Do insurance companies support training for their claims adjusters and managers to promote good faith and ethical claims handling? Barry Zalma recently stated in his September 1st insurance industry newsletter, Zalma’s Insurance Fraud Letter, the following:
The American Policyholders Association Board of Advisors meeting resulted in me writing two blogs today. While Doug Quinn was explaining a program providing whistleblowers an avenue to report illegal claims activity, which I noted in Are You an Employee in the Insurance Industry Who Is Upset About Unethical and Illegal Claims Activity?, the information about Citizens Property Insurance claims adjusters systemically backdating letters for about two months caught my attention.
The property insurance claims industry is increasingly turning to independent adjusters rather than company adjusters. The number of independent adjusters calling, texting, and literally confessing to me about unethical conduct has exploded over the last few years. My thought is that insurance companies are hiring independent adjustment firms and then placing financial pressure on those entities to reduce claims severity. Insurers trying to make their financial claims goals will simply hire a competitor of the independent adjusting firm if those numbers are not met. Those independent adjustment companies, in turn, have their claims managers place more emphasis upon closing claims for less than what is owed—damn regulatory ethics requirements and good faith treatment.
Continue Reading Do Independent Property Claims Adjusters Need More Legal Protection From Unethical Managers
How often do insurance companies shop for a new opinion looking for a way to deny coverage of a large loss? This was the situation in a recent trial which resulted in the insurer being liable for $44 million. The facts summarizing the “shopping” for a new expert opinion regarding a boiler and machinery loss were outlined by the court:
Continue Reading A $44 Million Verdict After Wrongful Denial of a Boiler and Machinery Claim—Yet No Bad Faith?
A Texas law firm that practices insurance defense work admits that claims delay is a strategy employed by some of its clients. In an article that was sent to me by numerous people, the law firm posted on its website blog:
Continue Reading Insurance Company Defense Counsel Admits That Claim Delay By Insurers Is a Strategy
Merlin Law Group attorney Drew Houghton brought an article, Discovery of Insurer Employee Incentive Plans: Rewarding Employees For Paying Insurance Claimants Less, to my attention. It was written by longtime colleagues Mike Abourezk and Marialee Neighbours. Their article is important and raises one of the fundamental ethical questions of claims management: The role of the claims professional regarding company profit. While insurance companies need to be profitable in the long run, I have yet to see a claims goal that rewards claims managers for making certain that the customer has not had benefits missed and not paid after a loss.
Continue Reading Thoughts On Claims Incentive Goals—Where Is the Goal To Not Overlook All Damages?
Contents claims are often overlooked. Some insurance companies, like FedNat, fail to adjust contents claims and only estimate and adjust real property insurance claims until their customer does the good faith work of investigation and evaluation for them.
Continue Reading Contents Claims Are Important and FedNat Does Not Adjust Contents Claims
Insurance company claims management hates to have outside critical analysis over its handling of property insurance claims. Whether by regulators through market conduct examinations or discovery in claims practices cases by their own customers, the modern trend is to object to turning over these internal documents on every conceivable ground, including “trade secrets.” This has been noted numerous times in this blog, including in Trade Secrets: Dynamite Discovery Decisions, Part 11, where we noted:
Continue Reading Insurance Company Internal Claims Management Documents Should Demonstrate Good Faith Claims Processes
The tragic tornadoes ripping through Kentucky and the Midwest this weekend will result in significant insurance claims. Policyholders are in need of immediate adjustment and payments of money to help soften the blow. Kentucky has a very strong public policy for good faith claims treatment which is found in its Unfair Claims Settlement Practices Act (USCPA).1
Continue Reading Kentucky Unfair Claims Settlement Practices Act
Insurance companies have an obligation to promptly investigate coverage and evaluate damages when adjusting a first party property insurance claim. When an insurer fails to do this, it has failed to act in good faith. A federal court in Washington recently found the same as a matter of law.1
Continue Reading Claim Delay Leads to Bad Faith Judgement