Mitigation Strategies

Insurers need to evaluate cases properly and send adjusters to mediation with proper authority, said Alf Kwinter, partner with Singer Kwinter LLP, said.

Adjusters do not come out with enough authority when settling a claim in mediation, he said, while speaking at the Canadian Insurance Claims Managers’ Association/Canadian Independent Adjusters’ Association Ontario Chapters’ 44th Annual Joint Conference in Toronto on Feb. 8.

This is why mediations fail. “We find all too often that there isn’t a proper evaluation of these cases,” he went on to say.  “I’m amazed at how few insurers take the advantage to settle claims early and where decisions are taken which really don’t make sense or claims aren’t properly evaluated. You really do, in so many cases, miss an opportunity to settle cases early.”

Insurers always take their best-case scenario and negotiate on that basis. “As plaintiff counsel we know when to discount, we know when to bail and we know when a case has weakness,” he stated. “Insurers, in my experience, don’t seem to appreciate when cases have strengths that they don’t allow for. We discount for weaknesses, you should allow for strengths.”

Early and proper evaluation of a case, in addition to property authority of a case, will settle it at a much earlier stage, he pointed out.

“Once you’ve got your investigation done, take a proactive, realistic view of the case,” Craig Walker, director at Maltman Group International, added during the panel seminar.

If you have blinders on and are not looking at all the possibilities, then there will not be a proper evaluation of the loss, the strategies and where files should be reserved, he cautioned.

“An unrealistic view is no good to anybody, your client in particular, and you get into situations . . . where if it gets to mediation and you have not done a realistic evaluation you are going nowhere fast,” he said.

Insurers are in the compensation business, said Harvey Klein, partner with Benson Percival Brown LLP. “It’s in our interests to look at cases realistically and it’s in our interest to pay them quickly, reasonably, for an appropriate amount of money and before it comes to me.”

Klein disagrees with Kwinter that insurers do not look at things appropriately. “Once an adjuster does his job and once we’re in a position to assess the risk, which is what we do, I think insurers try to settle these cases quickly. I think they try to do it fairly and once the case comes to me, if the risk isn’t assessed properly, obviously we have the production and discovery process.”

He goes on to note that most plaintiff lawyers are not going to negotiate until mediation and, in his view, it’s because experience tells them they will get a better result after mediation than they will if they negotiate with a lawyer without the adjuster.

“It’s becoming incredibly expensive to got to mediation now,” said Johanne Deloges, senior manager of the litigation unit at Aviva Canada. “Paying mediators to go back and forth between rooms is simply not effective.” There are cases where a particularly difficult claim needs to be heard by an independent party, but, in most instances, there is no reason that the two sides can’t sit down and talk. “Pick up the phone and call plaintiff counsel and try to resolve the case early. Why do we need to go and spend money for a mediation?”

A key aspect to this, is getting information from plaintiff’s counsel early.

Sometimes, on the eve of mediation,  plaintiff counsel will provide the adjuster or defense with new expert reports, leaving less than 24 hours to evaluate, consult with defense experts or review it with the client, Walker said.

“If you are blind-sided in the last 24 hours before a mediation with several expert reports or changes to an expert opinion without proper time to evaluate, then how can you get back to what the initial concept is, which is a realistic evaluation of the case, to decide how best to run with it?” Walker asked.

Every case has an opportunity to settle and a time to settle, Klein said. Mediation is just the settlement meeting – one opportunity to settle a case. However, if information is handed to the defense lawyer at the last minute so there is no time to pass it over to the adjuster or defense to analyze the information, the mediation is going to fail. “I’m happy to tell (plaintiff counsel), ‘You’ve given the stuff to me at the last minute, we are here, we are not in a position to deal with it, you’ve lost your opportunity to mediate with us, now get ready for trial or we will come back and settle another time’,” he adds.

If the insurer received the reports well in advance, they would be more than willing to sit down and try to resolve the case. However, Deloges notes there seems to be a reluctance from the plaintiff’s bar to provide information and reports before the claim goes to litigation. Typically, the information does not come through until defense counsel has been retained, with the reasoning being that plaintiff’s get a better deal with defense counsel is on the file,” she notes. “What that tells me is that either we are not properly evaluating case reports or our liability assessment is too optimistic.” Alternatively, she goes on to add, the insurer is not making the extra effort: Call the plaintiff counsel and schedule an appointment to discuss. “With mediation now, insurers are too quick to settle cases at mediation,” Klein said. “There is a short-term agenda with settling cases expeditiously. There is also a long-term agenda of making sure you settle cases properly.”