The Link Between Good Faith Claims Handling and Continuing Education

To stay on sharp and avoid bad faith, claims professionals need to keep education a top priority.

March 19, 2015 Photo

From a management perspective, there is a very strong case to be made that continuing education helps to reduce the incidence of bad faith. While statistically hard to prove, the premise makes logical sense. Insurers and independent adjusting companies train claims professionals in the basics of good faith claims handling not only because of regulatory requirements, but also because it makes for good customer relationships and impacts profitability. In order to maintain and update these basic skills, claims professionals need to participate in continuing education.

Claims professionals operate in an ever-changing environment. Case law and regulatory changes as well as operational and technical changes occur on what seems to be a daily basis. It is difficult to keep up with what takes place in one jurisdiction much less multiple jurisdictions, which is the more likely scenario for most claims professionals. Continuing education, if structured properly, can provide the training necessary to keep pace with changes.

Claims managers should have confidence that their staff understand the impact of every activity or inactivity made in conjunction with claims handling. It is up to them to develop a continuing education plan with their staff. Most managers do this during the performance review process. However, linking the continuing education plan to the performance review can make continuing education seem punitive. If at all possible, the specifics of the continuing education plan should be a discussion held separately. Use the performance review to evaluate compliance with the continuing education plan and to highlight areas of performance that may benefit from additional training and education.

Before holding a planning session with their staff, claims managers should prepare a list of topics that are bad faith related. Use this list as the framework for the continuing education plan. For example, common allegations in bad faith claims involve arbitrary claims denials, inadequate investigation, failure to settle within policy limits, and failure to provide a defense. Develop your list by consulting with bad faith counsel, by conducting your own research into hot topics, and by following proposed legislation and regulations.

The next step in the process is to be familiar with the various educational opportunities available. One opportunity is attendance at a claims educational event or conference. There are several claims conferences each year, such as CLM’s annual Claims College, that offer a wide variety of topics. Most claims professionals who attend these conferences select their own sessions based on their interests and areas of expertise. However, it would be a better use of time and money if the sessions were chosen in light of the continuing education plan. Have the claims professional submit a proposed list of sessions that they wish to attend to see how they support the plan. Discuss any sessions that do not appear to support the plan. Another educational opportunity can be local sessions provided by counsel, a local insurance organization, or one of many events sponsored by CLM’s committees. Attendance at these sessions also should be supported by the continuing education plan.

Together with the claims professional, sketch out a continuing education plan for the year. Determine what topics are important and what opportunities will be available to address these topics. Preparing this plan also will allow you to more accurately budget for travel and education. Put the plan in writing and revisit the plan every time the claims professional participates in an educational opportunity.

Whenever education has been completed, ask for a copy of the session description or handout and put it with the continuing education plan. Take this opportunity to discuss what the claims professional learned during the session and see if it actually met expectations regarding the content. Oftentimes, a session description does not adequately describe the actual content, or the presenters went off topic. Reinforce what was learned in the session by relating it to company guidelines. Having this post-education talk with the claims professional will emphasize the importance of the continuing education plan.

Reevaluate the continuing education plan each time an educational session has been completed. If the sessions have been scheduled for various times during the course of the year, it will not be necessary to have additional reviews of the plan. However, if there has been no activity for a long period, it should be reviewed for compliance every quarter. Continuing education should not be put off until the last minute, only to be performed as part of a compliance requirement.

In order for continuing education to help maintain a claims professional’s skills and reduce the likelihood of bad faith, it is necessary to have a continuing education plan that outlines the topics to be covered, the methodology for obtaining the education required, and the budget for the education required. Finally, the education must be reinforced once sessions have been completed, and compliance must be monitored.   

About The Authors
Donna J. Popow

Donna J. Popow, JD, CPCU, AIC, is president of Donna J. Popow LLC, and has more than 25 years of experience in the property and casualty insurance industry. She has been a CLM Fellow since 2007 and can be reached at (215) 630-0829.

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