In theory at least, communication is a simple matter: the exchange of information from one person to another—and, for our purposes, in written form. Yet we all know that written communication is anything but simple in practice. In the current insurance environment, one wrong word can mean the difference between effective resolution of a claim and litigation.
By way of cautionary tale, take the case of Granneman v. Columbia Ins. Group. A commercial building was vandalized while under renovation, having been unoccupied for months due to code violations. The policy explicitly excluded such losses from coverage "if the building(s) have been vacant or unoccupied beyond a period of 30 consecutive days," but a building in the process of construction, by definition, was not considered vacant. When the time came to deny the claim, the sole basis for denial referenced in the response letter was "vacancy" with no mention of the lack of "occupancy." Fortunately for the adjuster involved, the court concluded that waiver and estoppel did not apply on the facts of the case, and denial of the claim was upheld. But the point is this: One word—"vacant" instead of "unoccupied"—meant the difference between an obvious result and a close call in lengthy, and no doubt expensive, litigation.
Verbal, Written—Or Both?
The first decision is whether to communicate in writing at all. Verbal communication is sometimes necessary and far better. Some situations simply require a more personal touch. Denying coverage for a devastating loss via a letter alone may seem easier for the messenger at first, but it could prove disastrous in the long run. Often, verbal and written communication will complement each other, with a combination of both being most effective.
Of course, in many instances written communication is mandatory. For example, in some states, by statute or regulation, the following may need to be in writing:
- Claim acknowledgement within seven to 15 days of receipt of the claim from the insured
- Notification of the applicable statute of limitations for filing suit against the insurer
- Caution as to the consequences of submitting a fraudulent claim
- Notification of the status of a claim pending after a given time—30 or 45 days, for example—and the reasons why the claim remains open
- Reference to, or quoting of, the policy language relied upon for a claim decision.
In other instances, written communication is a must, for your own protection and the protection of the insured, whether or not a statute or regulation requires it. We often think of keeping contemporaneous records of our communications with the insured, both through claim notes and correspondence, because of the potential for mischaracterization of our own statements. That is important, and many adjusters have learned the lesson the hard way, with words and actions falsely attributed to them and nothing but their own word to protect themselves. However, following up verbal communication with a letter recounting your understanding of what was said can also avoid innocent misunderstandings and give the insured an opportunity for clarification. Regular written communication can ensure that you and the insured truly understand each other.
The Perils of E-mail and Text MessagingWith e-mail and text messaging in regular use between adjusters and insureds, the danger of using these modern means of communication warrants a word of caution. The fast pace of e-mail and texting is the enemy of thoughtful communication. In another era, when a letter arrived via first-class mail, there was time to give careful thought to the response and avoid an immediate emotional reaction. Now, it is all too easy to react via e-mail—perhaps with the caps lock key on—only to immediately regret the response after sending the message.
Simply put, take the time to think. The fact that an immediate response is possible does not mean an immediate response is necessary or appropriate. In most jurisdictions, insurers have at least 10 working days to respond to written communication from the insured, whether received electronically or otherwise. With that standard in mind, adjusters have every reason to take the time necessary for careful, deliberate communication with an insured.
Ten Common Elements of Effective Written Communication
Once you have decided that written communication is necessary, consider these common elements of effective written communication:
Clear Goals
Before putting pen to paper (or more accurately, before the first key stroke), ask yourself: Why am I writing this letter or recording this activity? What does the reader need to know or understand? The letter or claim note needs a purpose. Know what you are really trying to communicate before you attempt to do so.
Choose the Author
With the future in mind, who should write the letter and sign it? The person sending the letter should be the one most familiar with the facts and circumstances of the claim and best equipped to testify in a deposition or trial in case the claim comes to that. By default, this usually means the adjuster or claim representative dealing directly with the insured, but think this through based upon the facts and circumstances of each claim.
Focus on Your Audience
Who will read this letter or claim note? A letter written to an attorney or public adjuster familiar with the claims process and conversant in insurance lingo should be written quite differently from a letter written to a retired couple with no real understanding of insurance. Choose your words accordingly.
Accuracy
Know the facts and make sure they are written correctly. What are the names, history and numbers involved in the claim? In a settlement letter, including one too many zeros in the settlement offer will be hard to explain—and escape. In claim notes, if the expectation is that all significant events should be recorded, omission of a critical event will prompt a challenge to the adjuster's credibility.
Make Only Those Promises You Can Keep
Trust is critical and often difficult to earn in your working relationship with an insured. Make only those promises you know will be kept and usually only those that are within your own control. If you must rely on others to fulfill obligations, such as issuing a check, plan accordingly, and build in the necessary time when giving an expected date for receipt of the check. An insured will not forget a broken promise.
Brevity
To quote Proverbs, "When there are many words, transgression is unavoidable, but he who restrains his lips is wise." Say only what needs to be said—nothing more, nothing less. Unnecessary words only heighten the risk of misunderstanding.
Careful Selection of Words
Words are subject to perceptions, connotations and emotional interpretation. First, know how your audience perceives you and take that into account. Often, your relationship will define their interpretation of what you say. Second, know that, while words have clear dictionary definitions, they may be received very differently in the real world. The word "misrepresent" can mean a mistake, not just an attempt to deceive, but your audience will likely hear only "lie." Third, keep in mind that some words generate emotions that are not constructive. Think of your own reaction if an insured writes that you have "delayed" their claim. There are perfectly acceptable reasons why resolution of a claim takes longer than expected, but the word "delay" is still heard as an accusation and generates resentment accordingly. Choose your words carefully with these principles in mind.
Documentation and Support
With the goal being effective communication, think of how best to bolster your credibility and persuasiveness, and do it creatively. If coverage is being denied based on the input of an expert, consider attaching the expert's report to the letter. The decision is now not yours alone; it is based on the expertise of a mechanical engineer, for example. If a claim is denied based upon submission of fraudulent receipts, consider attaching copies of those receipts to the denial letter. The next reader may be a potential attorney for the insured, who will then better understand the nature of the insured's problem and advise against pursuing the matter further.
Matters of Form
Proper spelling, grammar and format are far more important than most realize. In the eyes of the reader, your IQ drops a point with every error. Proofread, proofread…and then proofread again. Make a pact with the person in the adjacent office that you will proofread for each other.
Closure
Always consider keeping the door open to further communication. If you are denying coverage, offer the insured an opportunity to provide additional information or documents if they disagree. This demonstrates the utmost good faith and ensures a fully informed decision.
Learning the Hard Way…Or the Easy Way
We can all make the kind of mistake made by the adjuster in the Granneman case—one wrong word is all it takes. To avoid problems stemming from written communication, know the facts and coverage in play; get some rest and a strong cup of coffee; and then write your next letter or claim note with these principles in mind. Both you and your insureds may actually achieve the simple goal of exchanging information and effectively communicating with each other.
George E. Reede Jr., Esq. is a partner with Niles, Barton & Wilmer, L.L.P., based in Baltimore, MD. Gary P. Sullivan, CPCU, AIC, AIM, AIS is vice president and manager of Illinois Claims for Erie Insurance Group.