or personal lines insurance policies, typically have no dealings with anyone in the
insurance industry other than the agent
or broker until a loss occurs. They do not
interact with underwriting or with other
departments except perhaps loss control,
which may inspect the property or business premises to confirm that the exposure and risk match the information provided on the policy application.
There are often many parties involved
in claims management activities, and
this sometimes makes decisions more
complicated, but we need to ensure that
we make our policyholders our highest
For example, a liability claim may
involve insurers, policyholders, claimants, reinsurers, attorneys, appraisers,
and many other professionals. We must
ensure that all of these parties perform
their duties in the best interest of the
policyholder, and that any potential or
perceived conflicts of interest are identified and properly managed to achieve
an objective outcome. Transparency is
a desirable trait and has become an increasingly important characteristic in
the business world, and it certainly applies to claims management.
We must also recognize that in some
cases we must tell clients or policyholders what they do not want to hear, which
may lead to unpleasant conversations
with those we have given the highest
priority. Even in these circumstances we
should ensure that our clients and policyholders hear objective expertise from
us rather than our acquiescing to the client’s every requirement.
For example, some policyholders or
clients may insist that we obtain their ap-
proval before increasing reserves beyond
a predetermined value. While clients cer-
tainly have the right to be informed of re-
serve increases based on our professional
knowledge and expertise, we should resist
agreeing to obtain their approval. Our cli-
ents, or a particular client representative
may decide to inappropriately depress re-
serve values, which almost always comes
back to haunt the client and us at some
later point. When that occurs, not only
will our client appear to have manipu-
lated reserves, but that same shadow will
fall on us as claims professionals.
You can find additional information
and examples on this reserving issue in
the February 2010 issue of Claims maga-
zine in an article titled “Under Pressure:
The Temptation to Reduce Reserves Can
Increase in a Poor Economy.”
• Develop and maintain a high degree
of knowledge and expertise in areas of
attorneys, and other specialists, when
their expertise will augment ours. After all, it impossible for anyone to be an
expert in all fields of insurance claims.
• Have well-documented procedures
for the claims programs so that the
claims staff is consistent and thorough
in its work.
lives of the claims, which will necessar-
ily require more information-sharing if
the claims are more complex or severe.
is needed, using your expertise and objective findings to present an accurate
assessment to your client.
•;Resist;instructions;from;clients;or;poli-cyholders that may lead to inappropriate pressures and direction, or even the
appearance of inappropriate pressure.
These guidelines, along with strict
adherence to state requirements and actions to be avoided based on the “Unfair
Claims Settlement Practices,” will help
claims professionals render service that
represents the utmost in strong ethics.
Gary Jennings, CPCU, ARM, ALCM, AIC,
ARe, SCLA, is the principal consultant
at Strategic Claims Direction LLC. He
may be reached at Gary.Jennings@
Specializing in all types of Property losses
Residential, Commercial and Catastrophic Claims