With the summer Olympic games underway, “going for the gold” seems like an opportune topic. However, many policyholders are not seeking a medal these days but rather money from insurers. In fact, a new personal injury 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 $2,000 per person in the form of a hidden litigation tax to cover the costs associated with the litigation that is overwhelming courts and insurance carriers. While litigation comes in all shapes and sizes, the five most frequent causes of litigation are as follows:

Automobile accidents
Work-related injuries
Assault claims
Slip and falls
Product liability

As these claims are presented, insurers are challenged with effectively investigating, evaluating and resolving them as accurately as possible for all involved. With limited resources and an aging workforce, this is becoming a greater challenge than ever before. With more and more claims professionals turning in their clipboard and Dictaphone for a set of clubs and a deck of cards in Florida, how can insurers effectively evaluate the swelling volume of claims?

Challenges Persist

Certainly the hiring and development of staff is key to replacing the graying claims workforce. But beyond that is the retention of high caliber employees and necessity of processes that allow for consistent outcomes. But, what about leveraging technology as well?

Long gone are the days of Barton Keyes, the overzealous insurance adjuster featured in the thriller Double Indemnity. Today, companies are faced with doing more with less. Accurate outcomes must be balanced by compressed cycle time and increased disposition of workload. This is where technology can play a crucial role in outcomes.

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

Comparative negligence, joint and several liability and other factors play into a myriad of legal challenges that adjusters face when evaluating claims. The biggest challenge for carriers is develop a staff that consistently identifies and enforces various liability arguments, which remain one of the property and casualty industries greatest opportunities for improvement.

According to Jury Verdict Research, a company that tracks jury verdicts nationwide, it was found that nearly half of all claims adjudicated involve scenarios where shared liability is applied. These may include premises liability, left turn intersection accidents or other situations where more than one person is likely at fault.

During my tenure overseeing claims operations for a large top ten insurer, liability recognition was something that we struggled with. With far too often predictability, claims were settled at either zero or 100 percent, even in situations where shared liability was evident.

The key to success was not only training, but utilization of technology to coach adjusters to know when such shared liability may be present. In our particular case, we utilized a methodology by which the characteristics of our best employees could be replicated across the universe of employees. The result was an exponential increase in comparative negligence identification and assessment, with no increase in either arbitration or litigation.

Evaluating Injury

Equally as challenging is the damages aspect of claims, whereby injury evaluations vary widely depending on a number of factors including workload, experience, quality of investigation and negotiating capabilities. During our process improvement initiatives, we learned some very important lessons that made us a stronger and more nimble organization.

Don't equate quality with tenure. Some of our best outcomes were obtained by those with very little experience who embraced the company philosophy and utilized new tools and technology to drive results.
There is always a better way. No matter how good one thinks they are, there is always room for improvement. In the words of the late, great John Wooden “Failure is not fatal, but failure to change might be.”
Listen to the field. Far too often decisions are made in the board room and pushed to the masses. If the field doesn't like it, they aren't going to use it. The key to success here is to differentiate between winning and whining. Certainly there will be a segment of the population that is simply change adverse. That said, there are key contributors throughout the organization who will provide valuable insight. In our situation, we had to balance tremendous economic gains with productivity and quality.
Build it right the first time. There are a lot of out of the box solutions being offered to insurers that provide just about everything imaginable. Focus on customizing a solution that makes sense, is affordable and has a quantifiable return on investment. Look to proven industry leaders who can not only support what they are delivering, but who have the ability to create savings through cross functional offerings.
Economies of Scale. Just as a carrier may house multiple functions together to leverage costs and benefits, the same holds true for service providers. For example, if you can leverage property damage solutions with casualty solutions, it will always be more bang for the buck to use one business partner than many.

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

Imagine the impact to the bottom line if comparative negligence was properly identified on just a fraction of claims. What if medical bills could be reviewed to determine reasonable pricing and utilization consistently? What if adjusters had a roadmap to properly negotiate? What if, as was the case in our claims organization, this could all be bundled into one package that delivered millions of dollars in claims improvement annually?

Christopher Tidball is an executive claims consultant and the author of multiple books. He may be reached at chris@christidball.com.

Special Reports /

Going For the Gold: A Litigious Claims Environment

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