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How Insurance Companies Evaluate Cases


This will be the first in a 3 part series on how insurance companies evaluate cases. What goes on inside the mind of the company? What gets recorded in their files? The reason that I am able to speak with some degree of confidence on this topic is not simply because I’ve been a personal injury lawyer for 35 years. It is because I recently became a witness in a case where an excess insurer was suing the primary insurer for not settling the underlying case with me. The case is being tried before a judge only and the trial has been continued for several weeks.

In my deposition and in what I have seen in the trial so far, there are hundreds of documents, now public record. In this case, the excess insurer is saying there should have been a settlement within the primary insurer’s limits. Because there was no significant settlement offer, I was able to pursue the case to trial and gain a very substantial verdict. The offer was about 3% of what we collected from the jury’s verdict! As a result, the excess insurer – providing coverage in excess, literally, of the primary insurer- is suing this underlying insurer.

What I have learned about the two insurance companies’ files? The amount of paperwork generated in the so-called underlying case by the excess insurer, far less involved in the life of the case than the primary insurer who controlled the litigation for the defense, is staggering. There are no fewer than 94 documents pertaining to their assessment of the case. Of course, the primary insurer had even far more documents, well into the several hundred, the exact number yet to be determined.

I’ve had almost complete access to these two insurers’ files and what strikes me first and foremost is that insurance companies are bureaucracies. Their big concern is to get assessments from the defense counsel on a regular basis. There seems to be more concern with having a report filed within the insurer’s time limit of 30, 60 or 90 days than with the actual content of the report.

What happened with my case, fortunately, is that a meaningful evaluation slipped through the cracks. There was no ability to reassess the case in the light of new information. There was no willingness to do so either. New information, even if reported to the insurance company, didn’t appear to be not reviewed and was certainly not given any serious consideration. With millions of dollars at stake that is quite surprising.

I have seen an astounding level of consistency in the perception of the case. Consistency in this instance is not effective. It can better be described as an inflexible viewpoint. Things change in the course of litigation. New information comes forward. Someone is a good witness at their deposition or not. Assessments of cases, from either the plaintiff’s or defendant’s perspective, often need to change. Why bother with litigation if the first impression of the case is never altered?

The defense counsel, of course, has his or her own lens in which he or she views the case. The insurance company, at least in the instance of my case, failed to make a serious assessment of what this case would be like before a jury. Thankfully, it was to their detriment and to my client’s success.

The focus of the two insurance companies, although misguided, was on the following:

  • what the defense expert’s view of the case was;
  • the appearance of plaintiff and plaintiff’s counsel;
  • the jury friendliness or hostility of the county;
  • the Massachusetts comparative negligence statute;
  • the special damages.

They wrote nice things about me and my client. They just didn’t think we had much of a chance to win. They couldn’t overcome their fixation on what their expert told them. Had they bothered to assess the credibility of the parties and the effect of that credibility on the jury, their assessment would have been markedly different. Instead each layer of authority rubberstamped the lower layer’s view. It is little wonder then that I laughed when their lawyer said to me in Court, just before the trial started, “It’s been through three layers of authority and they see no liability.” Who are they, I thought, to make such a grand pronouncement? Having seen their records, I now know why I thought that. They were in for a well-deserved comeuppance.

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