Given the intersection between claims management in bad faith claim, why aren't carriers engaging in active claims management? I have some theories:

1. Lack of time and resources. Just as claims adjusters have a legitimate complaint about unreasonable case loads, so do claims managers, who often are managing the caseloads of multiple adjusters. Now add those duties to those associated with employee management and other management duties, and it becomes easy to see how good claims management can fall to the wayside.

2. Reliance on counsel. Overworked adjusters and claims managers will often rely too heavily on counsel to determine the direction of a claim. While it is tempting to rely on competent counsel to help with the management of a difficult claim, claims managers cannot abdicate their management role to counsel. First, counsel, especially outside counsel, is usually focused on one single case, while the claim manager has to focus not focus not only on a particular case, but several cases in order to ensure consistency. Second, counsel's goals from those of the claims manager may be divergent, with potentially undesirable results. Third, contrary to what we attorneys think, we don't know everything (sacrilege!); claim adjusters and managers have much to offer and teach counsel.

3. Pressure to reduce costs. The pressure on claims managers to reduce the costs of claims handling and claims management is enormous. That pressure can understandably result in less active claim management and claim handing than might be seen if cost were no object. However, as difficult as it may be sometimes, claims managers must balance the duty to fully investigate the claim with budget concerns.

True Management

Assuming that I am correct, I can completely understand how the lack of time, money and resources, as well as the ability to rely on counsel can lead to less active claims management. But this is where the part about “management” comes in. Management requires the setting of priorities and allocating the resources available to address those priorities.

Claims management further requires that claim managers evaluate all claims and take a more active role in those that appear complex or involve significant damages, as these are the type of cases that often lead to bad faith suits. An active role means more than simply reviewing the file to see if the claim adjuster is completing tasks timely.

It means asking questions to ensure that the claims adjuster is conducting a thorough investigation as well as providing the adjuster with the resources necessary to complete that investigation. It means ensuring that there is good, substantive communication with the client. In litigation, it means working with the attorney to ensure that the tasks being completed will lead to the carrier's ultimate goal—efficient closure of the file.

Yes, active claims management is time-consuming. It requires the expenditure of dollars in an environment where such dollars are ever-shrinking. However, the time and money expended with such an endeavor will undoubtedly pay dividends when the file in question is marked “closed” rather than in “bad faith litigation.”