Getting Claims Paid

Welcome to my newsletter on Risk in Asia focused on the CEO. Don’t forget to sign up to our free Substack too: https://tunstallasc.substack.com/??

At the end of the day there is only one primary reason for buying insurance. That is to get claims paid when the worst happens. So before moving off this topic I wanted to reiterate some of the earlier advice about how the CEO can make this as likely an outcome as possible, and add in a few tips and ideas I’ve learned over many years of claims resolutions.?

Of course the preference is always for a simple and rapid payment in accordance with a perfectly worded black and white policy wording. Chances are though that this may not always be the case. When a dispute arises with regard to an insurance claim, it is important for the CEO to work out as early as possible what they really want out of the situation. It is easy for disputes on claims to become emotional and even heated. When passions run high it can be easy to miss the point. A more clinical and detached position will be one that recognizes getting most of what is wanted now is usually preferable to getting a little more after one or more years of dispute and argument.?

It feels as though some CEOs and their teams struggle to appreciate that there is a significant sunk cost fallacy in many claim discussions. The ongoing distraction in terms of senior management time, let alone the loss of opportunity can be difficult to factor in. This is before the legal costs are cut in. Which even with the best will in the world, can quickly entrench positions and the determination to win “at all costs”. Which is obviously missing the point.?

I have been fortunate to work with a large number of superb professional lawyers over the years, not least when I was head of legal at Cathay Pacific. However, there have been more than a few instances where the legal team got, shall we say, a little over enthusiastic, and fanned the flames of likely success in situations where the outcome was actually fairly opaque. The CEO must stay alert in these situations and not allow enthusiastic righteousness to overpower common sense.??

I have been closely involved in dozens of claims disputes over the years, several of these ending in arbitration or other courts in Singapore, Hong Kong and London. Having been an expert witness in several cases, (and even being called as a witness by a corporate fraudster in one case), I have seen up close how challenging getting the best out of the legal process can be, even at the best of times. Whilst it would be inappropriate to say that the legal system is a lottery, there is huge potential for even the strongest cases to be undermined by the close and detailed scrutiny a rigorous court examination brings to bear.?

As an ultimate deterrent, threatening to pursue a court or arbitration settlement is a useful tool of negotiation. But in my view, the CEO should do everything in their power to ensure all negotiation options are fully exhausted, before finally topping the courtroom steps. Once the team is in the courtroom, the narrative can easily get out of control, and unravel, despite the best efforts of all concerned. This, of course, can cut both ways.?

The thoughtful CEO will think of many ways beyond the policy wording to leverage a favorable outcome. Here are just a few strategies? that I have seen succeed over the years.

Pay my claim and I’ll give you a “guaranteed” renewal on this or other policies in future years.

Pay my claim and I’ll help you meet your targets to secure ‘multi- line deals’ at renewal (this in a case where we found out this was one of the underwriters personal KPIs)

Pay my claim and I’ll connect you to the other parts of our group (who you have been trying to access for years) and give my endorsement.

Pay my claim and I won’t need to go to your ultimate holding company and cause a potential future business deal to collapse.

Pay my claim and we can get our CEO to come and speak at your next event.

These are just a few examples of how to work around strict wording where there is some wriggle room, in a way that brings a “win win” to all. It’s not mean, it’s just business.?

Next time I finally get to turn to my favorite topic in the insurance management space and a vital tool for any serious professional risk manager - captive insurance and alternative risk transfer generally. Until then don’t forget to sign up to our free Substack too: https://tunstallasc.substack.com/

#riskmanagement #insurance #claimsmanagement #CEO #businessrisk #riskmitigation #risktransfer #corporategovernance #leadership #strategy