Almost three years ago, Carrier Management published an article titled “The Underwriting-Claims ‘Disconnect’ in Casualty Insurance: An ERM Issue?” The article reported on one of the sessions of Advisen’s March 2013 Casualty Insights Conference involving claims-handling practices.
Executive SummaryUnmoved by the argument that ERM practices prevent insurance underwriters from sharing the original intent of policy language and exclusions with carrier claims professionals who ultimately handle claims from policyholders, Jenner & Block's Matthew Jacobs explains the policyholder's viewpoint—that financial interests must be motivating the enormous organizations that refuse to engage in internal communications to serve their customers. This is the second part of a two-part series. Part 1, "The Disconnect Between Underwriting and Claims Handling: A Policyholder Perspective," is available here.
Three years later, the problems discussed in that article still exist. As described in Part 1 of this two-part article series, when a claim is submitted for coverage, the policyholder expects all of the information it provided to the underwriter at the time of placement will be considered, analyzed and given weight by the claims department. But that rarely happens.
Why do carriers persist in carrying out their business in this way? Is there a reason why there is often a disconnect between the side that brings in the premium and the side that pays the claim?
After having participated on my own panel that day, I was in the audience during the Advisen conference and posed the question to another panel of casualty underwriting executives. One offered that a concern about enterprise risk management was the reason why underwriters and claims handlers do not often talk about active claims: “There are conflicting interests that you want to have separate just for [the sake of] enterprise risk management.”