16 hours ago

Be Able to Fulfill All the Claims Commandments
Post 5217

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
The Professional Claims Adjuster

To be able to be a professional claims adjuster or public insurance adjuster it is essential that you are ready, willing and able to fulfill the Claims Commandments.

This series of fifteen claims commandments is an effort to provide direction to every person involved in claims handling for insurers and for the public insurance adjusters, whose duty it is to help insurers fulfill the promises made by an insurance policy.

Claims Commandment I -Thou Shall Confirm Coverage
How to Confirm Coverage

Notice provisions in insurance policies serve the important function of allowing the insurer the opportunity to make a timely and thorough investigation of the insured’s claim.

Once the policy is obtained and available for review the claims person must read and understand the policy coverages and compare those to the facts of a loss and wording of the policy to confirm that one of the policy coverages promises to indemnify the insured against the risk of loss of the type reported and that the claim is being made on a policy issued by the insurer for whom the adjuster works.

Claims Commandment II -Thou Shall Always Conduct A Thorough Investigation

Investigation is a search for truth. It is an art form where facts are established. Courts will not subject an insurance company to a choice between liability under a bad faith failure to investigate theory for publication of a denial of coverage without an adequate investigation. Liability can be imposed for a constructive denial imposed after the insurer has conducted a more thorough investigation that confirms an earlier determination of no coverage, on the theory of delay coupled with a wrongful intent.

An insurer has a duty to conduct an appropriate and careful investigation prior to deciding on a claim. However, if after conducting a thorough investigation of the facts and circumstances giving rise to a claim, the insurer can reasonably conclude that the claim is fairly debatable or questionable, there can be no bad faith.

Claims Commandment III - Thou Shall Communicate Often With The First Party Insured

Insurance claims is a service business. The claims person – whether acting for the insurer or the insured – provides a service to the insured and the insurer. Communication is essential to providing the service promised by the insurance policy.

The claims person’s obligation is not limited to communication with the insured. The claims person and the insurer have an obligation to communicate with the state, police agencies, or prosecutors if they suspect that an insured or a claimant is attempting fraud.

No claims person should ever misrepresent or conceal benefits, coverages, time limits or other provisions of the policy from the insured or the claimant.

Claims Commandment IV - Thou Shall Understand The Policy

Insurance policies are contracts. To understand insurance claims the adjuster must understand how all contracts, and specifically insurance contracts, are interpreted. Rules of contract interpretation have developed over the last 300 years and are applied by courts with the intent to fulfill the desires of all parties to the contract. Long-established insurance law supports the conclusion that insurers are presumed to know and be bound by the meaning of the terms used and customs adopted in their insureds’ industries.

To conclude a thorough investigation the insurer must at least conduct a detailed interview with the insured, the brokers, and the underwriter

Claims Commandment V - Thou Shall Work With the First Party Insured

The key to resolving insurance claims amicably is constant and substantive communication between the insured and the adjuster. Communication about the claim on a regular basis allows the insured and the adjuster to build rapport.

Building rapport is a fundamental aspect of human communication. Being able to build rapport could be viewed as a basic element of social intelligence. The professional should first spend time establishing rapport and the confidence of the person being interviewed. there are four elements of building rapport.

Contact in person is preferable but caseloads for most modern insurers does not allow for continuous personal contact. If such contact is not available the contact should be by telephone, mail, or e-mail.

Each communication should be noted in the file.

Claims Commandment VI - Thou Shall Document The Claims File

Most insurance regulators, by Fair Claims Settlement Practices statutes and Regulations, require that every insurer maintain claim files that are subject to examination by the regulator or by his or her duly appointed designees. The regulator requires that the claim files must contain all documents, notes and work papers (including copies of all correspondence) which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed and the insurer’s actions pertaining to the claim can be determined.

Claims Commandment VII - Thou Shall Never Lie to an Insured

Insurance is and has been since the first policy was carved into a clay tablet, considered a business of the utmost good faith. The principle of utmost good faith (uberrimae fides) was, I believe, first stated in the English speaking world, in the British House of Lords by Lord Mansfield in 1766 in a case where he concluded that the duty of good faith rests upon both the insured and the insurer and held the insurer to its knowledge at the time the policy was signed.

Nothing can be gained by an insurer concealing or misrepresenting information about the policy or the surety bond. Claims staff should be warned that violation of this regulation will be grounds for discipline and certain loss of employment.

Claims Commandment VIII - Thou Shall Not Suffer Fraud to Succeed

Insurance fraud in the U.S. is epidemic. Insurance fraud continually takes more money each year than it did the last from the insurance buying public. Estimates of the extent of insurance fraud in the United States used to range from $308 billion every year to as much as 10% of all premiums collected. In truth no one really knows the extent of insurance fraud because most insurance fraud schemes succeed without the insurer even suspecting that it is being defrauded.

If a preponderance of the evidence gathered reveals that a fraud has been committed: that there was a material misrepresentation or a concealment of a material fact, made with the intent to deceive the insurer, that the insurer was actually deceived, and that the insurer was damaged by the deception, the claim must be rejected.

If a preponderance of the evidence does not exist or establishes there was no fraud the claim should be paid.

Claims Commandment IX - Thou Shall Communicate Regularly

Insurance claims handling is a person to person business where the claims handler, the insured and the claimant (if there is one) interact with each other.

The professional claims person will log every telephone call, keep every e-mail and letter in the claims file, and document everything done to deal with the claim. The professional claims person will treat everyone with whom he or she comes in contact with the utmost good faith and fair dealing.

Part Eight of The Zalma Philosophy of Claims Handling will deal with more of the Claims Commandments.

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