BY LOUIE CASTORIA, DON EODICE

Insurance brokers and claims professionals are often reminded to document their files: “If it's not in writing, it didn't happen.”  

File notes, memos, emails and correspondence take on special importance in litigation, but even before trial those documents are likely to be carefully reviewed by an unexpected reader: an expert witness.  

Insurance professionals’ work is reviewed in the clarity of 20/20 hindsight during bad faith and agent/broker E&O litigation. It's likely that the defense and plaintiffs’ attorneys will have the case reviewed by an expert to determine what standards and expectations the professionals were required to meet, and whether they did so.

Coverage disclaimers leave someone “holding the bag.” Without insurance funds to mount their defense or to pay an adverse verdict, and with few other options, liability insurance policyholders often turn to suits against the carriers for bad faith and also name their insurance brokers for failing to procure the appropriate coverage.

 

“All claims department operations are alike!” Many claim managers would argue such a statement is untrue. And yet, claim mangers have for years used “Industry Standard Performance Metrics” (ISPM) to judge the performance of their department and their staff. But does measuring performance against the rest of the industry assure your operation just like all the rest? Why should a claims department be different than the rest of the industry? Does handling claims just like every other insurance company add value for the customer?

How can a carrier lose control of the defense and settlement of a case and still be required to pay? Deny coverage, fail to defend or provide a qualified defense under a Reservation of Rights.  And, the carriers can be required to reimburse the insured settlement and defense costs, even in excess of policy limits. How can that happen?

Court finds the UIM carrier cannot wait for the underlying case to resolve before commencing an investigation. Failure to justify and post adequate reserves even while the underlying tort action is proceeding, are further evidence of Bad Faith

Gavel If the carrier denies coverage or provides a qualified defense under a reservation of rights, they may lose the ability to control the defense and settlement. And, the carrier may be responsible to reimburse the insured for both.