Considerations for insurers

It is clear that vague, confusing and noncompliant Holt demands will continue to be used to ensnare insurers in bad faith litigation, but what can insurers do to navigate this complex, often hostile, legal environment? For starters, insurers should consider:

Formalizing procedures and conducting trainings so that teams can spot and escalate possible Holt demands timely and effectively to in-house counsel as necessary. For example, O.C.G.A. § 9-11-67.1 applies only to settlement demands "prepared by or with the assistance of an attorney," and claimants will often send letters that appear to be prepared by individuals to disguise Holt demands. Buzzwords ("time-limited demand"), citations to Georgia law (Holt, Brightman and O.C.G.A. § 9-11-67.1) and language about the insurer's and insured's interests often signal a Holt demand.
Escalating a potential Holt demand to in-house counsel to assess the demand and the insurer's response, while minimizing communications with claimant's counsel. Even a polite acknowledgement of receipt of a Holt demand by an insurer can be misconstrued to tee up a purported rejection of a Holt demand.
Ensuring that Holt demands are interpreted literally and, if accepted, strictly followed. Unconditionally accepting and then failing to meet every single condition and stipulation will be deemed a rejection. Plaintiffs' firms are looking for any basis to claim their offer has been denied so that they may pursue bad-faith litigation. Deadlines for settlements are often masterfully crafted to include weekends and holidays, producing confusion about the exact expiration date.
Proposing and backing legislation amending O.C.G.A. § 9-11-67.1 to provide for a workable procedure that better accomplishes the policy goals stated in Holt. One option is a safe harbor that an insurer satisfies any Holt duty when it places the policy limits in escrow (or files a disinterested interpleader) where the parties with a stake in the policy funds are the insured and the plaintiff.

Insurers have a number of options in responding to a Holt demand, but it is important that they are proactive so they can effectively assess their options. Being informed about the current legal landscape can help make that task a bit easier.

Special Reports /

Preventing bad faith insurance litigation in Georgia

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