The Power of Connectivity: Navigating Modern Insurance Challenges Through Collaboration

As the Insurance Claims industry prepares to converge at Connected Claims USA 2024 (November 12-13, Austin), we're shining a spotlight on the transformative power of collaboration. In the lead-up to the event, our conversations with event partners PLRB have revealed a compelling narrative: claims shouldn't be a siloed endpoint, but rather a catalyst for continuous improvement. With claims departments sitting on a treasure trove of customer data, the question is - why aren't we leveraging these insights to inform underwriting, customer experience, and product development? In this exclusive interview, PLRB's Bryan Falchuk and Daniela Weiszhar share their expert perspectives on unlocking the full potential of claims data to drive business growth and innovation.?

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At PLRB, we've spent decades supporting the insurance industry in determining and delivering effective coverage. Our team of coverage attorneys plays a crucial role by analyzing policy forms, case law, and regulatory changes while also addressing complex questions from adjusters at our member insurance companies, who often face the challenging task of understanding what is and isn’t covered – and, more importantly, why.?

Through this ongoing work, we've uncovered a powerful insight that can significantly reduce confusion, prevent unnecessary litigation, and ensure that the risks covered by policies align with what was intended when those policies were written: collaboration.?

Collaboration is more than just a buzzword; it's a transformative tool that shapes the insurance landscape. We see it in the dynamic interplay between Underwriting and Claims departments, the necessary coordination across various insurance products – whether from the same or different insurers, and the critical partnership between insurers and their agents or brokers.?

So, what does effective collaboration truly look like? And how can it drive meaningful change? Let’s explore three key areas where connectivity is essential: internal collaboration, cross-product collaboration, and distribution collaboration. By strengthening these connections, we can create a more cohesive, efficient, and ultimately successful insurance ecosystem.?

Internal Collaboration: The Claims-Underwriting Feedback Loop?

It’s all too easy to point fingers at the Claims department when losses exceed expectations. But in reality, Claims is simply dealing with the aftermath of risks that were underwritten and the coverage terms agreed upon. The real opportunity lies in how Claims can feed valuable insights back to Underwriting to improve risk selection going forward.?

Take, for example, issues with choice of law or choice of counsel, which can significantly affect claims outcomes. If a loss occurs and the choice of law isn’t clearly established in the policy, it could lead to a much larger claim in a jurisdiction with a less favorable legal environment. Similarly, allowing insureds to pick their own counsel, instead of using the attorney the insurer knows will provide the best defense, can lead to skyrocketing legal costs or settlement values.?

When Claims teams identify these pitfalls, they can provide feedback to Underwriting, leading to better policy wording or endorsements that protect the insurer from avoidable losses. For companies where Claims and Underwriting are siloed or even in separate business units, establishing a feedback loop that generates actionable insights is crucial.?

Cross-Product Collaboration: Navigating Overlaps and Gaps?

In today’s complex insurance landscape, a single claim often straddles multiple policies, sometimes even from different insurers. Take, for example, a roofer in Florida who leaves a section of roof exposed, resulting in water damage during a sudden storm. This scenario could trigger claims under several policies: Professional Liability, Homeowners and possibly even Commercial General Liability.?

Each of these policies has its own limits, coverage stipulations, and cost structures. For instance, GL typically includes defense costs outside the limit, while E&O does not. The differences don't stop there. Some policies provide first-dollar defense, while others don’t, and the response to a potential lawsuit from the homeowner could yield vastly different claim costs, limit exhaustion, and more. Without careful coordination, the result could be coverage gaps, redundant coverages, or conflicts that confuse the insured, complicate the claims process or even risk coverage litigation.?

This is where cross-product collaboration becomes essential. Insurers providing multiple types of coverage to the same insured must look beyond product silos and consider how these coverages interact. For example, when a carrier provides all commercial insurance coverages for a roofer, they should assess their offerings holistically, considering how the different products might interact on a given claim. This approach helps identify unexpected coverages, claims handling limitations, or other complications. Package policies can address some of these issues, but they aren’t always suitable for every market. A coordinating force should review challenges across all products, with Claims playing a key role.?

Cross-carrier collaboration adds another layer of complexity. With countless combinations of insurers and products, collaboration with every carrier on everything is impossible. Insights from internal, cross-product collaboration can guide policy language choices, especially when offering coverage alongside competitors. The Claims team can help identify these issues or specific other insurers where a particular policy or wording can create a specific issue that needs to be protected against with endorsements or other language in the policy.?

So, while we may not be collaborating directly with other insurers, staying informed of what they are doing through feedback from the Claims team allows our coverage to work more in conjunction with those other products than in a log jam with them.??

Distribution Collaboration: Aligning the Insured’s Coverage?

One of the trickiest areas of collaboration is ensuring consistent coverage across different channels, especially when insureds work with multiple agents or brokers. This can lead to unintended gaps in coverage. For example, a recent scenario we saw at PLRB involved an insured relocating, leaving his home to his daughter. Soon after that, a fire destroyed the property, and coverage issues arose that led to a denial of the claim. The insured’s homeowners policy no longer covered the home due to the change in his primary residence, and the daughter had no coverage since she was not considered an "insured" under the policy.?

The key issues here center around the specific definitions of "residence premises" and "insured." Courts may vary, with some requiring residency at the time of the loss, while others accept residency at the policy's inception. Even though the insured might still recover the value of the contents lost in the fire, the value of the house itself was not covered since the daughter was not a member of his household at the time of the loss. Additionally, Additional Living Expenses (ALE) wouldn’t apply for the daughter or her family, as ALE is only available for the "insured’s" household.?

All of this could have been avoided if there was coordination across policies for the two homes to properly change information about residency and insureds.?

This example highlights the importance of strengthening communication with our agent and broker partners, expanding internal collaboration beyond just Claims and Underwriting to include our Distribution team as well. To learn more about this particular scenario, listen to the discussion on? PLRB's What's The Scenario podcast.?

The Bottom Line: Connected Collaboration for Clearer Coverage?

The key to delivering clear, effective insurance coverage lies in fostering strong connections – both within your organization and across the broader industry. By enhancing collaboration and sharing insights, we can ensure that the coverage we provide not only meets the expectations of policyholders but also aligns with the actual risks we’re willing to assume. This approach leads to greater clarity, reduced exposure to unexpected risks, and ultimately, a better experience for everyone involved.?

To learn more about PLRB, visit our website.?

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