Not long ago, a judge decided a bad faith lawsuit in favor of a plaintiff because the lack of a timely settlement could be traced back to the carrier’s not having any written claims procedures or guidelines in place. The carrier, which employed about 50 people and had only one or two claims adjusters on staff, argued that it was too small to have written guidelines. But is being “small” an acceptable reason for not having some procedures in place? Any way you look at it, small companies do not get a pass.
By producing Best Practices Guidelines for the type of claims handled by your carrier, third party administrator (TPA) or independent agency, you set forth standards and procedures that will guide your organization through a process that is sound, consistent and fair.
The following tips help guide you in planning and writing these documents:
- Decide which Best Practices Guidelines need to be written. Even small TPAs and carriers may find that they want a Best Practices Guideline in place for a number of situations or claims. These could include production of loss runs, anti-fraud, audits, auto claims, construction defects, homeowners’ claims, occupational accidents and subrogation.
- Decide on an attractive format for your Guidelines. Regardless of subject matter, the Guidelines should be well spaced, have headings and subheads, have wide margins and avoid long paragraphs and sentences. Avoiding long paragraphs is especially important if you plan to have text that is both left- and right-justified, since right justification tends to emphasize a paragraph’s length.
- Use plain English. Although the Best Practices Guidelines are often written by house attorneys, they should be free of most jargon and easily understood by most claims professionals.
- Read the Best Practices Guidelines aloud. Your ear may catch what your eye doesn’t. The Guidelines should have the warmth and color of human speech. By reading them aloud, you’ll catch phrasing and punctuation problems as well as make sure bullets are parallel, and unnecessarily legalistic phrases are eliminated.
- Choose headings that are logical. For a Guideline on Subrogation, one TPA chose the following subheads: INTRODUCTION, INVESTIGATION, EVALUATION, DISPOSITION, REPORTING, DOCUMENTATION and SUPERVISION. The Guideline’s only subhead, “Mitigation” was placed within the heading “INVESTIGATION.” By bolding and capitalizing the headings while upper- and lower-casing the subheads, the Guideline immediately tells the reader which topics are subordinate to larger topics.
- Use subheads that are simple and descriptive. For a Best Practices Guideline on Statements, one company used just five concise subheads: INTRODUCTION, STATEMENT SUBJECTS, GENERAL PREPARATION, THE INTERVIEW and POST INTERVIEW.
- Keep Best Practices Guidelines to a reasonable length. A Best Practices Guideline for Occupational Accidents may run 4-5 pages, while a Homeowners’ Claims Guideline could run 10 pages or more. The shortest Guideline I’ve seen is one that runs only one page (Production of Loss Runs).
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