First party insurance defense attorneys are like beavers to a flowing river. If financial dispute resolution works well without litigation, they need to find something to dampen it and slow it down. The extra work goes to them in the form of billable hours. Their actions increase their policy customers’ financial profits and delay the flow of money that would otherwise go to policyholders.
Steve Badger has been at the forefront of insurance defense attorneys regarding what he considers the evil of appraising. We have debated and argued against each other on a national and international stage, as can be seen from Steve Badger got rep-a-doped by Chip Merlin!, and Lloyd̵7;s Property Insurance Claims Group—Badger v. Merlin IV. He has new competitors.
The upcoming Property & Liability Research Bureau (PLRB) meeting includes a session on insurance appraisals. Attorney Robert Horst and Claims Executive John Kirby of Philadelphia Insurance Company will present a session on Rating: The new normal. This session will explore the following:
Prepare an Effective Appraisal Claim and Identify a Legally Insufficient Appraisal Claim Compare differences in appraisal law in different jurisdictions while understanding why the distinctions are important. Structure the assessment process to fully resolve claims and avoid legal challenges Effectively manage a claims organization and an individual claims adjuster during the assessment process
I wonder how two people can legally share information about how claims organizations can manage their business affairs and conduct this seminar without violating the PLRB’s antitrust warning:
“The Property & Liability Resource Bureau intends to prevent potential violations of antitrust laws at all of its meetings and conferences.
Presenters and participants … must remember that their respective companies are competitors in the marketplace and that the McCarran-Ferguson Act and the laws of some states give the insurance industry very limited immunity from federal and state antitrust scrutiny. Therefore, presenters and participants must be careful during all presentations and discussions, as even innocuous discussions on certain topics can later be misinterpreted as evidence of collusion.
… all educational, social and business development events connected with this meeting, there should be no discussion or agreement, formal or informal, expressed or implied, about any matter that could give rise to a charge of violation of antitrust laws. Substances to avoid include:
individual insurance company positions on coverage issues and other policy interpretation issues; agreements or understandings relating to claims practices, policies or positions; standards by which an insurer’s performance can or should be judged; codes of ethics; advantages or disadvantages of doing business in certain states; … costs or profits of any aspect of any of the above.”
But I am digressing from the point of this post about insurance advisors trying to demonstrate their machismo and get business in the growing field of insurance appraisal. So I will leave the insurance company claims managers and their general counsel wondering if I encourage the DOJ antitrust lawyers to monitor their activities at these How We Do Business conferences and get back to the point of this blog.
In white papers, the law firm of Robert Horst has made a point to note that at “Horst Krekstein & Runyon, we pride ourselves on being at the forefront of developing issues in the insurance industry.” As for first party appraisals, they are really developing a new question of whether attorneys can act as appraisers and judges because they advertise to their clients that their neutrals can serve as “property insurance appraisals (appraiser/judge).” Don’t get me wrong, Bob Horst is as good as it gets when it comes to defense attorneys. But how neutral can they really be? Horst is a great rainmaker because of his considerable competencies, and the fact that he emphasizes insurance valuation is worth noting.
In Monday’s post, Property insurance valuation legislation is dynamicI noted how insurers pay more attention to larger awards and legalize them:
The trend has been that the larger the award or amount in dispute, the more the insurance company analyzes the appraisal process, the award, or the people who sit on the appraisal panels. This has also contributed to further disputes over valuations.
Butler, Weihmuller, Katz & Craig partners Pablo Casceres and Nick Goanos advertise and teach that they can help their insurance clients with these great awards:
The insurance appraisal laws and tactics in the Gulf Coast and SEUS states can sometimes mystify the experts who have worked on these claims. These high-exposure property losses have been subject to valuation claims as a standard practice by public adjusters and policyholder representatives, resulting in unexpectedly large payouts. This course provided legal and tactical guidance regarding appraisal requirements to achieve the most equitable resolution of the claim.
I assure you they do not teach them how to pay out the premiums quickly and take care of the policyholder.
The new “wanna be Steve Badger” appears to be Louisiana insurance defense attorney Matthew Monson. Monson is very smart, and our company has studied his argument that “Evaluation beats bad faith.” He says in part:
“Evaluation beats bad faith
When it comes to disputed claims, judgment is the best way to defeat bad faith.”
In the article, New judgment clause may deflect allegations of bad faithMonson was noted as asserting that:
When it comes to contested claims, Monson affirmed, judgment is the best way to beat bad faith. The reason: An insurer is not acting arbitrarily or capriciously when it withholds a payment based on a genuine, good-faith dispute about the loss or applicability of coverage. Additionally, compliance with an agreed upon and self-committed assessment process does not provide evidence or factual evidence of vexatious, arbitrary or capricious conduct or conduct without probable cause.
If an insurer timely pays all undisputed amounts, it is not bad faith to resolve the disputed portions of the claim via appraisal, Monson said. The request for valuation is relevant if it is made within 60 days of receiving the insured’s valuation.
What Monson is really arguing is that if an insurer acts wrongfully, an invocation of appraisal gives the bad-acting insurer another legal argument to avoid liability for such actions by claiming that the insurer paid within the appraisal clause’s deadlines. Raising various issues in the legal contest that follows the assessment can provide an excuse for insurers to be slow to evaluate, pay slowly, and underpay to escape Louisiana’s law promoting prompt investigation and payment of property insurance losses. This is not a new concept, but he advertises and teaches this technique to his insurance clients.
I would suggest that what insurance lawyers shall teaching insurers is that they must have a sufficient number of motivated, experienced and trained adjusters with sufficient time to thoroughly investigate all claims and empower those adjusters to pay the claims of the insurance company’s customers promptly.
Can any insurance defense attorney or insurance company claims adjuster tell me where your attorneys teach anything close to this? The sound of crickets will be the answer. And that’s a big part of the problem.
Instead of being the leader and explaining what the duty of good faith is and preaching that insurance clients should act in good faith, the civil insurance defense attorney comes up with legal techniques to avoid liability for their clients’ wrongful behavior knowing it will happen. This is similar to what some criminal lawyers may do for members of organized crime. What happened to the doctrine of not breaking the law? No wonder assessments and assessment ligation are increasing.
Leadership – leadership is about taking responsibility, not making excuses.
– Mitt Romney