June 19, 2021

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GEICO Marine Insurance Good Faith Claims Service—Being Fair and Balanced

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We should strive to be honest in our views, give credit where it is due, and be fair and balanced when making observations. Two sides to a story occur frequently and an underlying silent story about why things go awry is usually lurking upon greater investigation. Unlike Lexington Insurance Company, which I called out a week ago in, Lexington Slow-Pays Claims and Ignores Policyholders, GEICO Marine Insurance gets applause for adjustment of a claim in a well-done manner when things could have gone terribly wrong.

Twelve years ago I wrote in, Fair And Balanced:

Nobody calls my office telling me what a great job their adjuster has done to fairly maximize their recovery in a prompt manner. Why should they? Risk managers, property managers, insurance agents, attorneys, public adjusters and policyholders, generally call our firm because they need help with claim delay or a denial. Their stories usually have derogatory, but colorful, language describing the insurance company representatives.

Last week, the Citizens Property Insurance Corporation’s General and Assistant General Counsel met with me regarding a number of claims topics. At the time, I knew my blog regarding recent complaints about Citizens and TWIA was about to be published. I told them about the complaints. They seemed bewildered. They explained their belief that the recent change in claims management had been very positive and a good move towards improving Citizens. I promised to send them examples of our findings so we could determine if what I was hearing from others is accurate.

The point is that my views are largely shaped by an upset or wronged policyholder’s view. My livelihood is made representing them. My most significant daily activities are trying to figure out how to prove that insurance companies act in bad faith and why our firm’s clients are entitled to more money.

Comments to this blog, are often “atta boy” cheers from policyholders and colleagues when I write about or expose instances of insurance company misconduct. Sometimes, my colleagues criticize my comments regarding the good business of insurers or when I empathize with an insurer point of view. I am certain that these cheers and jeers have some impact upon my view.

The above picture is Rick Wilson who is the Managing Director of Claims for GEICO Marine. He obviously is a dedicated leader based on his background. He holds certifications as a CPCU and AIC from The Institutes. This is what GEICO Marine has to say about him:

As Vice President of GEICO Marine Insurance Claims, Rick oversees the day-to-day operations of our busy claims division.

With more than 20 years experience in the marine claims industry, Rick brings extensive knowledge in the nuances and challenges of managing complex boat losses and disaster recovery efforts. After joining the BoatUS Claims team as a trainee in 1991, Rick spent years as an adjuster bringing swift resolution to boat claims big and small before ultimately becoming Assistant Vice President of the department’s Liability and Specialty programs. Having also served as director of the BoatUS Catastrophe (CAT) Field Team, Rick has been at ground zero for many of the nation’s most notable hurricanes, dispatching teams and directing grand-scale recovery operations at a moment’s notice.

As the latest member of the GEICO Marine Insurance, Rick brings strong leadership, vision and of course, a lifelong love of boating! An avid boater since childhood, Rick spent much of his early years sailing and racing along the northern Chesapeake Bay with his family; a pastime he’s quick to tell you has since been replaced by soccer games and swim meets for his two children.

The silent underlying story about claims usually starts at the top. Leaders set the claims culture and training. They determine how claims adjusters are incentivized for their work. Claims leaders determine if the message and motivation is to reduce claims costs and reduce severity or fairly and promptly get claims paid so the customer is fully obtaining all the benefits available.

Everybody knows that I have a passion for the water. I own four racing sailboats and one 52’ floating cocktail party motorboat. My 32-foot racing sailboat is the Chip’s All In! and is berthed in a dry slip at the Davis Island Yacht Club. Two summers ago, a lightning storm struck sailboats on either side of Chip’s All In! They suffered holes in their structures and black scorches from the severe lightning strike. I thought the Almighty had been looking out for me again because Chip’s All In! looked perfect…..or so it would seem.

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When the fall racing season started, we could never get our navigation equipment to synchronize or work properly. We raced a number of regattas and finally gave up on receiving erroneous numbers. We then sailed with a simple digital compass until we could figure out why we could not make the fancy yacht racing navigational gear work. Eventually, Brian Malone from North Sails suggested that maybe we were not so lucky and the electronic equipment had been damaged by the lightning and electrical surge. There seemed to be no other explanation.

How many claims have I represented policyholders where they claimed their electrical equipment did not work correctly after a lightning strike? Stupid me for not thinking about this possibility. So, the claim was reported late from the date of the loss and not exactly prompt even after we surmised what could have happened. I kept wondering if I was going to have to defeat another excuse of non-payment because of late notice.

The GEICO marine surveyor responded right away and came to the boat. He was provided information about the rest of the boats that had damage and provided lots of pictures about the severity of the strike. He contacted the electrical racing equipment installer about the issues and at the same time, started evaluating the damage. The claim was paid fairly and quickly. No hassle. I can only assume it reflects how Rick Wilson and leaders at GEICO Marine want their customers to be treated and claims handled. Good going GEICO Marine!

In contrast, I started receiving responses about Lexington and its parent company AIG as soon as I posted the blog about Lexington last week. One claims expert report provided in part:

43. Providing an ownership connection to the company’s successful profitability may be appropriate in certain insurance company departments, such as underwriting or sales, but it is contrary to the operation of a claim department. Claim department employees should not be provided any direct compensation based on the profitability of the company. Nonetheless, that is what AIG has done. Payment of stock shares to AIG claims department personnel has been confirmed (See deposition of Andrew Barnikel, in Moses Taylor Hospital, Inc., et al. vs. Chamberlin & Reinheimer Insurers, et al., Law Court, Lackawanna Cty., PA, Civ. Action No. 05-CV-4563 [hereinafter, “Moses Taylor”], p. 108; and see American International Group, Inc., 2013 Short-Term Incentive Plan).

44. AIG has also set improper claims handling goals. Over a period of several years, AIG has set annual claim payment reduction goals for its claims handlers (See deposition of Andrew Barnikel, in Moses Taylor, pp. 104–107). Such artificial claim payment reduction goals distort the claim handling process, in that they provide an incentive to claims handlers to seek to pay less than is owed on claims in order to meet the artificial goals.

45. Further, the significant delays in the handling of the claims at issue here would also contribute to AIG’s profits. It is well-recognized that the delay in payment of insurance claims benefits insurers.

It is important to recognize that when it comes to Lexington’s handling of claims, AIG Claims Services and AIG Claims Technical do the work. One bad faith lawsuit provided to me argued that AIG should be the real party in interest since AIG’s subsidiaries do all the claims handling for Lexington:

Specifically, AIG operates at least two claim companies that handle the claims of its subsidiary companies. These two claim companies are AIG Claims Services, Inc. and AIG Technical Services, Inc. The latter company is the AIG company that handled Plaintiff’s insurance claim which gives rise to this lawsuit.

Although Defendant Lexington cannot dispute this fact, Plaintiff will nonetheless attach hereto an exhibit from AIG’s website which reflects the existence of its two claim companies which act on behalf of its wholly owned subsidiaries, including Lexington Insurance Company. As the document reflects, AIG Technical Services, Inc. “is responsible for specialty claims and litigation management.

I teach Merlin Law Group attorneys to research what the insurance company’s leaders say about their claims philosophy through speeches, presentations and under oath in prior depositions. The best presentations are the internal ones where claims management sets forth their claims initiatives and provides guidance about the results which are expected from the claims department. A good place to start that research is on the internet. Here is what Lexington says about it claims handling philosophy on its website:

Paramount to the insurance purchasing decision is our commitment to deliver prompt, skillful, and knowledgeable claims service that meets our clients’ unique needs – whenever and wherever a loss occurs. Exceptional claims service does not happen by accident. It takes years of experience and organization-wide dedication to build a customer-focused claim network, committed to service excellence and continual improvement to better serve our clients.

At AIG, our experienced teams allows claims to be managed by drawing on local, first-hand knowledge of risks, forms, business practices, legal and regulatory issues. We offer dedicated resources to ensure consistency of claims handling, effective account stewardship and winning claims strategies. Finally, the financial capacity of our insurers offers customers the security of long-term stability. We will be here to pay claims tomorrow and years from now.

I think the last three words of the last sentence speaks volumes for when policyholders of Lexington can expect to get paid.

Thought For The Day

If you live a life of make-believe, your life isn’t worth anything until you do something that does challenge your reality. And to me, sailing the open ocean is a real challenge, because it’s life or death.
—Morgan Freeman

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