Reflections on a Case
I recently returned from testifying in Federal Court in
a plaintiff case and as I was sitting on the airplane
reflected upon the case and the issue of the inside
game and how we would speak to the duty of a
claims representative to a third party claimant when
liability is reasonably clear. This case, which by the
way settled shortly after my testimony really came
down to that issue. You as the expert of course like
to think your testimony really made the difference,
but that is not really the case, it is the skill of the
legal team that makes the difference.
Mikes Rule : When liability is reasonably clear, you
treat the claimant as though she or he is a customer.
Now to some this may indeed seem strange, after
all is not the claimant the enemy, they are after the
dollars that we are to carefully guard. When I reflect
on this, I return to research material that I reviewed
during the course of being an expert in this case
and reflections on a past life in many claims
positions. Also I recall about 3 hours of
cross-examination by the defense attorney, much
dealing with this very issue.
One issue: The insurers' obligations are ... rooted
in their status as purveyors of a vital services labeled
quasi public in nature. Suppliers of services affected
with a public interest must take the public's
interest seriously, where necessary placing it before
their interest in maximizing gains and limiting
disbursements ... As a supplier of a public service
rather than a manufactured product, the obligations
of good faith and fair dealing encompass qualities of
decency and humanity inherent in the
responsibilities of a fiduciary. Insurers hold
themselves out as fiduciaries, and with the public's
trust must go private responsibility consonant with
that trust. Goodman and Seaton, Ripe for Decision,
Internal Workings and Current Concerns of the
California Supreme Court, 62 Cal L REv 3090,
346-47 (1974)
Second Issue: The claims professional must
dispense his or her knowledge and skills for the
benefit of society. The general public expects
claims representatives to pay all legitimate claims
promptly and fairly. The claims environment,
Markham, Quinley & Thompson, AIC text 1993.
The reason I muse today on how we treat third party
claimant's is based on my looking back at my own
career and the case I was retained on. In this case
the carrier simply used every tool at their disposal
to defeat the claimants claim. Now, one must ask
is that wrong, or is making low ball offers wrong?
My answer is yes, it is wrong. Why? Liability was
reasonably clear, in fact it was 100% adverse and
bordered on a punitive exposure.
Claims representatives must have a mental mind
set that their role is to resolve problems, and part
of that role is to pay claims promptly, fairly and
with a sense of equity. In that process claimants
must be treated as though they are a customer,
they must receive quality service, they must be
told what the process is all about and what we
will do for them, and if they cannot do it for
themselves, such tasks as getting records, then
we as adjusters must help them do it.
There must not be deception, there must be
honesty and equity in the delivery of claims service,
this entails a prompt investigation, a thorough
evacuation of damages, fair offers, not taking
advantage of the state of mind we often find
claimants in at the time of loss. The adjuster must
also be aware of the needs of the claimant and
when required serve those needs to the best of his
or her ability. By way of example, advance
payments when required to assist the claimant in
recovery or in their time of need to replace wages
or income loss.
The adjuster must also reflect on his or duties to
the insured. By treating a claimant with hostility
you expose your insured to possible excess
verdicts in certain cases, and you do not provide
claims service that the general public expects.
Claims adjusters must settle claims on their merits
not based on the inherent power the insurance
company has. One of the issues in my case was
just that, the carrier brought to bear their inherent
power of delay, money and litigating power to crush
this claimant. In the long run that did not occur,
they found counsel who was very competent in
personal injury cases.
Note that at the start their family attorney, who did
not have a PI practice tried to help, they made a
very reasonable offer taking into account that there
would be no attorney fees. The carrier using the
power of delay and compromise, forced the case
to litigation and then paid their limits, prior to this
they could have settled for about 50% of the
limits. They also paid to settle the bad faith case,
more than they paid in the underlying case.
I will conclude more or less with an observation that
is also somewhat of a question, is not low balling
not ethical and simply not supportable? By low
balling I mean making an offer that is so far off
the mark that it cannot even be considered
reasonably when compared to an offer from a
claimant. A claims adjuster must make and offer
based on the merits of the case and it should be
realistic. It can also be observed that a claims
adjuster who engages in the practice of trying to
force a settlement with a truly fragile claimant
with low ball offers is in essence engaging in
unethical conduct. One must ask, is it not true
that in this business of claims are not adjusters
there to ensure the prompt, fair and efficient
delivery of the promise made to their insured in
the policy? If that is the case then is it not also
true that by treating the claimant in those cases
where liability is reasonably clear as a customer
that the adjuster has made good on that
promise?
Mike Cerf
Expert Witness Insurance Claims
Sherwood, Oregon
503-925-1937
mcerf@teleport.com
