Prevent Bad Faith and Unnecessary Litigation with Active Claims Management

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.