Archive for May, 2013

10 Steps to Properly Investigating Low Impact Claims

LIST1Those who have spent time reviewing claims have likely had many head scratching moments.  How did the adjuster come up with that liability assessment?  How could they possibly have paid so much on this claim? How could we have ever let this one go to litigation?  It’s often a game of Monday morning quarterbacking, second guessing the “he said, she said” of who struck John scenarios.  

Perhaps the biggest head scratcher of them all are low impact claims with allegations of soft tissue injuries.  While not claiming that this is out of the realm of possibility, albeit remote, these are cases that always warrant a thorough and detailed investigation.   According to the Department of Transportation, 80% of all accidents occur at less than 20 miles per hour.  Knowing this, it is imperative that claims organizations have a successful low impact strategy in place. 

Don’t assume it is fraud just because there is no property damage.   Rather, recognize that impact can have a causal relationship on injuries, and lack thereof may be indicative of opportunistic fraud.   Insurance Research Council statistics suggest that more than one third of all accidents involve this type of fraud which is a little different than outright fraud, such as staged accidents.  The difference is that with opportunistic fraud, the loss really did occur but an involved party is trying to get more than they are entitled to.

By following a simple ten step plan, carriers will be able to sort through the facts, conduct more consistent investigations and achieve more accurate outcomes.  

1)       Triage claims at the outset of the loss.   Focus on key elements of the property damage such as damage to any sheet metal and drivability.   Gather information from all involved parties to understand early on if there was meaningful property damage. 

2)      Get the right claim to the right person.   Let’s face it, not all claims are the same and at times it is beneficial to have a specific workgroup with niche expertise and local claims knowledge, as well as a proficiency in both material damage and medical claims adjusting. 

3)      Obtain a recorded statement of all claim parties, including occupants and witnesses.  Ask critical questions about events leading up to, during and after the accident.  Establishing a mechanism for injury is crucial.   If possible, meet the parties involved in person so as to assess credibility.   Key aspects of the claimant statement should include:

a.  Facts of Loss

b. Scene description

c. Other party description

d. Medical provider description/directions/procedures

4)   Physically inspect all claim vehicles involved in the accident.   Identify the principle direction of force.  Observe force lines, abrasions and metal folds.   Check for multiple impacts and old damage.  Consider the vehicle movement at impact and compare to what was said in the claimant statements.  Was the vehicle stopped or moving?  Did the front end dip from braking?  Is the damage consistent with speed?  Does the damage match the striking object?  Are there appropriate pain transfers? 

5)  Photographs- A cornerstone of a good low impact investigation must include photos of both vehicles, as it is possible to have significant damage to one car and virtually none to the other. For example, a Ford Focus that rear-ended a full-size Chevy pickup would under ride the truck, resulting in extensive front-end damage to the Ford and virtually no rear-end damage to the Chevy. 

Each vehicle should be photographed from multiple angles at a distance that can capture the entire vehicle.   Both involved vehicles should be photographed from the same distance. 

6)      Measurements of the damage are critical as well, as these can not only validate that the two cars indeed struck one another, but also can provide a biomechanical engineer with critical data when determining velocity and resultant G-Forces exerted on the occupants who are claiming injury.   When possible, have the measuring device in the photographs.  

7)      Complete index/background checks on all parties to the accident.  This step is critical to ruling out known associates or links to other parties with a questionable claims history.   During this stage of the investigation, identify possible parties who can be contacted to corroborate the presented medical history, such as neighbors, co-workers or ex-spouses.  In addition, look for professional licensure so as to validate any inability to work that may be presented.  

8)      Have an early settlement or cash out strategy.  While many low impact claimants seek early attorney representation, not all do.  It is imperative to have a strategy to resolve the claims early, and for a reasonable cost.  Of course, reasonable is somewhat subjective and is very venue specific.   This is why leveraging local counsel and adjusters with local claims knowledge is crucial to achieving a quality outcome.  Try to get a handle on what the claimant is seeking to resolve the claim.  Sometimes it is as simple as having a doctor visit paid for, other times it may be significantly more. 

9)  Effective negotiation is the key to resolving these claims.   Whether represented or unrepresented, it is imperative that solid negotiations take place.   Recognize that the client is telling people they are hurt and this will be reflected in the medical records and in a dialogue with the attorney.   This is why assessing credibility early on is very important. 

Make an early offer and advise that it is final absent objective evidence to the contrary that can be attributed to the claim at hand. 

Attorneys should know the limitations of a case if the facts are presented properly.  Chances are the attorney never saw the claimant vehicle, so providing 8 x 10 color photographs early in the claim cycle can be very beneficial.   Juries rarely are sympathetic to low impact cases recognizing that these types of opportunistic claims are what drive up their premiums.  Attorney’s are well aware of this phenomenon.  

If the case persists, request an independent medical exam and request a medical history.   For these types of claims, asking for a twenty year history is not unreasonable.   There can also be significant benefit to utilizing a bio-mechanical engineer to affirm or refute the mechanism of injury.   Surveillance can also be very beneficial if there are claims that work or other activities can no longer be performed. 

10)  While some of these negotiation strategies may succeed in resolving claims early, there will be other times when the claimant or their legal counsel insists on pushing forward.   In this instances, the adjuster will ultimately be presented with a demand.   It is critical to effectively review the demand with a three pronged approach for resolution. 

a. Liability- It is crucial that liability be established and argued.   Short or a rear end accident, there is likely comparative negligence involved as many low impact losses occur in parking lots, intersections or during lane changes in heavy traffic.    This is an area where carriers often struggle, assessing comparative on only 3-5% of all claims presented, while juries consider it one more than half of all cases adjudicated. 

b. Special Damages- Just because the medical specials are presented doesn’t mean that they are reasonable.   It is critical to dig into the medical specials to see if bills are reasonable for the zip code where treatment occurred.   Moreover, were bills upcoded or unbundled?  Was there modifier abuse?  Where global surgical edits properly utilized?  This is a daunting challenge for adjusters who are already busy, but there are proven solutions to assisting the adjuster with this task.   This can provide a tremendous lift, as presented specials can be 30-50% more than what is reasonable for consideration.

c. General Damages- Like liability and specials, generals need to be factored in.  Is pain and suffering owed for the particular case being evaluated?  Is the venue liberal or conservative?  In some states, the tort threshold must be pierced.  

By developing a solid third party strategy for low impact claims, carriers can derive a significant benefit while gaining a competitive edge in the marketplace.   It is this type of focus on fundamental execution that enables organizations to go from ordinary to extraordinary

Christopher Tidball is a claims consultant, author and speaker.   He is a veteran of the insurance industry having held multiple adjusting, management and leadership roles for various top 10 P&C organizations.   To learn more, please visit www.christidball.com

May 28, 2013 at 8:28 am Leave a comment

In-N-Out Urge: Consistency, Quality & Accuracy

During a recent discussion with a friend, he commented on the In-N-Out tee shirt that I was wearing.  As the owner of a number of restaurants, he shared his fascination with how successful the In-N-Out enterprise has become in such a limited geographic market.  This west coast phenomenon boasts a simple menu with a handful of items, although those in the know have memorized the secret menu.   Despite this, there are routinely customer lines out the door akin to those at the release of a new Apple product. 

For those who have shared the In-N-Out experience, you can probably relate to the cult status that this organization has attained over the years.  For those who have not, it is certainly worthy of adding to your bucket list.   When you get the chance, order the Double Double “Animal Style” and thank me later.

As you follow Blocking and Tackling, you have probably come to realize I am not a fan of reinventing the wheel.  Rather, I like to look across the business landscape for organizations, claims or otherwise, who do things that we can emulate to make our own organizations better.  When thinking about the drivers of success, three things come to mind; timeliness, quality and accuracy.  Perhaps there is no better example of the consistent application of all three than In-N-Out Burger. 

The closely held In-N-Out Burger chain, celebrated by fans for its fresh ingredients, has made third-generation owner and President Lynsi Torres the youngest billionaire woman in the U.S. and one of the youngest in the world. Just 30, Torres oversees the Irvine (Calif.)-based fast-food company her family built from a single hamburger stand into an almost 280-restaurant empire in five states that’s worth about $1.1 billion, according to the Bloomberg Billionaires Index.

So what can we possibly learn from a burger joint to make our own organizations better?  In a word, plently.  

What is so striking about In-N-Out  is their ability to replicate the experience from location to location without missing a beat.  The stores are all immaculate.  The crew behind the counter are clean cut, courteous, looking as if they just walked out of Mayberry.  The quality is consistent to a fault, with freshness guaranteed just as it was when the company was founded in 1948.  In a world where things are over processed, pre-packaged and frozen,   In-N-Out owns the distinction of not even owning a microwave, heat lamp or freezer.   The commitment has been on doing things right, one burger at a time. 

Herein lies the challenge for claims organizations, where inconsistency hampers quality, timeliness and accuracy.  By focusing on the basic fundamentals, organizations can get back on track to delivering a quality claim product, one claim at a time.  

As discussed in Re-Adjusted: 20 Essential Rules For Taking Your Claims Organization From Ordinary To Extraordinary, the focus is on doing just that.   But achieving this level of success is often easier said than done in the imperfect world in which we live. 

 

Like a burger, well done, medium or rare, there is often an element of subjectivity to the claims process.   Consider liability decisions where ten adjusters will quite frequently come up with ten different assessments.    While one may be hard pressed to challenge the results of a 60/40 decision against one that is 70/30, this far too often isn’t the issue.  Rather, organizations are confronted with far too many adjusters simply assessing 100% against one party or another in a world where 100% liability is more often than not an anomaly.

During my tenure leading various Quality Assurance and casualty processes for a larger multi-national insurer, significant amounts of time, energy and capital were expended to bring a uniform approach to achieving results.   Most certainly there are products, such as ClaimIQ, which are proven to assist in this endeavor, especially when used in conjunction with execution of fundamentals.

What is often found while benchmarking organizations is a widespread disparity of understanding, be it liability or other critical claim function.   When there isn’t a uniform approach, one cannot expect consistent and accurate outcomes.   Ten different adjusters will often assess liability ten different ways, sometimes right and other times wrong. 

Liability, along with damages, serves as the foundation of all claims.  Yet, it is often cast aside in a never end quest to achieve other metrics, such as disposition.   Adjusters may recognize that not addressing liability is the path of least resistance and can actually improve disposition results.     But is this the right approach, especially when considering the important role that the carrier, as a fiduciary, plays in achieving accurate claims outcomes. 

While the laws vary in many states, there are some basic benchmarks against which your results can be measured.   For auto carriers, a good starting point is to identify the percentage of claims on which comparative negligence was assessed.   Opportunities likely exist if comparative negligence is assessed on fewer than 35% of collision claims in pure comparative venues, 25% in modified venues and 10% in contributory venues.   

Proper calibration of an organization does take time, experience and effort.   But it is a worthwhile endeavor that exposes inadequate knowledge from which training can commence.   It should never be designed as a punitive exercise, but rather one that seeks to improve performance. 

Calibration drills will force every level of the organization back to the basics.  They will create a mental toughness and psychological mindset that will forever transform an organization into one focused on execution with no excuses that does nothing but perform at the optimal level.  

To effectively improve your organization, calibration needs to be taken to every level of the organization.  In essence, the line adjuster, supervisor, manager and claims leaders all need to be on the same page.   If a claim is presented to them, they need to utilize the same thought process to derive outcomes.   This is precisely how In-N-Out achieved their success; a uniform approach following basic blocking and tackling techniques to deliver quality on a consistent and timely basis, yielding significant results.    

Of course, our organizations aren’t hamburger joints but we do provide a menu of offerings.  Our policy holders select from that menu and when a claim happens, they expect us to deliver the services promised on that menu.   To do so provides organizations with an immediate competitive advantage enabling them to move from ordinary to extraordinary. 

“Keep it real simple, do one thing and do it the best you can.”

-Harry Snyder, founder In-N-Out Burgers

 Christopher Tidball is a claims consultant and author of multiple books including Re-Adjusted and Blocking & Tackling: The Playbook for the Winning Claims Organization.   He is an industry veteran having held various adjusting, management and leadership roles with multiple insurers.  To learn more, please visit www.christidiball.com.

 

May 7, 2013 at 9:08 am Leave a comment


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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at chris@christidball.com

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