Fighting Every Inch of the Way
In the case of a personal injury claim, it's an adjuster you're working with (or against) rather than a DMV clerk. Instead of having just the bureaucratic goal of processing paperwork, they also have the additional goals of paying you as little as necessary and holding onto that money as long as possible. The basic model of the auto liability insurance business is pretty simple: Collect premiums from policyholders, pay claims and business costs out of those premiums, and have some profit left over.
An insurance company has to look at these few elements in their business model to find places to make more money. On the premiums side, insurance companies can only charge so much before they start seeing their customers leaving for other insurers – they can't just keep increasing premiums indefinitely. As far as business costs, insurance companies have gone a long way in the last few decades toward streamlining their businesses, especially by reducing the number of claims staff, automating the claims process with computerized evaluation and handling, and closing and consolidating claims offices – many insurance adjusters were telecommuting for work long before it became popular with other industries because it shifts the cost to the adjuster with a home office instead of a big, expensive office building paid for by the insurance company. As to profits – well, that's the reason the insurance company is in business. They're not going to happily accept reduced profits.Time Really Is Money for the Insurance Company
What's left for the insurance companies to work with on enhancing profits is claims payments. The obvious first step is to simply pay less on claims. We discuss that elsewhere with the insurance companies using tactics like trying to persuade folks to settle quickly and cheaply, by lowballing and denying claims, and by using computerized claims evaluation processes that can keep tweaking values downward. The second step is . . . time. Just . . . waiting a bit. Stretching things out. Not being in a rush.
Along with universities and national security codebreaking operations, insurance companies are one of the largest employers of professional mathematicians. The ones employed by the insurance companies are called "actuaries," and they have a couple key jobs in the insurance company business model. One job is to evaluate the risk of different types of potential policyholders based on the individual demographics such as gender and age, combined with things like geographic location, driving history, and the particular vehicle being insured. Based on this evaluation, the insurance company can reliably predict the claims risk – how much a potential policyholder is likely to cost in claims over a period of time – and then use this risk assessment (along with other factors) to set the premium to charge that policyholder. The other service that actuaries provide to insurance companies is to give benefit assessments to their employers as to where to invest their collected premium money.
Insurance companies don't just sit on the premium money they collect from policyholders. They don't stick it in a savings account, earning 0.5% interest per year. They invest the money in a variety of different financial products. These tend to be fairly conservative investments, both because government regulators want insurance companies to be financially stable and because the insurance companies themselves value predictable income. So, these investments tend to rely more on steady interest and income . . . over time . . . rather than big, flashy, quick returns. And that's okay because, on the payout side of the equation, the insurance companies have time – and tactics – on their side. Each day without a particular claim being paid means a little more money earned on those investments. Each week is yet more. And each month is even more.Delaying Over Liability
An insurance company has no obligation to resolve a vehicle property damage claim, a bodily injury claim, or an uninsured motorist claim until they have proof of how their driver (or an uninsured motorist) caused the injuries and property damage.
- "We haven't heard from our driver yet."
- "Our driver says he wasn't at fault."
- "We don't have the police report yet."
- "The police report has some questionable items in it."
- "We're working on interviewing the witnesses listed in the police report."
- "We need a statement from the injury party about how the accident happened."
And so on. If the responsible driver hasn't admitted liability on their own (and they are generally cautioned not to do so), and if there isn't a fair slam-dunk police report available, this process of simply showing who caused the accident can take quite a long while. If the insurance company feels there is sufficient uncertainty, they may simply deny the claim, or they may insist that the injured person was responsible to some degree for the accident.Delaying Over Causation
Once liability is established, the next hurdle in a personal injury claim is "causation" -- what injuries did the accident actually cause? There are plenty of opportunities with causation for insurance companies to turn time into money.
On a medical payments coverage claim, for example, you might think that simply providing your doctor's billings to your insurance company would be enough to prompt them to issue payment for those charges. But no, "We need copies of the medical records showing that these charges . . . were for this particular treatment . . . that was for those specific injuries . . . caused by this accident you' claim' you were involved in."
Even more opportunities for delay over causation arguments are available in bodily injury and uninsured motorist claims. "Your doctor's records show you complained of a backache ten years ago – how do we know that your herniated spinal disc was caused by this 'major damage' traffic collision and not by that day you spent gardening ten years back?" Or, "We have an obscure academic report that says this type of collision simply can't cause the injuries you say you have. How will you prove otherwise?" And how long is that going to take?Delaying Over Damages
This is a big one. Every element of damages in a personal injury claim will have an associated dollar value that all go together in the claim evaluation. Injuries, past medical bills, past wage loss, past pain and suffering, future medical bills, future loss of earning capacity, future pain and suffering, etc. And each of these items is an opportunity for disagreement, for demanding additional documentation, for more back-and-forth.
One mistake that many individuals make – and that some inexperienced attorneys make – is to submit a settlement demand that doesn't include adequate proof of each and every element of damages that's being claimed. Each doctor's report, medical bill, pay stub showing time taken off, and so forth that isn't included in the demand when it is submitted to the claims adjuster is just one additional item that they will have to get from you "to provide a full and final evaluation and offer on the claim." And if two items are missing, it's a good bet that they will ask for the first one this week . . . and the second one next week.Delaying in Settlement Negotiations
"Yes, we received that settlement demand package you sent to us a month ago. Unfortunately, the 'settlement committee' that has to review your package only meets on alternate, odd-numbered Tuesdays, in months with two full moons – and they were off for a holiday break on the last one of those. We'll get back to you as soon as we can!" It's not usually this bad; it just seems to be. Sometimes when a settlement demand is submitted that has many hundreds of pages of supporting medical records and other evidence, it's perfectly reasonable to give an adjuster a little extra time to review all the materials. But it frequently seems to be the case that unexpected delays are encountered in handling even fairly brief and straightforward settlement packages.
More often, delay is achieved in negotiations through the use of persistent lowball offers that just stretch out the negotiating delay. Some claimants – especially folks handling their own claims who just want the headache to be over and done with -- will give in and accept the lowball offer (another way for the insurance company to profit). But even those who don't may end up having to face additional time being spent by filing suit and moving into litigation or demanding formal arbitration of an uninsured motorist claim.Delaying in Litigation
The process of filing a lawsuit and proceeding through litigation – on a small percentage of cases all the way to and through a trial – is even more like that day spent at the DMV, because the litigation really is all about process and procedure, filling out forms, calendaring when next steps can be taken, etc.
The process server has served the summons and complaint on the defendant? They've got a month to file the response in court. Ask formal questions and request documents in discovery? They've got more than a month to respond. "We'd like to schedule the plaintiff's deposition – how's your calendar two months out?" And the courts are busy, mainly with criminal cases that have to be given priority. Although they're anxious to see civil cases like personal injury lawsuits resolved quickly, they are not necessarily anxious to have to commit lots of their own limited and valuable time to push things along.Just . . . Delaying
"Sorry, it doesn't look like we received your document." We know of at least one insurance company that provides several different mailing addresses and several other fax numbers -- and the one you sent your documents to a couple weeks ago just never seems to be the right one.
"Thank you, we received the signed release. The settlement check will be issued within two weeks, and you should receive it within a month. If you haven't gotten it by then, please give us a call." When we've finally gotten to resolution on a claim, most insurance companies will have the good grace to get a settlement check cut and in the mail in a few business days and delivered to the recipient within a week or two. Some . . . don't. Time . . . is money.
An experienced personal injury attorney will be prepared to help clients by providing timely information to insurance adjusters and defense attorneys to get their clients' claims resolved both fairly and promptly. Some forms of delay can only be avoided to a certain degree, but knowing when and how to avoid unreasonable delay is a critical skill for a personal injury attorney.
For more information on the tactics and practices of the insurance companies, see:
- Colossus and Other Computer Claim Programs
- Lowballing or Denying a Claim
- Pretending to be Your Friend
- Offering Money to Settle Quickly
- Using Your Own Words Against You
- Types of Auto Coverage and First and Third-Party Claims
- The Insurance Industry and Individual Companies
- How an Experienced Personal Injury Attorney Deals with Insurance Company Tactics
:GM cha [cs 1914]