For modified comparative states, this figure is in the 25-percent
range and contributory states drops to
about 12 percent. Further evidence of this
potential opportunity area can be derived
from more formulaically driven jurisdictions, such as Japan, where comparative
negligence is routinely assessed about 35
percent of the time.
So what does this mean from a bottom line perspective? If an organization
is currently assessing 50/50 on 5 percent
of all claims with an average payment of
$2,800, the benefit derived is $70,000 per
1,000 claims processed. Keeping the average comparative assessment at 50/50,
assessing comparative at an optimal
level of 35 percent increases accuracy by
$490,000, or an improvement of $420,000
per 1,000 claims processed. Multiplying
this out by actual claims processed can
show a tremendous opportunity for accuracy improvement, often to the tune of
tens of millions of dollars per year.
For a claims organization processing 10,000 material damage claims in a
year, this improvement is $4.2 million.
For 100,000 claims, this improvement
is $42 million. Hit that million claim
mark and improvements are $420 million. This does not even begin to factor in the improvements on the bodily
injury line where average paid are much
higher and potential benefits much
Of course not all comparative claims
will be settled at 50/50; some will be 80/20
in favor of the insured, others 60/40 in
favor of the claimant. What we do know
is that seeing more shared liability is an
opportunity nearly universally available
to all insurers, both domestically and in
many nations abroad.
It is estimated that 15 percent of all
property and casualty claims are closed
with a missed subrogation opportunity.
This is significant in terms of bottom
line revenue and policyholder retention
opportunities. By more effectively leveraging improved liability processes, insur-