Undoubtedly, most claims executives will readily tell you that they have a strong claims management program, which is a crucial component of any claims department. They will point to policies, procedures, guidelines, and claims audits. They would also point to stringent litigation and billing guidelines for attorneys. But do they fully consider the intersection between their claims management program and bad faith? I'm not so sure, given my recent experience.
In one case, the manager responsible for claims and litigation management relied solely upon the adjuster's summary of the investigation in supporting a denial for a claim worth well over $1 million. Had that manager only briefly reviewed the file, he would have seen that the adjuster's “investigation” was woefully inadequate and violated not only claims best practices, but also the company's own claims procedures.
In another, the claims manager failed to take an active role in managing an uninsured motorist claim until over 18 months after a demand for the policy limits had been made. However, by then, the bad faith had been committed, and the damage was done. In both cases, the policyholders have filed suit against the insurer for breach of contract and bad faith. Both suits could have been avoided through active claims management.
Recommended For You
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more information visit Asset & Logo Licensing.
