Matthew J. Smith, Esq. | Claims Management | November 2015
We hear about multimillion dollar verdicts against insurers. Must we accept these as inevitable, or should we evaluate why jurors return these verdicts and what factors drive them? Solutions are closer than we may realize.
Jurors promise to treat companies fairly, but the reality is that insurance carriers face an uphill battle in court. Jurors know that insurers have money, and this allows plaintiff attorneys to spin the “big bad corporate giant,” versus “the little guy.” While we on the defense side face significant hurdles, they are not insurmountable if we try cases correctly.
Creating Our Own Problems
Insurers are the second-largest single advertisers on American sports programming, trailing only beer companies. Five billion dollars is spent annually on insurance advertising, and it’s growing exponentially.
Marketing for new policyholders may be detrimental to insurers’ interests in court. often, ads give the impression that every claim is covered and paid instantly. Commercials imply that their companies’ policies provide more coverage, while other carriers offer inferior service.
We also are in a time where speed replaces quality and accuracy. most companies are understated in an effort to increase profits, forcing the handling of more claims than personnel can properly manage.
Technology allows us to conduct business remotely through service or call centers and even offshore claims processing. while these might create a better bottom line, they remove the insurer from the local community, creating a real and emotional distance between the two. Combined, these factors allow plaintiffs the opportunity to portray insurers as uncaring, insensitive, and greedy. we cannot change everything, but we can do better.
Fighting Back
There are ways for insurers to overcome these obstacles. Surprisingly, they are neither complicated nor expensive.
A starting point is a question that often goes unasked in depositions: “Why did you select XYZ Insurance to provide your coverage?” It may be price, service, or a recommendation. the follow-up question is to ask, “Other than not agreeing with the claims decision, how specifically did the company fail to live up to what you were told or recommended, leading you to purchase its policy?” Frequently there is no real explanation; only dissatisfaction, which does not equal bad faith.
Consider carefully your corporate representative at trial. A vice president may sound impressive, but also it reinforces the corporate structure. Consider instead the agent who issued the policy. If local jurors in the community return a multimillion dollar bad faith verdict, let them read it before the neighbor they see at church or synagogue, the grocery store, or the soccer field.
Most insurers adopt statements setting forth their purpose or vision. Consider these as the foundation for trial from opening statement to closing argument. Explain how the company’s adopted standard is reflected in everything done during the claims investigation and decision processes, and how those promises were fulfilled. Jurors understand more when a trial theme is presented tying all of the evidence together. A corporate motto can help do that.
Many companies give back to local communities. These may be sports sponsorships, donations, or charity campaigns and events. While being mindful of relevance, interjecting some information at trial is entirely appropriate and dispels allegations of the uncaring corporation.
Do not be afraid of your loss ratio. Does your company pay more in claims than received premiums? This may be on a national, state, or local basis. Educate jurors regarding the number of claims handled and indemnity dollars paid. this demonstrates that the insurance carrier is in the business of paying claims. Such testimony is especially powerful following a major catastrophic storm or loss in which the company exhibited prompt and efficient claims handling.
Do not apologize if the claim is denied. Explain why it is harder and more costly to deny coverage than issue payment. prepare an exhibit listing all of the individuals involved in the investigation, adjustment, and coverage decision. rather than allow the plaintiff’s attorney to portray it as a random decision, list each person involved, their role, and years of experience. Generally…