stay on top of these changes.”
In addition to the complaints noted
below, regulators criticized insurers for
the manner in which they maintain com-
plaint handling; their failure to provide
requested data to market conduct exam-
iners; and a failure to conduct business in
their “own name.”
This marks the ninth year that Wolters
Kluwer has compiled the report. Shortly
after the firm released these findings,
Claims caught up with Donovan, who
elaborated on regulatory issues central to
Are carriers typically reluctant
to utilize self-audits?
A specific self-audit privilege actually exists in a limited number of states. However,
regardless of that limited provision, insurers can and do perform compliance audits
to assess their controls on the state multiple
requirements. Generally, I believe it is rea-to see how good claims management can
fall to the wayside.
2. Reliance on counsel. Overworked adjusters and claims managers will often
rely too heavily on counsel to determine the direction of a claim. While it is
tempting to rely on competent counsel to
help with the management of a difficult
claim, claims managers cannot abdicate
their management role to counsel. First,
counsel, especially outside counsel, is
usually focused on one single case, while
the claim manager has to focus not focus
not only on a particular case, but several
cases in order to ensure consistency. Second, counsel’s goals from those of the
claims manager may be divergent, with
potentially undesirable results. Third,
contrary to what we attorneys think, we
don’t know everything (sacrilege!); claim
adjusters and managers have much to offer and teach counsel.
3. Pressure to reduce costs. The pressure
on claims managers to reduce the costs
of claims handling and claims manage-
ment is enormous. That pressure can
understandably result in less active claim
management and claim handing than
might be seen if cost were no object.
However, as difficult as it may be some-
times, claims managers must balance the
duty to fully investigate the claim with
Assuming that I am correct, I can completely understand how the lack of time,
money and resources, as well as the ability
to rely on counsel can lead to less active
claims management. But this is where the
part about “management” comes in. Management requires the setting of priorities
and allocating the resources available to
address those priorities.
Claims management further requires
that claim managers evaluate all claims and
take a more active role in those that appear
complex or involve significant damages, as
these are the type of cases that often lead to
bad faith suits. An active role means more
than simply reviewing the file to see if the
claim adjuster is completing tasks timely.
It means asking questions to ensure that
the claims adjuster is conducting a thorough
investigation as well as providing the adjuster with the resources necessary to complete
that investigation. It means ensuring that
there is good, substantive communication
with the client. In litigation, it means working with the attorney to ensure that the tasks
being completed will lead to the carrier’s ultimate goal—efficient closure of the file.
Yes, active claims management is time-consuming. It requires the expenditure
of dollars in an environment where such
dollars are ever-shrinking. However, the
time and money expended with such an
endeavor will undoubtedly pay dividends
when the file in question is marked “closed”
rather than in “bad faith litigation.”
Suzanne M. Ganier is president of ALEXI
Professional Services, Inc., a firm that
provides expert and consulting services in
the areas of insurance coverage, bad faith,
and claims and litigation management. She
may be reached at Suzanne@alexipro.com;
(855) 440-7299 or www.alexipro.com.
1. Failure to acknowledge, to pay, or to deny claims within
specified time frames.
3. Failure to provide required compliant disclosures in claims
5. Failure to maintain claims documentation.
7. Failure to provide required compliant disclosures in
9. Failure to issue compliant adverse action underwriting notices.
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