When a particular loss amounts to $100,000 or more (or a reserve change causes the loss to reach that figure), adjusters write large loss reports to summarize the status of the claim for top management and to show the need for the new reserve.
The following tips help make sure these reports are clear and easy to digest.
1. Include all pertinent facts in your RE line.
These facts include the name of the claim handler, the date of the report, the current and proposed reserve (if relevant), policy number, insured, and broker. Other items that may be required in the RE line include: current and proposed incurred loss, paid to date, location and policy term.
2. Start with an Executive Summary.
While you may be tempted to have a first subhead such as “Facts Surrounding Claim,” which tends to be a general review of the background of the claim, it’s better to use a summary that gets right to the point (e.g., The purpose of this report is to request an increase in the expense and indemnity reserve.”). Also, quickly establish the type of claim under discussion (e.g., breach of contract, legal malpractice). The summary will also establish the results of any mediation so far.
3. Establish the conflict, important dates in the evolution of the claim, the status of any settlement demand, and any upcoming trail date.
In these paragraphs, your job is to “tell the story” of the claim in terms of the contrasting points of view between the claimant and insurer. You should try to establish the plaintiff’s view in a single succinct sentence: (e.g., The plaintiffs allege that TTA failed to exercise reasonable care in providing general contractor and construction management expertise relating to the project, which caused substantial construction defects and extensive delays.”
4. Save conclusory statements for a subhead or paragraph labeled “conclusions.”
While your summary of the claim should be objective, giving the facts of the case, you may still have strong feelings about who is right or wrong, what is fair or unfair. Save these thoughts for either a section marked “Conclusions” or for a final paragraph in which you can summarize these subjective thoughts. Here is an example of a paragraph in which the writer of the Large Loss Report gives forth with subjective remarks:
“Plaintiff is being extremely unreasonable with a demand of $1.6 million and insist they are only interested in a global settlement. With Ace Builder’s demand against the insured being $400,000, which is highly unreasonable as well, considering the limited liability on the insured and the cost of repairs produced by plaintiff of approximately $47K, settlement seems unlikely and appears not to be a viable option at this time.”
5. Other subheads may aid readability of report.
In lengthier or more complex reports, you may want to group different type of information into brief subheads that summarize key facts. For example, a “Coverage” subhead can review the policies, insureds, effective dates, and limits, with a bulleted list used to describe any endorsements or provisions that limit or bar coverage for the claim. (e.g., Continuing or Ongoing Losses Exclusion, Fungi or bacteria Exclusion, Punitive Damages, and Contractors Professional Liability Exclusion).
The subhead “Jurisdiction” establishes the Court and County in which the Matter is filed.
A “Damages/Injury” subhead goes into detail about the particular damage attributable to the insured’s actions. In a breach of contract case, these could include items such as “Excessive cracking of stucco,” “Discoloration and efflorescence on the stucco,” “Excessive moisture,” and “Leaking of the balcony decks.” In a health claim, it will mention particular injuries, such as “sprained neck,” “broken wrist” or “whiplash.”
“Loss Description” establishes the contracts between parties and subcontractors, if relevant) and the Plantiff’s allegations in the filed lawsuit.
“Reserves” establishes your new expense increase and the reason for it, along with backup detail. The first sentence of this section could sound something like this: “I am requesting an expense increase to $75,000 based on defense counsel’s outstanding and ongoing litigation fees and cost up through mediation.”
A “Status” subhead is usually a brief statement of impending action (e.g., An expert meeting is set for May 2, 2009, to discuss the parties’ respective positions.”
Even though large loss reports are not all the same, they all require precision and lots of specifics. These tips help will help you organize, phrase, and format your large loss report that are both readable and complete
Blake is director of The Communication Workshop, offering writing seminars and webinars to insurers across North America.
Phone: 516-767-9590. E-mail: firstname.lastname@example.org. Web site: www.writingworkshop.com.
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