Construction claims professionals operate in a complex and constantly evolving environment. The construction industry itself contends with longstanding and emerging risks, such as the ongoing skilled labor shortage and the use of new materials on job sites. And claims related to this industry are often complicated, involving multiple parties and policies.
Apart from industry-specific challenges, construction claims professionals also deal with some of the more traditional obstacles experienced throughout the insurance industry. When considering how to tackle the many challenges, it is helpful to turn to some of the most well-known and well-respected leaders in the field to get their perspectives: What is improving? Where are the pain points? What are some trends to watch out for?
Attendees to CLM’s 2023 Construction Conference got the opportunity to sit in on a conversation involving six of the industry’s heavy hitters and get their views on the lay of the land. During the Premier Session, “Insights From Claims Leaders: Sharing Perspectives on the Evolving Landscape of Claims Management in Construction Litigation,” the distinguished panel tackled four big issues on their minds. Below are some takeaways.
Communication Between Claims and Underwriting
Session moderator Dan Ducommun, president and CEO, MC Consultants, noted that the interactions between claims and underwriting departments have undergone “a bit of a paradigm shift within the last few years.” Essentially, the traditionally siloed approach to claims and underwriting is giving way to a new spirit of cooperation.
Carolyn Crawford, director, complex claims-construction, Nationwide Insurance Company, said, “When my career started in claims…the idea of claims and underwriting actually sitting down and having a conversation never happened.” Today, she said, the mindset is that these two departments need to interact. “Underwriting has got to understand what claims is doing,” she said, and claims has to understand what the intentions are within underwriting with respect to policies issued.
Pat Nails, executive vice president and chief claims officer, Arch Insurance Group, said there is a greater desire today within underwriting to hear from claims. “They understand that we see things out there: how an endorsement is working; how a policy is working. Is it really covering what they wanted it to cover,” or is it doing more than they thought relative to pricing?
Expectations of Defense Counsel and Vendors
Working to improve communication and understanding between claims professionals and outside counsel is a core mission for CLM, and the panelists offered some key insights on this topic. What do claims professionals expect when dealing with defense counsel?
Larry Beemer, vice president, claims, Tokio Marine HCC, stressed the importance of defense counsel getting information back to carriers quickly so the carriers know what they are dealing with on a given case. “Nothing is worse than spending $100,000 on a case—defend, defend, defend—and then you get to a mediation and the lawyer says, ‘Oh my gosh, we can’t try this case, we’re going to get killed. You need to pay $1 million.’ That doesn’t work anymore.”
Nails made a similar point, stating, “One of the most frustrating things for us is when we take a case all the way up to the courthouse steps and then [we are] told, ‘We shouldn’t try this case.’” He added that there needs to be more “intensity” in the evaluation of cases early on.
He said he has heard from defense counsel that carriers do not want to try cases. “We’ll try cases,” said Nails, but he added there needs to be an appropriate process to evaluate the case. “My advice both to adjusters and to defense counsel is, explain to us the risks. Explain to us the downsides, and then we’ll make a decision.”
Beemer added, “I think being precise and thorough—we’ve lost some of that.” He noted that defense firms should take more time to ensure associates are following through on investigations and discovery.
Krista Glenn, executive vice president and chief claims officer, Westfield Specialty; and Robin Kahn, vice president, construction claims, Chubb, discussed the importance of clear communication between claims departments and defense counsel. Glenn suggested asking adjusters about their requirements at the beginning of a carrier/law firm relationship to improve the flow of information and avoid overloading busy adjusters. She said that gaining an understanding of, for example, the adjuster’s pre-trial report requirements and reporting intervals will help ensure the adjuster gets what she needs in a timely fashion without having to sift through vast amounts of additional information.
“This is not just the high-level communication [between a firm and a carrier],” Glenn explained. “This is the desk adjuster and the associate in your firms. Having that conversation, getting to know each other; understanding what their individual requirements are—it makes the whole [process] easier. It also strengthens the relationship.”
In the interest of communication being a two-way street, Kahn noted that claims professionals should ask defense counsel for assistance with specific information when they need it. “If you don’t understand something on your cases, you need to be bold and ask.” She said a claims professional may have questions about a certain jurisdiction, or certain claims in a given state. “Ask your attorney, and don’t feel shy and don’t feel stupid about it,” said Kahn. “Just admit ignorance and own it.” She added that a claims professional cannot come up with a strategy if she does not admit that she does not know something.
When it comes to a claims department’s expectations for vendors, Michael Hinojosa, president and chief claims officer, National Claim Services, said, “…there’s a difference between having an expert who is really good at what they do, and having an expert who can explain it to laypeople. And you need to have both.”
Beemer said experts should be teachers. Some experts, he noted, can come across as egotistical without realizing it. “Put them in front of a mock jury and have the jury give comments back to them…it’s pretty shocking to that expert what happens.”
Glenn said there are opportunities for vendors, law firms, and carriers to partner when it comes to training new professionals. “If you are doing training at your law firm or vendor organization, and it’s for your less-experienced people, ask your carriers if they want to send people to it, and we should do the same for you.”
Litigation Metrics
Ducommun said of litigation metrics, “This is definitely one of the most challenging parts of this business.” He noted that statistical data is not easy to gather, track, or keep.
Nails said, “We’re just starting to scratch the surface on litigation metrics.” He noted litigation budgets may be an area where these metrics could be useful. “Claims and cases take twists and turns that you can’t predict. So, litigation budgets can change. I do think that’s an area litigation metrics is coming to.”
He added, “I’ll be really impressed when a law firm shows up…and doesn’t just tell us about the trials they won,” but comes to the table with metrics related to litigation budgets, such as the number of cases resolved and how close they came to the initial valuation, and where the budget was hit or blown, and why. Nails said there is an opportunity for law firms to sell themselves by coming to carriers with these types of metrics.
Hiring Challenges
The industry has long contended with the challenge of finding, hiring, and retaining new talent. Kahn said carriers must develop training programs before they fall even further behind with developing talent.
She explained that, at Chubb, recent college graduates have the opportunity to work in all different departments within the company. “People start training in underwriting, they work in claims for six months and get a taste of that, then they work in our financial department for another six months, and they’ll rotate.” This exposes young professionals to all aspects of the company and gives them experience on different teams.
The panelists also pointed out that a key selling point for the insurance industry is that opportunities for advancement exist for young professionals because many professionals in the current workforce are nearing retirement.
Offering advice to younger professionals looking to advance, Glenn put forth what she called an unpopular opinion: “Come back to the office.” She noted that many of the experienced professionals in the room understand that they learned a lot sitting next to, and learning from, peers. While new communication tools like Teams and Zoom make remote work possible, she said, “It’s still not the same and it’s still not as good.”
The panelists noted that remote work is likely here to stay, but they all agreed on the importance of in-person learning to proper professional development, whether it is at company-specific gatherings or industry events.