The costs of litigated claims are on the rise, and the number of large claims experienced by businesses across the U.S. have increased significantly over the last several years. As a result, many organizations are reevaluating their claims management strategies and approaches.
The drastic increase in payouts to plaintiffs are driven by several factors. Social inflation is one notable contributor as a result of the increased cost of medical care, changes in jury attitudes towards corporations, the growing availability of third-party litigation funding, increases in legal advertising by plaintiff lawyers and changing social sentiment. In addition, the volume of files handled by defense attorneys and adjusters has also contributed to these multi-million-dollar settlements.
Insureds’ passive involvement and other avoidable claims management mistakes also often contribute to these ballooning payouts. To mitigate the exposure created by litigated claims, organizations should create an effective claims management program in which all involved parties collaborate and are held accountable to perform their role in the process. The insurance broker, the insured, defense counsel and third-party administrators/claims adjusters/insurance carriers must work together starting from the moment the incident occurs.
Unfortunately, too often evidence is mishandled, important facts go uninvestigated, witnesses are not properly interviewed, and plaintiffs are thus given an advantage to pursue massive payouts. Aside from the significant financial implications, mismanaged claims can be extremely time-consuming and cause reputational damages.
At Conner Strong, claims management consulting is a critical aspect of our business. We employ a team of dedicated claim advocates and consultants with decades of experience containing claims. Thankfully, there are several steps all organizations can take before and after a claim is filed to mitigate the damage. Here are five steps we recommend every organization take when facing a claim:
1. Develop an internal investigation and reporting process
Creating sound internal procedures for risk management and incident response before an accident occurs is a critical first step to effective claims management. These procedures should ensure there are appropriate reporting protocols when an incident does occur and a process to investigate. This process will ensure the injured party receives immediate medical care. Early reporting can also assist in deterring fraud and identify the cause of the incident to prevent recurrence. Witness testimonies are also more reliable at this time, and it is easier to preserve evidence.
When investigating, focus on identifying facts, not assigning fault or providing opinions. Create a system to retain and organize documents and other evidence that makes them easy to find and reference when needed.
It is also important to create such documentation with an understanding of the rules of evidence to protect the documents against disclosure in litigation.
2. Perform thorough, unbiased interviews with empathy
Conducting thorough, unbiased interviews is a crucial part of evidence collection. When asking questions, it is important to stick to the facts. Refrain from asking leading questions and never insert your own opinion into the conversation.
Focus on asking open ended questions and be intentional with the phrasing. What were you doing? Where were you at the time of the incident? What did you see and hear? Questions framed in this way do not lead the witness into answering a specific way and allow for the interviewer to capture as much information as possible. It is important to let the witnesses and injured parties tell the story on their own terms. When the interview is complete, always be sure to review the completed statement, and when appropriate, have it signed.
Last but not least, conduct the interview with empathy so that the person who may have experienced a traumatic event feels comfortable and supported.
3. Report claim to carrier and collaborate and engage with all involved parties
Effective claims management requires a coordinated approach across the many parties involved. To do so, the first step is reporting the claim to the carriers as soon as possible.
The insurance broker, insured, defense counsel, claims adjusters and all applicable insurance carriers must be in constant communication throughout the process and collaborate on approach. Conner Strong & Buckelew claim advocates often act as the coordinators in these situations, ensuring all parties are briefed on claims strategy and adequately performing their responsibilities. Our professionals can also assist with TPA selection and defense counsel approval to make sure insureds are working with competent teams that have the organization’s best interests in mind.
Collaboration includes the insured providing all information to defense counsel so they can properly prepare the defense of the claim. In addition, companies should be an active participant in all strategy calls, assessments and preparation of witnesses. No one knows the business better than the client.
4. Immediately develop a resolution strategy
Burying your head in the sand and assuming all claims are fraudulent prevents the development of an effective defense strategy. It’s best to face reality. Ensure straight talk in the claim strategy conversations, encouraging the honest assessment of liability upon immediate notice of an incident, even before a claim is filed.
Be open to creative paths to resolution, and be flexible to a change direction upon learning new information.
It is equally important to understand the litigation process, including the purpose of the designation of a corporate representative and the affirmation of discovery responses. These can be some of the most important decisions in litigation. Designating a poor witness as a 30(b)(6) witness can make or break the outcome of the case.
5. Analyze claims outcome and modify actions to prevent future accidents and mishandling of claims
Claims management does not stop once a settlement or verdict has been reached. Effective risk management professionals understand that claims produce useful and valuable information that can help enhance their approach to worker safety and risk mitigation going forward.
In addition, at Conner Strong & Buckelew, we have a team of data experts who review detailed claims information and help make specific recommendations on how to address areas that are producing the largest and most frequent claims. By putting this information to good use, organizations can help prevent additional incidents and be better prepared for future claims.
The CSB Advantage
Organizations that work with Conner Strong & Buckelew don’t have to take on their claims alone. Our dedicated teams of claims professionals advocate for their interests, ensuring no stone goes unturned when it comes to mitigating the impact of a claim. At Conner Strong & Buckelew, more than 16% of our staff is dedicated to claims management, while the rest of the broker industry typically dedicates less than 3% of their resources to this critical service. Our team goes above and beyond — holding adjustors and lawyers accountable in ways that stop claims from growing out of control. To mitigate the damage of their next claim, it’s important for insureds to prepare today. Do not delay, and act now by implementing processes and procedures, training staff and mitigating risk where possible. Doing so could save the business millions of dollars resulting from mismanaged claims.
For more information on how our team can help, please reach out to your Conner Strong & Buckelew representative, call us at 1-877-861-3220 or email
[email protected].
Heather Steinmiller
Executive Partner, General Counsel & National Risk Management Services Leader
