The DRI Bad Faith conference resumed on Friday with a presentation by Anthony Zelle of Zelle, McDonough & Cohen and Anne Kevlin of the Beazley Group. The panel observed that successful resolution of a bad-faith claim is a team effort, from in-house counsel, to the claims professionals, to defense counsel. The panel advised that, when considering a new claim that may eventually involve bad faith allegations, interested parties should talk about how to handle the claim so as to avoid bad faith. Counsel is reminded that written communication will be discoverable, and should therefore reflect the integrity with which the claim is handled.
Opening the discussion to the floor, the audience remarked that, even before a bad-faith set up is first identified, counsel should bring the possibility of a future bad-faith claim to the insurer’s attention, and to perform an independent review of the claims file to avoid unintentionally running head long towards a bad faith claim. The panel also observed that it is counsels’ role to identify a bad-faith set up, and should not depend on the claims professionals to do so. This subjects the claim process to independent review to ensure that the claim is being adjusted correctly and professionally and, when necessary, to identify possible corrective action. Although insurers’ training and policies are helpful to identify “triggers” or red-flags of a possible bad faith set-up, counsel should be cognizant that plaintiffs’ counsel will evaluate the claim handling against established policies and harp on actual or perceived deficiencies in the claim handling or even in the established procedures.
Counsel should recognize, however, that abrupt changes to the claims handling procedures could be used by plaintiffs’ counsel to argue an indicia of bad faith, arguing that the insurer had been handling the claim improperly and took corrective action. The audience also discussed the utility and risks of having a single corporate designee, versus delegating this to multiple unit or regional managers. On a related note, regional managers or even local regional counsel may have a better sense as to how particular tone will play to a jury in the subject jurisdiction, and in some cases may be more effective witnesses than national witness from outside the jurisdiction.