Strengthening backbone rewardsinsurers, customers
Zero tolerance is an popular catchphrase forinsurers to bandy around. It implies a blanket boycott of dubious claims, themarshaling of an insurer’s full resources at every turn.
In practice, zero tolerance is a moving target. Few insurers canassert they contest every dubious claim. Even the most principled insurersdecide which claims to challenge, and which to let slide through.
Focusing limited staff resources on a complex staged-crash ringthat’s stealing hundreds of thousands of dollars might make more sense, from aninsurer’s standpoint, than taking on a handful of smaller homeowner claims thatprosecutors likely aren’t interested in pursuing.
Perhaps paying a $5,000 nuisance claim from a clearly setup fallin a restaurant makes more sense, as an insurer sees it, than spending manytimes that amount in legals fees to defend against the determined crook’s civilsuit. A sympathetic jury could dole out $500,000 to the swindler, who’s fakinga convincing limp in court. Just pay off the guy and make his claim go away.
That said, one of best business cases for zero tolerance recentlywas mapped by former CNA chief claims officer George Fay. He writes movingly inthe Journal of Insurance Fraud in America.
“Most claim denials for fraud result in a lawsuit against thecompany, no matter how solid your case,” George wrote soon after retiring. “Astrong anti-fraud position can earn your insurer a reputation within thecriminal underworld for being an undesirable target to try and bilk. Thisprincipled stance saves legal fees in the long run.”
And helps build customer loyalty: “When you make customers awareof your anti-fraud efforts, they see it for themselves and usually stay withyou for life.
Zero tolerance also reflects an insurer’s character, from the leadershipdown through line staff. “An insurer that knowingly pays a fraudulent claimviolates its values statement,” George writes. “And certainly the insurer lackscharacter. The same is true of insurer employees — from the SIU director toclaims personnel to adjusters. Character is critical to building the foundationof successful fraud-fighting efforts.”
Zero tolerance — strengthen your backbone, stop false claims andreap rewards. George Fay writes an inspiring roadmap. Insurers should studythat vision closely — your honest policyholders will be glad you did.
About the author: Jim Quiggle is director of communications forthe Coalition Against Insurance Fraud.