1. Choose words carefully. include a disclaimer. Have counsel draft
it. point out that these are aspirational goals, not warranties or
2. Don’t do it for show. Don’t make best practices another “credenza
decoration.” Don’t embark on best practices as the management
initiative du jour. aim to change behavior, not to have an
3. Train and train again! provide periodic training and education on
best practices. schedule in-house sessions to refresh everyone’s
understanding them. Develop case studies to show examples of
best and not-so-good claims practices.
4. Audit for adherence. “That which gets measured gets done.”
Quality assurance means checking under the (file’s) hood to make
sure that adjusters follow best practices.
5. Link it to performance reviews. align performance review criteria
with best practices. Then, link performance reviews to merit pay.
This reinforces the tie between striving to be the best and the
money in paychecks.
6. Reassess best practices” periodically for relevance and currency.
like furniture, best practices benefit from periodic dusting. as a
company evolves, its notion of what does (and doesn’t) constitute
best practices may change as well. periodically review the
document for relevance.
7. Make it realistic, authored by people who “do the work.” marc
Dubois, a florida-based claims consultant, notes that some best
practices guides “are written by theoretical practitioners rather
than by folks who have hands-on experience.”
world record in the 100-meter dash at
9.58 seconds. He is officially the world’s
fastest man. Sprinters finishing one or
two places behind him — like Justin
Gatlin and Asafa Powell — get silver and
bronze medals, respectively. That doesn’t
make them unreasonably slow. They are
still blindingly fast.
Straying from “best practices” in claims
doesn’t mean that an adjuster engages in
unacceptable behavior. The orbit of rea-
sonable practices lies outside best prac-
tice. There is a range or continuum of
claim-handling activities that may fall
short of a company’s “best practices” but
are nevertheless reasonable.
A saying attributed to Voltaire, “The
best is the enemy of the good,” applies
here. Falling short of best practices may
not equate to bad faith. One can miss best
practices, but still be within the realm of
reasonable claim standards. As a top-shelf
claim organization, a company should always be striving. That’s why establishing
written best practices is a worthy discipline, despite the risks.
Kevin Quinley CPCU, AIC, is the principal
of Quinley Risk Associates LLC. He can
be reached at email@example.com.
Law of Unintended
This does not mean that pursuing best
practices is a bad idea. Shouldn’t a person’s
— and a company’s — reach exceed its
grasp? Don’t be afraid to set the bar high.
“Having a [best practices] manual setting
the bar high,” according to UK-based consultant Clive Munnings, “demonstrates
that an insurer seeks to provide the best
possible service.” In claims, as in life, nothing is wrong with reaching for the stars.
However, that effort could come back
to bite one. What some view as a way
to elevate claim practices could become
a bad faith liability. Shouldn’t adjusters
and claim operations strive not just for
competence, but mastery? Definitely.
However, claim departments should consider potential negative, unintended consequences of codifying best practices.
Two case studies
As an expert witness reviewing cases involving alleged bad faith by adjusters or
insurers, often an insurer’s “best practices” are discovery targets and a point
of contrast between how claims are supposed to be handled and how they were
actually handled by the adjuster. If adjusters follow company best practices, no
problem arises. However, troubles multiply when lofty pronouncements from
management must be implemented by
the folks actually doing the work.
Recently, a trucking firm sued its third-party claims administrator, alleging mismanagement of a Workers’ Compensation program over many years. Discovery
revealed that the TPA had published best
practices. A Workers’ Compensation file
audit, however, showed deviations from
not only best practices, but from claim-handling norms.
In another case, a plaintiff sued an
insurer over attendant care benefits allegedly underpaid for years through automobile PIP coverage. Through discovery, the plaintiff saw that the insurer had
some written best practices. One section
covered “cost management.” The plaintiff
used those to build an institutional bad
faith claim, alleging that cost management guidelines aimed to boost company
profits at the policyholder’s expense.
Jamaican sprinter Usain Bolt holds the