Maximizing Efficiency and Minimizing Risk: The Benefits of Partnering with Insurance Legal Counsel

For all types of insurers, partnering with legal counsel is essential for maximizing efficiency and minimizing risk on an ongoing basis. By maintaining a close working relationship with legal counsel, not only can insurers minimize their risk of facing allegations of bad faith and other unlawful insurance practices, but they can also maximize their ability to efficiently target favorable resolutions in dispute resolution proceedings when necessary.

How Insurers Can Work Proactively with Legal Counsel to Minimize Risk

Some of the biggest risks insurance companies face relate to their coverage decisions. While insurers must be careful not to pay invalid and fraudulent claims unnecessarily, they must be equally careful to ensure that they avoid allegations of bad faith and other unlawful insurance practices.

Legal counsel can assist insurers with minimizing risk related to their coverage decisions by: (i) developing risk-focused policies and procedures; (ii) providing legal advice throughout the claims process; and, (iii) preparing coverage opinions when necessary.  

Developing Risk-Focused Policies and Procedures

Insurers should have comprehensive and custom-tailored policies and procedures in place that guide their personnel in all aspects of their operations. This includes policies and procedures that guide their handling of first-party and third-party insurance claims.

When it comes to handling first-party and third-party insurance claims, insurers’ policies and procedures need to give due consideration to the legal risks involved. Experienced legal counsel will be able to develop risk-focused policies and procedures that insurers can then use to manage claims with confidence. Experienced legal counsel will be able to assist with implementing these risk-focused policies and procedures as well—including developing internal protocols and providing training to relevant personnel.

Providing Legal Advice Throughout the Claims Process

Even with effective risk-focused policies and procedures in place, insurers will still encounter a variety of complex legal issues when processing first-party and third-party insurance claims. The purpose of implementing risk-focused policies and procedures is not to prevent issues in all cases—because, in many cases, this will be beyond insurers’ control—but instead to ensure that insurers can respond to challenges effectively when they arise.

Oftentimes, responding to challenges effectively will involve seeking legal advice. It is essential that relevant personnel understand when coverage-related issues cross the line from matters they can (and should) handle to matters that require legal representation. By maintaining a close working relationship with legal counsel, insurers can get the advice they need when they need it, and without unduly bogging down the claims management process.

Preparing Coverage Opinions and Seeking Declaratory Judgments When Necessary

While working alongside legal counsel to evaluate and resolve challenging legal issues will be sufficient in many cases, sometimes, it will be in insurers’ best interests to obtain a formal coverage opinion letter. When needed, coverage opinion letters are key risk management tools for insurers that provide all lines of coverage.

Declaratory judgment actions can be key risk management tools for insurers as well. Experienced legal counsel will be able to advise insurers when it is in their best interests to pursue one of these options, and will be able to further advise whether a coverage opinion or a declaratory judgment action makes the most sense under the circumstances at hand.

How Legal Counsel Can Help Insurers Maximize Efficiency in Dispute Resolution

In some cases, disputes with first-party and third-party claimants will be unavoidable. Even when insurers prioritize risk minimization, there is only so much they can do. Neither insurers nor their legal counsel can prevent claimants from taking legal action if they choose to do so.

But, when a claimant decides to take legal action, there are steps that experienced legal counsel can take to maximize the efficiency of the dispute resolution process. These include promptly and thoroughly investigating the claimant’s allegations, formulating an informed defense strategy that is custom-tailored to the circumstances at hand, and using the leverage that is available to target a favorable resolution without the need for trial. While there are no guarantees, with a proactive and strategic approach, it will often be possible to significantly reduce the costs of dispute resolution without compromising the results.

With that said, to pursue efficient and favorable results in claim-related disputes, it is essential that insurers remain actively involved. While legal counsel’s role is to provide effective advice and representation, the insurer’s role is to provide information and make critical decisions when necessary. If an insurer is responsible for delays in the process, there won’t be anything that the insurer’s legal counsel can do to help keep the process moving forward.

How Legal Counsel Can Help Insurers Maximize Efficiency in Their Coverage Decisions

In the insurance industry, time is money. The more time insurers spend evaluating claims and trying to make difficult coverage decisions (and resolve disputes when necessary), the more resources they need. Beyond helping insurers efficiently target favorable resolutions in dispute resolution proceedings, experienced legal counsel will be able to help insurers maximize efficiency in other areas of their operations as well. Some examples of ways that legal counsel may be able to help maximize efficiency in insurers’ coverage decision-making processes include:

• Reviewing and revising outdated policies and procedures
• Helping insurers understand when coverage decisions require legal counsel
• Providing advice and representation before claims lead to disputes
• Responding effectively to allegations of bad faith and other unlawful insurance practices
• Reviewing artificial intelligence (AI) licenses and other contracts for efficiency and risk management initiatives

Again, these are just examples. If you would like to know more about how the insurance lawyers at Rendigs help insurers maximize efficiency and minimize risk, we invite you to get in touch.

Schedule a Call with an Insurance Lawyer at Rendigs

The insurance lawyers at Rendigs rely on extensive experience to help insurers of all sizes and in all coverage lines maximize the efficiency of their operations and minimize their risk on an ongoing basis. To learn more about what we can do to help your company, call us at 513-381-9200 or contact us online today.