Zalma's Insurance Fraud Letter - June 1, 2021

A Video from ZIFL - June 1, 2021

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Volume 25, Issue 11 – June 1, 2021, A ClaimSchool™ Publication © 2021, Barry Zalma & ClaimSchool, Inc., Go to my blog & Videos at: Zalma on Insurance, And at https://zalma.com/blog,  Go to the Insurance Claims Library, Listen to the Podcast: Zalma on Insurance, Videos from Zalma on InsuranceSubscribe to e-mail Version of ZIFL, it’s Free!  Read last two issues of ZIFL here.  Go to the Barry Zalma, Inc. web site here,  Videos from “Barry Zalma on YouTube,”   Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921.

Do Insurers Get Their Money’s Worth from Fighting Fraud?

The simple answer is “yes” and “no.” The more difficult question to answer is how to quantify the savings, if any.

A common belief in the insurance industry is that most SIUs systematically measure their return on investment to their companies. This is an inaccurate belief. For example, one large personal lines insurer refuses to measure its SIU operation, contending that whatever the savings, an aggressive anti-fraud program is in the best interest of policyholders and is “the right thing to do.” Other insurers downplay measurement for fear that such a system could be used against them in civil litigation that the company unfairly denies claims, perhaps even legitimate ones.

It is impossible to measure the intangible benefits of SIUs. The mere creation of a fraud-fighting entity should help deter crime, yet actually measuring that deterrence is nearly impossible. SIUs also review claims files that are quickly determined to be legitimate claims and allow insurers to pay claimants promptly and close files quickly. In most large organizations the SIU recommends payment of claims more often than they recommend denial for fraud.

The Law of Unintended Consequences Strikes Again to Help Set Up a Bad Faith Case
Statute to Protect Against Bad Faith Offers Created an Opposite Result

In White v. Cheek, A21A0212, Court of Appeals of Georgia (May 21, 2021) a personal injury action arising from an automobile accident involving Stephan Duwayne White and Walter Cheek. White appealed from the trial court’s denial of his motion to enforce a settlement. White contended that the trial court erred by holding that oral communications on White’s behalf constituted a counter-offer, and thus there was no enforceable settlement agreement formed between the parties.

The Georgia statute was enacted with an attempt to avoid bad faith set-up offers of settlement. It, as Chief Judge McFadden noted, had the exact opposite effect. The court was compelled to enforce the statute as written. Chief Judge McFadden made it clear in a concurring opinion that GEICO should aggressively defend the bad faith suit and made clear that a motion for summary judgment should be granted because the offer was clearly a bad faith set-up attempt. Lawyers must represent their clients but need not act unethically by refusing an offer to accept the settlement demand that did not accept every element of the 22 page offer immediately.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/  podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4