While having claims best practices can benefit an insurer, it’s important that claims management review and evaluate their reasonableness on a regular basis, according to Kevin Quinley, founder and principal of Quinley Risk Associates.
In a recent Claims Journal podcast interview, he discussed the nuances of implementing best practices.
While there has been an increasing trend of insurers implementing claims handling best practices, insurers need to be cautious not to set the bar too high which could lead to bad faith claim allegations. Quinley said this could happen despite the good intentions of the adjuster/insurer. He offered the example of an insurer who goes from a best practice of making contact with an insured within 72 hours of notice of a claim to 12-24 hours. This could be a problem if the insurer is short-staffed or its in-house claims personnel carry a heavy workload.
Another issue that could arise occurs when an insurer puts their best practices on paper, such as in their claims manual. According to Quinley, the insurer will be held to the higher standard and the documentation is discoverable and can be used in front of a jury should a bad faith claim go to trial.
Quinley, a 39 year claims veteran, said it’s a good idea to consider the unintended consequences related to best practices.
As a claims expert, Quinley has seen cases where best practice documents were targeted during discovery. In one case, a third party claims administrator (TPA) had deviated from their best practices in how they actually handled their claims resulting in bad faith litigation.
Just because an insurer or TPA falls short of its own best practices, it doesn’t mean their claims handling is deficient, Quinley said. Rather, it’s likely due to an unrealistic goal.
Claims departments need to consider what the reasonable claims standard is in the industry.
Quinley offered seven tips for insurers when implementing best practices in claims:
- Choose wording carefully;
- Remember that it is not just for show;
- Periodic training is a must;
- Audit for adherence;
- Link to performance review criteria and merit increases;
- Reassess periodically;
- Make them realistic.
Contact Quinley via kevinquinley.com, on twitter @claimscoach, on Facebook at Quinley Risk Associates or via email at firstname.lastname@example.org
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