Carriers may deny claims on occasion, but speakers at a conference Tuesday advised claims professionals to never forget their first job is to provide customer service business and to take heed to judges' rulings on what constitutes good faith.
"It's a hard beast to pin down," Stephen Scullion, the Kitchener-Waterloo, Ont. branch manager of Granite Claims Solutions, said of the legal definition of good faith. "There are many definitions of it."
Scullion made his remarks to a room full of claims professionals at the 46th annual joint conference of the Ontario chapter of the Canadian Independent Adjusters' Association (CIAA) and the Ontario chapter of the Canadian Insurance Claims Managers' Association (CICMA) in Toronto.
Good faith requires claims professionals to, among other things, to refrain from nullifying claims without adequate justification and to undertake adequate investigations, Scullion said, referring to a 2001 ruling of an Ontario Superior Court judge, who awarded damages after finding an insurer and an adjuster did not act in good faith.
When assessing whether an insurer acted in good faith, Scullion suggested, the courts will look not at whether the claim was paid, but on the conduct of the insurer throughout the process.
"An adjuster's job is to properly indemnify the insured as per the provisions of the insurance contract. I want to drill that into your head, 'as per the insurance contract,' Scullion said. "Never forget that."
In a presentation titled "Of Red Flags and Good Faith", Scullion walked attendees through the salient points of several legal decisions involving disputed claims. In one case, for example, a carrier initially denied auto liability coverage to a claimant who had been charged with impaired driving and failing to provide a breath sample. The problem was, the claimant pled guilty to the provincial offence of driving without reasonable consideration for other persons using the highway, and the criminal charges were stayed. Although the insurer had relied on the police investigation to deny coverage, the judge in the lawsuit ruled that the carrier did not have proof the claimant was actually impaired.
Scullion also warned adjusters not to judge claims just because there are "red flags" on a client's file.
"You must change your way of thinking," he said. "Here's the biggest one. Correlation does not equal causation. Just because every time it rains you see a pigeon in your backyard, that pigeon didn't cause the rain."
He illustrated by way of example how this applies to claims.
"If someone has a post office box address, or someone has increased their limits just before the loss, does that mean it's a fraudulent claim? It does not."
He suggested judges would take a dim view of an insurance carrier who assumed a claim was fraudulent simply based on a red flag.
"If you pre conceive, (a legal judgment of) bad faith is sure to follow," he said. "There is ample, ample case law on this."
Claims adjusters also need to remember their primary job is customer service, said another speaker at the CICMA/CIAA Ontario chapter joint conference.
Carl Van, president and CEO of the International Insurance Institute, told several anecdotes about companies he advised. In several cases, he listened to recordings of adjusters' calls.
In one case, he said, an adjuster received a call from an agent following up on a report from a claimant. Instead of taking the information from the agent, the adjuster said she had not received the information and suggested the agent call the 1-800 number, though the agent already had.
Van said the firm had no rule prohibiting the adjuster from taking information directly from the agent, but she wanted the agent to call the 800 number anyway.
"I went up to her, and asked, 'Why didn't you take his loss report?'" Van said. "She is not stupid, and she wasn't lazy. She was there until 6:00 at night working. You know what she said to me? 'It's not my job.' I said, 'What is your job?' She said, 'I handle claims' and she gave me a nice long list. Guess what words never left her lips? I provide customer service. She doesn't know she's in the customer service business."
He said some carriers look at their customer satisfaction scores and only compare themselves to other carriers, rather than to other industries. He also suggested some customers who report they are satisfied with their carriers might still take their business elsewhere.
"Don't be bragging about your customer service," Van said. "I don't care what your customer service scores say, if your own people don't even know that they're in that business, it's very unlikely that you're delivering extraordinary customer service because they're going to make the same decision that adjuster made and not help that agent."
Editor's note: Regarding the comment from I-DemnityPro, the case cited by Scullion was McDonald v. Insurance Corporation of British Columbia, Supreme Court of British Columbia, 2012. An earlier version of the story contained incorrect information. The story has now been updated to reflect the fact that the plaintiff pleaded guilty to the provincial offence of driving without reasonable consideration for other persons using the highway.