Should Insurers Consider Apologies in Claims Handling?

Despite the prevalence of apologies in our society –think Lance Armstrong, Tiger Woods, Mel Gibson and Bill Clinton – the idea of offering an apology as a result of a claim is rarely considered in the insurance industry, according to a recent panel discussion on the subject at the PLRB national conference held in Boston, Mass.

“By and large, our industry never makes an apology,” said panelist Christopher W. Martin, founder partner of the Texas-based law firm of Martin, Disiere, Jefferson & Wisdom.

He said that’s because, historically, insurers assess blame by examining the actions of the insured and claimant, evaluating contributory negligence and determining whether other parties are at fault.

If it’s somebody else’s fault – like the builder or manufacturer- according to Martin, the industry tends to stop the evaluation at that point.

Jeffrey A. Mills, director of claims operations for Ameriprise, said that there are 37 states with statutes that provide protection or act as an “apology shield.” According to Martin, many in the industry aren’t aware the apology protection statutes exist.

Martin said insurers should consider apologies as an option or strategy during resolution of a case, especially in those states considered “safe harbors for certain apologies.”

“If someone following an accident makes certain kinds of apologies, it cannot be used against them in a court of law,” Martin said.

However, if an apology includes a statement of negligence or conduct it is admissible. Martin offered an example, “I didn’t see the red light, I’m sorry.”

Though some in the industry will remain skeptical and will never admit to wrongdoing, both panelists agreed there are benefits to offering an apology on behalf of a vendor or as a result of insurer action or inaction. The emotion tied to a claim tends to drives an unreasonable demand, Mills said. Consider an injury that results in a life-changing event. Depending on the timing and authenticity, an apology can potentially reduce the likelihood of a lawsuit being filed and result in reduced defense costs and damages.

In addition, Martin said an apology can decrease the chances of a bad faith claim being filed.

The panelists stressed the need for carriers to keep an open mind and consider offering an apology on an individual claim or lawsuit basis.

They said there is a science behind the apology, especially during trial, noting that timing is important.

So when and how do you apologize and on what type of claim?

According to Martin, sexual harassment claims are prime opportunities for apology. In addition, apologies have proven to be effective in medical malpractice claims.

Apologies should be considered for “a loss uniquely personal in nature,” he said.

Mills said apologies should be considered in dog bite claims where strict liability applies.

The panelists offered additional suggestions of claims where an apology may be considered:

– First party bad faith;

– Auto underinsured motorist;

– Homeowners;

– Fatalities;

– When stipulating to liability;

– Claims involving minors.

Whether made verbally or in writing, according to Martin, the best time to offer an apology is at mediation when parties are face to face. The other important factor is that what happens in mediation remains confidential.

According to the panelists, the right apology contains remorse, responsibility, repair and reform.

Older people tend to be more responsive to apologies, Martin said. That’s because the younger generation tends to be jaded as a result of all of the public apologies they have seen on television.

Martin said that group think can help avoid a bad apology and while mock jury consultants can help construct it, the key content never changes – acknowledgement, empathy and action over words.