The Importance of Underwriting to the Claims Person
Barry Zalma
Sep 20, 2023
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The insurance adjuster and claims investigator are major sources of information available to the underwriter to avoid moral hazards. The adjuster provides the underwriter with information gained at the scene of a loss that will alert the underwriter of the existence or potential for a moral hazard. Every person involved in claims must understand that he or she has an important underwriting function as probably the only person from the insurer who actually communicates directly with the insured and actually views the property that is the subject of the insurance.
The sources of information available to the underwriter are limited. At best he has the answers of the insured, and the insured agents to questions posed in an application and the information provided by a pre-risk inspection. These are seldom sufficient. The investigation and adjustment of a claim is a source of detailed information about a risk that should cause an underwriter to reevaluate the risk and if a moral hazard is revealed the underwriter can take steps to protect against the moral hazard.
The adjuster must be able to recognize and report any information that might affect the underwriter’s decision to continue to insure the insured. When evidence of a moral hazard is discovered, the underwriter should be immediately alerted. Occasionally the information contained in the application is enough to make a decision. Usually, the underwriter will request more information in order to get further details to substantiate or negate suspicions. Every source of information is important to the underwriter as he or she attempts to decide whether to insure or not insure an applicant for insurance.
The Application
Clues to moral hazard can be found with statements about previous losses, previous business experience, the person in whose name title is held, and the number of mortgagees. If an inspection by the producer or loss control engineer is required, the underwriter will also learn about poor housekeeping or poor business practices.
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KEY POINTS
1. Motion for Judgment on the Pleadings: The Plaintiff moved for judgment on the pleadings, which was granted in part and denied in part.
2. Duty to Defend: The court found that the Plaintiff has no duty to defend William Mitchell in the California case due to a specific exclusion in the insurance policy.
3. Duty to Indemnify: The court could not determine at this stage whether the Plaintiff had a duty to ...
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Default of Settlement Agreement Reduced to Judgment
In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company, and Geico Casualty Company v. Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C., No. 24-CV-5287 (PKC) (JAM), United States District Court, E.D. New York (July 9, 2025)
Plaintiffs Government Employees Insurance Company and other GEICO companies (“GEICO”) sued Defendants Dominic Emeka Onyema, M.D. (“Onyema”), et al (collectively, “Defendants”) alleging breach of a settlement agreement entered into by the parties to resolve a previous, fraud-related lawsuit (the “Settlement Agreement”). GEICO moved the court for default judgment against ...
ZIFL – Volume 29, Issue 14
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You can read the full 20 page issue of the July 15, 2025 issue at https://lnkd.in/giaSdH29
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
This issue contains the following articles about insurance fraud:
The Historical Basis of Punitive Damages
It is axiomatic that when a claim is denied for fraud that the fraudster will sue for breach of contract and the tort of bad faith and seek punitive damages.
The award of punitive-type damages was common in early legal systems and was mentioned in religious law as early as the Book of Exodus. Punitive-type damages were provided for in Babylonian law nearly 4000 years ago in the Code of Hammurabi.
You can read this article and the full 20 page issue of the July 15, 2025 issue at https://zalma.com/blog/wp-content/uploads/2025/07/ZIFL-07-15-2025.pdf
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FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
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3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
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Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
