The quality of the educational programs at the recent Annual Meeting and Seminars of the CPCU Society was particularly strong. One of many highlights was a panel offering a "View from the Outside," comments on how the insurance industry's customers view the industry and, in particular, where they tend to find the most fault and what they find most dissatisfying in their interactions with insurers.
Michael T. Sharkey, a partner with the Washington, D.C., offices of Dickstein Shapiro Morin & Oshinsky LLP, contributed a list of Top Ten Mistakes That Insurers Continue to Make in their handling of transactions and claims with their insureds, i.e., the issues that most commonly lead to aggravation of policyholders, litigation and [horrors!] accusations of "bad faith" and the unpleasant damage awards that go with it. It is a good general overview of the most common ways in which insurers can get themselves in trouble, and I reproduce it here based on my notes from the session:
Top Ten Mistakes That Insurers Continue to Make
10. Failure to write in clear language.
9. Failure to investigate a claim promptly.
8. Failure to read the policy when making coverage determinations.
7. Failure to understand the relevant law of the relevant jurisdiction.
6. Failure to monitor litigation activities of outside counsel.
5. Unnecessarily 'nitpicking' a claim before settling (especially in 1st party [e.g., property loss] claims).
4. Taking inconsistent positions in coverage litigation (e.g., insisting that identical policy language means x in Case A and y in Case B).
3, Claims handlers treating policyholders as "the enemy."
2. Attempted overuse of the extreme remedy of rescission of the policy. (It's one thing to deny a single claim, quite another to accuse the insured of deception or dishonesty so as to cancel the entire policy.)
1. Taking positions that result in the purchase of more insurance yielding less coverage.
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