Good coverage adjusters don’t keep score of coverage denials and consider the policyholder, underwriter and agent perspectives when reviewing coverage, according to Kevin Quinley, founder and principal of Quinley Risk Associates.
Quinley, who has nearly four decades of claims handling experience under his belt, said coverage review is the bedrock of claims handling, since a finding of no coverage means no further analysis of liability or damages is needed. He added that coverage adjusters are valuable assets, contesting claims that merit resistance.
Quinley outlined the seven habits of highly effective coverage adjusters during the latest Claims Insights podcast.
The seven habits off effective coverage adjusters include the following:
- They read the entire policy or policies that applies to the loss, including endorsements, amendments and schedules. “They don’t rely on memory from having similar policies under past claims,” he said. He explained that the DICE acronym is a good start when reviewing coverage. (DICE stands for declarations, the insurance agreement, conditions and exclusions) “There’s no excuse for not reading the entire policy,” Quinley said.
- They get the underwriter’s perspective on coverage issues, especially relating to gray areas.
- They get the agent or broker’s perspective. “Sometimes, these intermediaries can shed light on coverage issues that adjusters should…hear out before making coverage decisions,” he said.
- They bounce ideas off of managers and co-workers during roundtables and informal meetings. Quinley said it’s a good way to stress test coverage hypotheses before making a hasty coverage decision.
- They consider the policyholder perspective. Did the policyholder have a reasonable expectation that the peril would be covered? Quinley says good coverage adjusters ask “what if” questions, determining where holes could be poked in their coverage analysis or stance.
- If an adjuster or company’s coverage stance doesn’t hold up in court or elsewhere, good coverage adjusters will pass on lessons learned to others within the organization. This offers a chance for organizations to consider changes to claims practices or to policy premiums.
- Good coverage adjusters don’t keep score and don’t use coverage denials as a badge of honor. “They don’t measure their professional effectiveness by the number of claims they deny or the number of reservation of rights letters they send,” Quinley said. “It can create a…dysfunctional culture in claims departments and be a breeding ground for institutional bad faith claims,” he explained.
He warned that insurers should avoid having incentive structures that encourages adjusters to be hyperaggressive and overreaching in their coverage denials.
Quinley will present on the subject at the Chartered Property Casualty Underwriter (CPCU) Society Annual Meeting to be held in Orlando, Fla., September 16-19. Quinley will present alongside Cynthia Khin, Berkley Life Sciences.
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