A Proposal to Create Insurance Claims Professionals

To avoid claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers must maintain a claims staff dedicated to excellence in claims handling. That means they recognize that they are obligated to assist the policyholder and the insurer to fulfill all the promises made by the insurer in the wording of the policy. An insurer can create a claims staff dedicated to excellence in claims handling by, at least:

Hiring insurance claims professionals.
If professionals are not available, training all members of the existing claims staff to be insurance claims professionals.
Training each member of the claims staff annually on the local fair claims settlement practices regulations.
Supervising each claims handler closely to confirm all claims are handled professionally and in good faith.
Explaining to each member of the claims staff the meaning of the covenant of good faith and fair dealing.
Requiring that staff treat every insured with good faith and fair dealing.
Demanding excellence in claims handling from the claims staff.
Being ready to dismiss any claims handler who fails to treat every insured with good faith and fair dealing.

If any experienced claims professionals exist on the insurer’s staff, the insurer must cherish and nurture them and use their experience and professionalism to train new claims people. If none are available, the insurer has no option but to train its people from scratch using available materials and professionals who have – for a reasonable fee – the ability to properly and effectively train claims personnel.

When the claims staff is made up of claims people who treat all insureds and claimants with good faith and fair dealing and provide excellence in claims handling litigation between the insurer and its insureds will be reduced exponentially. To keep the professional claims staff operating efficiently and in good faith they must be honored with increases in earnings and perquisites. Conversely, those who do not treat all insureds and claimants with good faith and fair dealing should be counseled and given detailed training. If they continue with less than professional conduct they must be fired. The insurer must make clear to all employees that it is committed to immediately eliminating staff members who do not provide excellence in claims handling and must be ready to publicly and quickly fire those who do not provide excellence in claims handling.

An excellence in claims handling program can include a series of lectures supported by text materials. It must be supplemented by meetings between supervisors and claims staff on a regular basis to reinforce the information learned in the lectures. To guarantee that the training and requirement for excellence in claims handling is effective he insurer must also institute a regular program of auditing claims files to establish compliance with the requirement to deal fairly and in good faith to the insured. The insurer’s management must support the training and repeat it regularly and audit claims files to determine the training has taken and is being applied to each claim.

There is no quick and easy solution. The training takes time; learning takes longer. If the insurer does not have the ability to train its staff it should use outside vendors who can do so available from sources like this publication, training from professional organizations, and continuing education providers.

The excellence in claims handling program requires thorough training providing each member of the claims staff with a minimum of the following:

How to read and understand the contract that is the basis of every adjustment, including but not limited to:
The formation of the insurance policy.
The rules of interpretation.
Tort law including negligence, strict liability in tort, and intentional torts.
Contract law including the insurance contract, the commercial or residential lease agreement, the bill of lading, nonwaiver agreements, proofs of loss, releases and other claims related contracts.
The duties and obligations of the insured in a personal injury claim.
The duties and obligations of the insurer in a personal injury claim.
The duties and obligations of the insured in a first party property claim.
The duties and obligations of the insurer in a first party property claim.
The Fair Claims Practices Act and the regulations that enforce it.
The thorough investigation:
Basic investigation of an auto accident claim.
Investigation of a construction defect claim.
Investigation of a nonauto negligence claim.
Investigation of a strict liability claim.
Investigation of the first party property claim.
The recorded statement of the first party property claimant.
The recorded statement or interview of a third party claimant.
The recorded statement of the insured.
The red flags of fraud.
The SIU and the obligation of the claims representative when fraud is suspected.
Claims report writing.
The evaluation and settlement of the personal injury claim.
How to retain coverage counsel to aid when a coverage issue is detected.
How to control coverage counsel.
How to instruct coverage counsel on the issue to be resolved.
Dealing with a plaintiff’s lawyer.
Dealing with personal injury defense counsel.
The evaluation and settlement of the property damage claim.
The Appraisal process.
Arbitration and mediation and the claims representative.

Claims handling without excellence is both dangerous and expensive. Insurers should develop a professional claims staff and provide excellence in claims handling because by so doing they will profit more than if they keep an inadequate and unprofessional claims staff.

ClaimSchool, Inc. provides webinars to help create a truly professional claims staff.

(c) 2021, Barry Zalma & ClaimSchool, Inc.