Recently, an insurance publication bestowed the honor of Risk Manager of the Year on Deborah Griffith, risk manager of the Boy Scouts of America (BSA) near Dallas, Texas. We have all heard the Boy Scout motto, "Be prepared." This is good advice, summing up the ethos of risk management as well.
A profile of Ms. Griffith and BSA's operation illustrates how her department embraces risk management excellence. One area of strength is claims. Six BSA best practices deserve consideration for those looking to improve their own claim and risk management operations.
1. View the big picture for claim defense. In isolation, settling individual claims might make sense. From a precedent or business standpoint, however, settlement might be folly, especially if paying nuisance-value cases could spur additional non-meritorious claims. Settling dubious claims can brand an organization as an easy mark in the litigation arena, giving incentive to other attorneys and plaintiffs to feed from the proverbial trough.
In some situations, trying every case makes sense. In other settings, such a policy invites disaster. If you lose a trial, your ability to keep an outcome confidential is vaporized. The precedent factor becomes stronger if you roll the dice in front of a jury and they hand you your head. If you take every case to trial and lack a strong defense, you commit the litigation equivalent of Russian roulette. Insurance companies and claim personnel often can make fragmented decisions that are tactically sound but strategically unwise.
This is more common than thought because rarely are all of a policyholder's claims handled by the same adjuster. Often, office management farms out claim assignments on an individual account amongst many different adjusters, depending upon staff schedules, availability, workload, and experience. This is understandable, but it often fragments claim approaches, obscuring a policyholder's big picture and business aims. Due to this void, somebody must think strategically about claim defense and make specific decisions based on that foundation. The risk manager can enforce that big picture and, in addition, fashion account guidelines requiring a more cohesive approach to claim assignments by an insurance company or TPA.
2. Develop a corporate claim policy. Many companies have a marketing philosophy and a distribution philosophy. Some may even have a risk management policy, expressing their attitudes toward risk, risk-bearing, or risk retention. Many have never thought about their corporate claim policies. This does not afflict the Boy Scouts of America who — occasionally beset by child abuse lawsuits — developed their own claim philosophy. The organization decided that, regardless of the stakes, it would defend and take to trial any claims of dubious merit alleging molestation.
Against the backdrop of public horror over child molestation and claims against priests, this was a bold decision fraught with financial risks. As a result, the last time that a plaintiff won an award against the Boy Scouts was in 1996, a decade ago. In the last eight years, the Boy Scouts have won 17 out of 19 cases that they took to jury trial. Whether your claim philosophy is feisty pro-defense or pro-settlement, a company or risk manager must reflect upon that issue and fashion an appropriate claim strategy.
3. Establish a collaborative claim relationship with insurers. Do not abdicate claim handling to the insurance company. Do not shove the insurance company aside, but make sure that there is ample input from the policyholder with regard to handling liability claims. The best time to ensure this is NOT after placing coverage with an insurer. The time to nail this down is in pre-renewal or pre-placement discussions with candidate insurers. This is when you have the most negotiating leverage. Use your insurance broker to help you wrangle an agreement over the input you will have in claim decisions. GET IT IN WRITING, TOO!
4. Encourage, if not require, your defense attorneys to network. Plaintiff attorneys lead the defense bar in their abilities to network and compare notes. This lets them fine-tune their attacks on corporate defendants and specific targets. Personal injury attorneys are more effective in forging the notion of a fraternity and network. As a result, plaintiffs exhibit more cross-pollination and sharing of ideas, tips, tactics, arguments, briefs, expert recommendations, and deposition transcripts — all of which enhances the strengths of their cases.
Defense attorneys could do a better job here. Risk managers and claim departments can spur the process. Boy Scouts of America requires that defense attorneys communicate and share ideas, briefs, research, and tactics that work in one setting and can be transplanted to others. This is sound practice! No man is an island, and neither is any defense attorney if he wants to maximize the odds of winning in court.
5. Use in-house claim management to ensure consistency in discovery. Answering interrogatories one way in your Florida case and a different way in your Missouri claim can be disaster. Plaintiff attorneys can and will detect inconsistencies in answering interrogatories or producing documents. This can be waved in front of judges and juries to demonstrate bad faith and buttress a punitive damage claim. Fragmented claim-handling efforts invite this problem. Boy Scouts of America have centralized the coordination of answering discovery within the risk management department. While not perfect, this strategy reduces the odds of inconsistently answering interrogatories or producing documents. BSA has invested in an in-house claim staff to provide this level of detail and oversight in claim coordination and consistency. The bean counters may have challenged the expense but it beats taking a million-dollar jury hit or settlement because of a discovery snafu.
6. Host attorney conferences and educate counsel about your operations, aims, and procedures. Meeting periodically with defense attorneys — and having them meet together — encourages them to network and see each other as collaborators and not competitors. It also allows them to share ideas that benefit your case defense. Boy Scouts of America periodically hosts defense counsel meetings, often at "rustic" camps. This has a two-fold benefit. Not only are they networking, but defense attorneys also learn firsthand about the operation of Boy Scout camps, one area that spawns considerable claim activity.
For nearly 20 years, my company has hosted an annual defense counsel meeting that has been effective in fostering a defense network for policyholders. Lawyers hear presentations on technical points of assembling a strong defense. They network and form relationships with similar counsel in other parts of the country. We review case-handling procedures and recognize attorneys who have obtained good results through an honor roll, and we even present an Attorney of the Year award. Unlike the Boy Scouts' rustic settings, we always go to a resort location. It is time and money well spent.
These are just some ways in which Risk Manager Deborah Griffith has implemented best practices in claim management within Boy Scouts of America. Ponder these steps and reflect upon how they are applicable to your own organization to improve claim processes, enhance outcomes, and save money.
Now place your right hand over your heart and repeat after me:
"On my honor,
I will do my best,
To adopt best claim practices,
Just like the Boy Scouts of America."
Kevin Quinley, CPCU, is an insurance company claim executive in Chantilly, Va. You can reach him at kquinley@cox.net or at www.kevinquinley.com.
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