With the summer Olympic games underway, “going for thegold” seems like an opportune topic. However,many policyholders are not seeking a medal these days butrather money from insurers. In fact, a new personalinjury lawsuit is filed every two seconds in the United States,making it the most litigious nation on earth.

It is estimated that each year, Americans pay upwards of $2,000per person in the form of a hidden litigation tax to cover thecosts associated with the litigation that is overwhelming courtsand insurance carriers. While litigation comes in all shapesand sizes, the five most frequent causes of litigation are asfollows:

1. Automobile accidents
2. Work-related injuries
3. Assault claims
4. Slip and falls
5. Product liability

As these claims are presented, insurers are challenged witheffectively investigating, evaluating and resolving them asaccurately as possible for all involved. With limited resources andan aging workforce, this is becoming a greater challenge than everbefore. With more and more claims professionals turning intheir clipboard and Dictaphone for a set of clubs and a deck ofcards in Florida, how can insurers effectively evaluate theswelling volume of claims?

Challenges Persist

Certainly the hiring and development of staff is key toreplacing the graying claims workforce. But beyond that isthe retention of high caliber employees and necessity of processesthat allow for consistent outcomes. But, what aboutleveraging technology as well?

Long gone are the days of Barton Keyes, the overzealousinsurance adjuster featured in the thriller DoubleIndemnity. Today, companies are faced with doing more withless. Accurate outcomes must be balanced by compressed cycletime and increased disposition of workload. This is wheretechnology can play a crucial role in outcomes.

While claim facts often vary, the two main components of aclaim, liability and damages, never do. Simply stated, ifthere is no liability then no claim is owed. Likewise, ifthere are no damages, then there is no claim. Of course lifein these litigious United States could never be so simple. After all, what is a person is 1% at fault, or if the damagesincurred were by someone other than the person making theclaim?

Comparative negligence, joint and several liability and otherfactors play into a myriad of legal challenges that adjusters facewhen evaluating claims. The biggest challenge forcarriers is develop a staff that consistently identifies andenforces various liability arguments, which remain one of theproperty and casualty industries greatest opportunities forimprovement.

According to Jury Verdict Research, a company that tracks juryverdicts nationwide, it was found that nearly half of all claimsadjudicated involve scenarios where shared liability isapplied. These may include premises liability, left turnintersection accidents or other situations where more than oneperson is likely at fault.

During my tenure overseeing claims operations for a large topten insurer, liability recognition was something that we struggledwith. With far too often predictability, claims weresettled at either zero or 100 percent, even in situations whereshared liability was evident.

The key to success was not only training, but utilization oftechnology to coach adjusters to know when such shared liabilitymay be present. In our particular case, we utilized amethodology by which the characteristics of our best employeescould be replicated across the universe of employees. Theresult was an exponential increase in comparative negligenceidentification and assessment, with no increase in eitherarbitration or litigation.

Evaluating Injury

Equally as challenging is the damages aspect of claims, wherebyinjury evaluations vary widely depending on a number of factorsincluding workload, experience, quality of investigation andnegotiating capabilities. During ourprocess improvement initiatives, we learned some very importantlessons that made us a stronger and more nimbleorganization.

1. Don't equate quality with tenure. Some of ourbest outcomes were obtained by those with very little experiencewho embraced the company philosophy and utilized new tools andtechnology to drive results.
2. There is always a better way. No matterhow good one thinks they are, there is always room forimprovement. In the words of the late, great JohnWooden “Failure is not fatal, but failure to change mightbe.”
3. Listen to the field. Far too oftendecisions are made in the board room and pushed to themasses. If the field doesn't like it, they aren't going to useit. The key to success here is to differentiate betweenwinning and whining. Certainly there will be a segment of thepopulation that is simply change adverse. That said,there are key contributors throughout the organization who willprovide valuable insight. In our situation, we had to balancetremendous economic gains with productivity and quality.
4. Build it right the first time. There are a lotof out of the box solutions being offered to insurers that providejust about everything imaginable. Focus on customizing asolution that makes sense, is affordable and has a quantifiablereturn on investment. Look to proven industry leaderswho can not only support what they are delivering, but who have theability to create savings through cross functionalofferings.
5. Economies of Scale. Just as a carrier mayhouse multiple functions together to leverage costs and benefits,the same holds true for service providers. For example, ifyou can leverage property damage solutions with casualty solutions,it will always be more bang for the buck to use one businesspartner than many.

Today there is a tremendous amount of opportunity for insurers,regardless of line of business or domicile, to leverage technologyto greatly enhance their claims performance. In the face ofincreasing litigation and associated costs, this can create a goldmedal competitive advantage that influences quality, customersatisfaction and retention.

Imagine the impact to the bottom line if comparative negligencewas properly identified on just a fraction of claims. What ifmedical bills could be reviewed to determine reasonable pricing andutilization consistently? What if adjusters had a roadmap toproperly negotiate? What if, as was the case in our claimsorganization, this could all be bundled into one package thatdelivered millions of dollars in claims improvement annually?

Christopher Tidball is an executive claims consultant andthe author of multiple books. He may be reached at[email protected].