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Claims Litigation: The Adjusters Guide

Ethos Risk ·

The insurance litigation process is not for the faint of heart. Think of it as a high-stakes chess match�one wrong move, and you�re facing costly setbacks. But with the right strategy, your team can stay ten steps ahead.

Understand the Litigation Process

Would you walk into a courtroom blindfolded? Of course not. Yet many claims professionals don�t fully understand each stage of litigation until they�re knee-deep in it. Get ahead by training yourself and your fellow adjusters on the ins and outs of the process�who does what, when to escalate, and how to keep airtight documentation.

�If you have in-house counsel, don�t treat them like a 911 call. Pick their brains before issues arise. A quick chat today could prevent a legal headache tomorrow.� VP of SIU

Communication

Good communication isn�t just a soft skill � it ensures that when a claim is heading toward litigation, all stakeholders (adjusters, legal counsel, vendors, and third parties) are looped in and up to speed.

  • Keep records of every email, call, and meeting.

  • Use tech instead of paperwork to streamline document sharing.

Think of the childhood game �telephone��where a simple message turns into something completely different by the end. In claims handling, miscommunication works the same way, except instead of a harmless mix-up, it can lead to legal disputes and regulatory fines.

Stay Ahead and Stay Informed

The legal landscape changes fast�kind of like those software updates you ignore until your phone crashes. Don�t get caught off guard. Invest in ongoing training, attend industry webinars, and keep your team updated on court decisions that could impact claims.

If a new ruling changes how courts view liability in property claims, knowing about it before your next litigation battle gives you a strategic edge. Knowledge = power.

The Discovery Phase

The discovery phase is where many cases slow to a crawl. Avoid unnecessary delays by having an evidence management system in place before litigation happens.

  • Digitize records for easy retrieval.

  • Organize reports, communications, and assessments efficiently.

  • Make sure your vendors maintain meticulous records and follow stringent privacy guidelines

Alternative Dispute Resolution

Let�s be real�litigation drains resources fast. Have a clear budget outlining in-house costs, external legal fees, and contingency plans and if you have the option, try an Alternative Dispute Resolution.

Alternative Dispute Resolution encompasses a range of methods for resolving disputes without formal litigation. The most common forms include mediation, arbitration, and negotiation, each offering distinct advantages when it comes to settling claims efficiently. Here�s why using ADR early in the process can be a game-changer:

Cost Savings

ADR is generally more cost-effective than going to trial. According to the American Arbitration Association (AAA), cases that go through arbitration typically cost 30%-50% less than those that proceed to court. With mediation, costs are even lower, as it focuses on collaboration rather than a lengthy legal battle. For insurers, this means reduced defense fees, lower legal expenses, and fewer costs for expert witnesses or court fees.

Cases that go through arbitration typically cost 30%-50% less than those that proceed to court.

American Arbitration Association (AAA)

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Time Efficiency

Litigation can stretch on for months or even years, causing delays that escalate costs and create uncertainty. ADR methods, particularly mediation, can often resolve cases in a matter of weeks. Mediation sessions are typically scheduled within 60-90 days, which accelerates the timeline for settlement and allows parties to move forward faster.

Preservation of Relationships

In many claims, especially those involving ongoing business relationships, ADR offers a less adversarial setting than litigation. Mediation in particular promotes communication and cooperation between parties. For insurers, this can help preserve relationships with claimants, policyholders, or third-party vendors, which could be crucial for future business opportunities.

Higher Success Rate

ADR boasts a notably high success rate for early resolutions. Mediation, for example, has a settlement rate of around 70-80%, according to various studies. You don�t have to be a mind reader to know that courtroom drama rarely ends in a win for anyone�but with ADR, you can avoid the suspense. These high success rates are attributed to the fact that ADR emphasizes collaboration over confrontation, providing a structured, supportive environment where both sides are encouraged to find common ground.

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A Powerhouse Team

Your claims process is only as strong as the people behind it. That includes your in-house team and the third-party vendors who provide critical assessments. If a claim escalates to litigation, their credibility could make or break your case.

  • Partner with experts known for objectivity and thorough documentation.

  • IME physicians must be impartial third parties

  • Ensure they�re prepared to testify if needed.

  • Vet vendors for their ability to provide fact-based expert opinions�because flimsy assessments won�t hold up in court.

Example: If your vendor�s report is even the slightest bit vague, it won�t stand up in court. Work with experts who bring, defensible insights to the table.

Looking for a claims partner who gets it? Submit an assignment and see how Ethos�s suite of services can support your team from assessment through litigation (or hopefully not). When it comes to claims, winning is all about being prepared in the courtroom.

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American Arbitration Association (AAA)

American Arbitration Association. American Arbitration Association (AAA). www.adr.org. Accessed 5 Feb. 2025.

The CLM Magazine

�The CLM Magazine.� The CLM, www.theclm.org/Magazine/. Accessed 5 Feb. 2025.