The ability to accurately evaluate a claim is the most essential professional skill for liability claim adjusters. No checklist, computer program, or actuarial data can replace the human skills necessary to analyze information and generate a reliable value for a personal injury or a wrongful death claim. Evaluating a claim is as much art as it is science. It requires a well-trained, experienced professional to be done properly. The evaluation of every claim starts with obtaining as much information as possible about the claim. That information is then examined under the harsh light of two primary factors: fault and damages. The adjuster's evaluation skills become critical when it is time to examine the facts in minute detail, including an infinite number of subcategories that affect the two primary factors. Those subcategories are too numerous to list. They tend to vary widely with each claim because no two claims are identical. However, one critical factor is necessarily present in every claim and may be more important than any other: Where will the claim be brought?
Often, location is viewed as a static background fact that determines nothing more than the geographical assignment of the claim, the applicable legal principles — pure comparative, modified comparative, or contributory — and the choice of legal counsel. However, just as in the real estate business, "location, location, location" is a critical factor in evaluating a liability claim. Certain geographical areas, such as Chicago, Appalachia and south Texas, are well-known as notoriously plaintiff-friendly venues. Because the value of a claim is driven by the prospective result of future litigation, the evaluation process must include an investigation and careful consideration of the characteristics of the jurisdiction where that litigation would take place.
As an example, let's take a routine personal injury claim arising from a disputed lane-change motor vehicle accident. Assume that both involved vehicles had non-intrusive sheet metal damage and were driven from the scene. Our hypothetical claimant immediately complained of neck pain and an MRI revealed a herniated cervical disc. Conservative therapy was ineffective, so the claimant underwent cervical fusion surgery six months after the accident. Her attorney claims that she has incurred $55,000 in medical expenses. Of course, much more information is needed to accurately evaluate the claim. What are the most important additional facts would you need in order to evaluate this claim? Perhaps her medical history, medical prognosis, and her employment status will be necessary? You might also need a credibility comparison between the claimant and your insured driver. All of that information is essential, but none is as vital to the evaluation as the characteristics of the venue where the claim would eventually be litigated.
As any good jury consultant will tell you, the outcome of a trial depends in large measure upon the characteristics of the people who make the decision, namely the judge and jurors. Given identical facts, a typical jury in Douglas County, Kansas is not likely to return the same verdict as a typical jury in Madison County, Ill. If asked to evaluate our hypothetical case and given sufficient information about the respective venues, few adjusters would conclude that the settlement value of that case would be the same in Douglas County as it would be in Madison County.
Of course, merely being able to put a push pin in the right place on a map does not help evaluate a claim. Obtaining reliable information about the venue is a necessary part of the factual investigation of the claim. As with any other aspect of a claim, having more information about the locale enables you to more accurately determine the exposure and settlement value of the claim. Generally, you need to know the characteristics of the venue, then compare and contrast them with the characteristics of the claim, the claimant and your insured client. If the claim's locus happens to be where your insured is well-known — for better or for worse — the effect of reputation should also be a part of your analysis.
A good corporate citizen, such as the town's largest employer, would probably fare better at home than it would in another state. Conversely, a company with a reputation for being a local nuisance would probably fare better if the claim is far from home. On the flip side of that coin, any extraordinary popularity or notoriety of the claimant should also be taken into account. If the claimant is a popular former OSU star quarterback, then the outcome of a claim litigated in Columbus, Ohio is likely to be dramatically different than the outcome of the same claim litigated in Ann Arbor, Mich. If one or more of the litigants is a member of a racial, ethnic, or religious minority, then you need to know the relevant biases and prejudices of the location. Factors such as the parties' relative wealth, social status, and political position should also be considered in light of local attitudes.
All of this begs the question of how to determine the characteristics of a particular location. The most reliable sources of information are, naturally, the most expensive: survey research projects and mock trials. When the two primary evaluation factors (fault and injury severity) indicate a large enough exposure, in-depth venue research can often pay for itself many times over. The cheapest (and least reliable) method is to draw on stereotypical generalizations of plaintiff-friendly urban areas versus defense-oriented rural areas. If that is all the information you have, then it is better than nothing. However, you will probably need more information about the venue to effectively evaluate your claim.
Local adjusters and legal counsel are a good resource and can often provide valuable insight into the relevant characteristics of a particular location. Trial lawyers are usually keenly aware of certain venues where they regularly practice that are "plaintiff friendly" or "defense oriented." The demographic makeup of the area and the tendencies of the judges likely to hear the case should carry a lot of weight in the claim evaluation process. Local biases and tendencies are difficult to fully appreciate unless you are a "local" or have done an in-depth research project. Commercially published jury verdict reports, when properly analyzed, are very useful. While researching those reports, watch for general tendencies such as unusually high or low pain and suffering awards in that county or an unusual percentage of defense verdicts. Also watch for previous verdicts in particular case types, such as motor vehicle claims or slip and fall claims, and for cases involving injuries similar to the injuries in the case you are evaluating. Your research is not complete until you have considered recent trends in the jurisdiction, for instance, which way the pendulum is swinging.
If the claimant is represented by legal counsel, then yet another variable enters the picture. A local lawyer is more likely to have the credibility and communications skills necessary to effectively present his or her client's case. If nothing else, then he or she speaks in the same vernacular as the locals. Also, like it or not, the political, economic and social standing of the attorney in that particular jurisdiction may have an unwarranted influence on the outcome of the case. The reasonable value of a claim in Arizona goes down when the claimant retains a Calif.-based attorney who has no significant local ties. The reasonable value of the claim goes up when the claimant retains a skilled attorney who also happens to be a popular local philanthropist and community leader.
To dispel any lingering hope that this was going to be simple, it should be noted that the ultimate location of the claim is not strictly limited to the place of the injury. Although most personal injury lawsuits are filed in the city, county, or judicial district where the injury occurred, a plaintiff actually has a choice of where to file. Under many venue and jurisdictional statutes, a savvy personal injury lawyer may recognize that the accident occurred in a conservative county and may decide to file suit in the state and county where one of the defendants resides, does business, or can be served with process. As previously noted, this could be a concern for entities with less than stellar community reputations. The traditional rule holds that the plaintiff gets to decide where to file suit, as long as the court the plaintiff chooses has jurisdiction. However, defendants may be able to exert some control over the venue. Under the appropriate circumstances, a savvy defense attorney may be able to remove or transfer the suit to a venue that is more to his or her liking.
Of course, the evaluation of a liability claim is based on many factors. The process does not take place in a vacuum and thus cannot be reduced to generalities or summed up without losing the nuances that make skilled and experienced adjusters indispensable to the business of claims. Nevertheless, some evaluation factors carry more weight than others. Liability claim adjusters who fail to take the location into account or who fail to sufficiently investigate the characteristics of the location do so at their own risk, and at the risk of their insureds.
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