“We currently use Berryman’s Lace Mayer (BLM) for all our insurance claims handling. BLM are very good but in an effort to reduce costs we are contemplating using our internal Legal Department to help with aspects of the claim. Whilst they haven’t got the resources or the experience to handle the claims per se, we think they might be able to help with aspects of the claims handling process. How do other company’s manage such claims?”
We have a full time claims manager, who although not legally qualified has extensive experience and is able to muster all relevant documentation and manage day to day questions very effectively, thus reducing the time that needs to be spent by the lawyers. Having a dedicated in-house resource for claims management, working closely with the H&S team on safety leadership, is essential if a business wants to reduce its long term claims trend, in my view. We previously used BLM and had no issue with the quality of their advice, but we felt we were spending too much unnecessarily, so we switched to one of DAC Beachcroft’s regional offices for our EL claims. This has definitely been cost-effective. Our motor claims, which were previously handled by our external law firm, have gone in house to our new insurer, and although I am sure we pay indirectly in the form of premium, motor claims appear to be being dealt with promptly and with much less hassle too. Agree with the comment that early triage to establish the settle/ defend question is very important, and this is a decision that must have some in-house involvement.
We currently leverage a combination of both an internal/central legal claims manager role and external loss adjuster firm (who act in a broad claims management position) to manage our insurable losses. This arrangement allows us to provide oversight and direct management of claims under our global insurance arrangements. Where external legal support required, this engagement is managed by the internal claims manager in conjunction with loss adjuster. Typically external counsel is used to support us on litigated cases. Time and costs are reduced through ensuring the ‘administration’ around an incident/claim is swift and appropriately managed by the internal resource, whilst ensuring we can still leverage expert external counsel by claim area rather than a possible generalist in house counsel.
It depends what type of claims you have to deal with and what your other service providers (insurers, brokers, loss adjusters, lawyers) can offer, but appointing a BLM for ALL claims would not appear to be cost effective. Assume you carry large deductibles/self insure. There are other service providers that can offer services more cost effectively. If you get particular types of claims (e.g. sale of goods; contracts; liquidate damages, professional indemnity), your legal department will have some experience and should be getting involved to understand business risks and what action can be taken to mitigate and prevent reoccurrence. As an example, we use a triage approach on all liability claims and decide (mostly) in-house whether a case is to 1/ Settle 2/ Investigate 3/ Defend. Our insurer allows us to negotiate in-house to a certain level and even when they are involved we are still very much involved in the process, decision making and settlement/defence. You could consider managing 1 and 2 in house and use a liability adjuster to investigate and assess quantum and consider only applying BLM on points of law in 1 and 2 and getting more involved in 3. For property claims we appoint adjusters on all matters over say £50k and would not involve lawyers unless there were complex subrogation issues.