Prompt claims notifications keeps costs down for all parties
Delayed claim reporting can cost both the carrier, and the insured, hundreds of thousands of dollars in defence costs, warns Allied World in an article.
The longer a claim has been in the hands of an insured without input from, or collaboration with the carrier and the appropriate attorney, the more “catch up” costs there are going to be, and the more difficult it is to shift a strategy already in motion, according to Allied World SVP Gregg Click and vice president Erin Ringbloom.
“It is not possible to predict all the varying reasons why an insured may not report,” they write. “The most common is that the insured’s team responsible for reporting is unclear on the definition of claim.”
“However, sometimes there is a change in management, a document is lost, or most simply put, a mistake is made. Unfortunately, no matter how compelling the reason for late notice is, it does not make the real cost to the insurer any less.”
Missed opportunities undoubtedly mean higher settlements and adverse verdicts. If the right team - including the insurance carrier - has not been assembled to outline a resolution strategy from the onset, there will undoubtedly be a missed opportunity and an adverse effect on the claim.
“The insurer is most often faced with a missed opportunity to respond to a demand or to seek an immediate and likely more cost-efficient resolution,” say the authors. “Additionally, there may be a missed opportunity to interview a witness while his or her memory remains fresh to assist in a liability evaluation, or maybe a missed opportunity to file a strong dispositive motion.”
Prompt reporting and collaboration is a counter balance to the insured making decisions on its own, or failing to make any decisions, at great cost to all parties, conclude Glick and Ringbloom.
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