Dealing With Tort Claims

While proponents of the new Ontario auto reform legislation anticipate relief for a number of issues facing automobile insurers, some fear it will further expose a smoldering crisis that has been plaguing the industry for several years now – a shortage of active, qualified and experienced bodily injury (BI) claims adjusters.

When Bill-59 was passed there was the expectation that tort claims would all but disappear with the exception of extremely severe injuries or death. Adjusters specializing in personal injury began to look for other career paths. Some went into the emerging accident benefits claims arena, while others moved elsewhere inside the industry or left it all together.

Today, we have found that BI claims continue to be a significant contributor to rising claims costs for insurers. Claims staff are also faced with overwhelmingly large pending caseloads with no end in sight. As such, members of the claims community must anticipate that Bill-198 will act as an accelerant on this already explosive situation when the influx of new tort claims begins. They will need to examine who in their departments are qualified to handle these specialized claims and how they will cope with the increased volumes.

Containing costs and managing caseloads will be a difficult challenge under these circumstances. Part of the solution may lie in refining adjusting skills, negotiating early, training and mentoring and utilizing the experience of the “old guard”. The following are some key proponents in effectively managing the tort claims process.

BACK TO BASICS

Every claim professional can significantly reduce the life of a file and ultimately the cost by getting “back to basics” with strong adjusting skills and beginning with a prompt investigation. Also at the backbone of a good investigation is the recording of good statements. A good statement really is about asking all the right questions and knowing when to probe further.

Tools, such as the “Auto/Tort statement guide” that we have equipped our adjusters with, can be extremely helpful when in the field. This comprehensive flip chart formatted guide outlines all the questions an adjuster should ask depending upon the claim scenario. We outline questions for witnesses, questions for claims involving self-employed people, WSIB claims, etc.

And, while every statement is unique, there are some basic components of a good statement, which are generic to all types of claims. They are: confirmation of coverage, description of the acts involved or omitted, information relative to the assessment of negligence or contributory negligence, injury description and treatment, employment information, FLA claimant information, and mitigating information – just to name a few. The goal is to accurately document the claim early to support a position on the claim, identify other potential defendants, and allow insurers to set adequate reserves.

EARLY NEGOTIATION

The art of negotiation appears to have all but disappeared and been replaced with mandatory mediation. Have we forgotten to negotiate before a claim gets to mediation?

Before no-fault, we used to sit in front of the lawyer, negotiate the claim and for the most part, settle it right then and there. I would wager to say that we ended with the very same results then as mediation does today but with less cost and in less time.

Perhaps part of the problem lies in not knowing how to negotiate or being intimidated by the prospect. If you have never engaged in negotiation before, the process can be a daunting proposition. However, the more you do it, the more at ease you become and therefore the more effective at settling the claim you become.

Large pending caseloads could also keep adjusters too busy investigating new claims to negotiate the older ones and opt to wait for mediation. But, spending time negotiating early can actually save time (and money) in the end. If you were to add up an adjusters travel time, pre-mediation discussions with defense counsel and say, three hours in actual mediation, you would total about one full working day’s worth of time. Multiply this by every claim currently pending and the dollars add up.

Early and effective negotiations will lower pending caseloads (remembering as well that the higher the caseload the lower the quality of the file handling), close files faster, eliminate reserving issues down the road, and overall control the costs of the claim. Most importantly, experience has proven that settling early leads to higher degrees of satisfaction for everyone involved.

TRAINING & SUPPORT

With the loss of so many qualified BI adjusters over the years, training and mentoring has never been more critical. It goes without saying that the more knowledgeable and qualified staff you have, the better equipped you will be to control your claims costs. A trained BI adjuster can conduct better investigations, write superior statements, uncover fraudulent claims activity, adequately set reserves and close files faster.

And, while the recruitment, training and development of qualified staff requires an investment of time and money, it will ultimately result in significant savings down the road. It is a “pay now or pay later” scenario.

There are several training seminars and courses available within the industry to help staff stay current on legislative changes as well as honing their technical skills. Every member of our inhouse liability unit, including myself, attend a large number of training seminars and conferences put on by various industry members. Inhouse training sessions are also an effective and inexpensive way of keeping adjusters at the top of their field. We often conduct short one or two hour lunch and learn sessions and have guest speakers like lawyers, accountants, WSIB consultants, etc to talk to staff about trends in the industry.

Our own experienced BI adjusters also act as mentors to our other adjusting staff, giving them the “inside track” on techniques and principles to apply to the various stages of the claims handling process. Furthermore, they are helpful in critiquing statements and conducting mock negotiations with junior staff members.

THE “OLD GUARD”

While training is important, every successful team needs veteran players – those who bring wisdom and experience that is not taught in a classroom. A claims department is no different.

And, because no two claims are ever alike, the more diverse and experienced members you have as part of your service delivery chain, the better able you will be to properly handle the claim and ultimately control costs. Unearthing members of the “old guard”, those who have both pre and post no-fault experience, is critical in today’s claims environment, and should be paramount on every claims manager’s mind.

The Art Of Negotiation – 20 Tips for Success

1. Always negotiate in good faith.

2. Be flexible – have options within your own position and consider options raised by the other side. A “take it or leave it” approach generally does not work.

3. Disclose that you have limited authority if applicable.

4. Listen, share and understand information from all points of view. Remember, negotiation is knowing when to put information forward and how to analyze what you get back.

5. Move to questions following disclosure of information from all parties.

6. Take breaks.

7. Recap where you are at during various time intervals.

8. Clearly outline the options.

9. Stay positive – show that you are there to accomplish something.

10. Make detailed notes – “agree” and “disagree” columns are a good idea.

11. Validate the points you agree on.

12. Be creative in your solutions.

13. Be cooperative and use phrases like “let’s see if we can get to a point that works for both of us” or “we both buy into”.

14. Remind all in attendance that the average trial costs are minimum $20,000 to each side.

15. Determine what is “really important” to the other side and what they may be willing to “give”.

16. Pay attention.

17. Apologies are free – use them.

18. Assess the use of h umor, it can ease tension in some situations.

19. Educate yourself on the players at the table to ensure you know who you are dealing with and their negotiation style – ask around.

20. Practice, practice, practice – conducting mock negotiations with a co-worker can really help. It will prepare you for what and how to state your position and eliminate any fears or insecurities you may have.