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What are you managing?

Updated: Apr 13

The most critical time spent managing bodily injury claims lies between a demand being received and the case resolving. It is in this portion of handling where the most value is created or lost. A case that was well investigated can quickly devolve into a settlement that must be "explained" because it clearly is not a "win".

These explanations nearly always center on venue, risk of litigation, citing the insured as a poor witness and other factors external to the claim handling process. These may help deflect questions about a particular settlement, but they are not a basis for improving results. The basis for improving results lies in a process that can, more often than not, produce a win. This process has to be managed.

This raises a critical question. "What are you managing?".

What is managed today?

In practice, management involvement in cases focuses almost exclusively on evaluation of the case. That is, attempting to place a value on a case as well as define "pro's & con's" or "issues". Interaction with adjusters revolves heavily around how much they can offer. Managers try to find the sweet spot between a settlement value they can defend as reasonable and avoiding litigation. "Tenure" and "experience" are frequently viewed as the basis to give adjusters wider discretion. We find no statistical evidence that tenure matters or, at least, should be so heavily trusted. We also do not find that plaintiff attorneys have to be paid off to avoid litigation.

This approach prevails across casualty claims organizations. This is surprising as its effectiveness in controlling claim outcomes is poor. One need only examine industry payment trends on third party personal injury claims to see why. The average cost to resolve third party personal injury claims is increasing at an alarming pace. While many point to "social inflation" and similar explanations, the reality is that casualty claims organizations and defense counsel have done shockingly little to examine and correct the apparent weaknesses that exist in their resolution process.

What's wrong?

The most critical errors lie in managers' and adjusters' exaggerated focus on evaluation at the cost of negotiation. Studying the "issues" and creating lists of "pros and cons" does not result in effective resolution. If it did, there would be no crisis in personal injury settlement costs.

There is no doubt that negotiation is fueled by comprehension of the facts of the case. However, fuel is only useful if there is an engine to use it. Negotiation is a dynamic process that must progress through phases to be effective. If the negotiation process is not well suited to a productive discussion of the facts of the case, then knowing the facts has little impact on the outcome.

In practice, adjusters rarely get the chance to really debate topics even though this is what they have prepared for. They try to present their insights and they are rejected. This obstacle starts with faulty analysis (what they spend most of their time preparing) and ends with ineffective negotiation process. Adjusters not using an effective process and negotiating strategy quickly fall victim to the plaintiff attorney's tactics (These tactics are as pervasive as they are predictable.

The costs of not being able negotiate well are substantial. Adjusters who use effective negotiation skills settle cases for as little as 50% of lesser performing adjusters. We DO NOT find that they have any greater command of the facts or comprehension of the issues. We DO find that they focus on how to negotiate. More specifically, they focus on getting the plaintiff attorney to explain why the information they have presented in their demand proves their client's claims.

So what should you be managing?

Most management of the resolution process begins and ends with case evaluation. That is, "understanding the issues". As already noted, this is not an effective prelude to negotiating. It only helps when the discussion with plaintiff's counsel can be positioned to use it. That requires an effective process. It follows these stages:

  1. Clarify their claims. This is one of the most overlooked and critical steps. (See What are you negotiating about?)

  2. Define a win and the path to a win. A win is NOT just avoiding risks like venue or threats of litigation. What do you need to do to move the value of the case in the direction of your evaluation?

  3. Use the facts to examine whether the plaintiff's claims have been proven. It is all too common that medical bills and treatment are used as proof of an injury rather than the medical facts in the records that are supposed to support the treatment. Don't take that bait.

  4. Train and coach on critical negotiation skills. These include questioning, active listening, summarizing, and negotiating in writing (among other things).

  5. Manage compromise by tying it to proven claims, rather than fear of losing or litigation.

Is the change worth it?

In our work with our customers, we focus on negotiation. Negotiation skills only start with comprehension of facts. They are skills that help the adjuster maneuver the discussion so that the plaintiff is required to demonstrate why the evidence they have presented meets the burden of proof. We craft our CaseXpert® analysis to challenge whether the burden of proof has been met and train on how to use that insight in negotiation.

We are now adding more formal training for supervisors and managers that will build the coaching skills needed to help adjusters manage the dynamic process of negotiation. Adjuster knowledge is comforting but not nearly enough (and can often be misused to explained failed outcomes). It has to be wielded effectively.

Our customer's have noted that their relationship with Casentric® is more than a partnership. They view us an ally. This alliance allows our customers to settle cases 25% below the industry average. We know this because of our unique process for examining performance before our customers implement CaseXpert® and after they have started using it. The improvements are surprisingly uniform across customers.

Want to learn more?

Want to know how the CaseXpert® program works?

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