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Take the initiative with injury claim reserves: help your client's personal injury claims settle faster by giving the insurance adjuster enough information to set adequate claim reserves early.

Article Excerpt
Your client was involved in an accident and sustained significant injuries. You send a letter of representation to the defendant's insurance carrier. It's been 18 months, and now your client is in a position to settle the claim.

You carefully assemble a demand package that includes medical records, bills, photos, witness statements, and a well-crafted demand letter. You send this package to the insurance carrier but don't receive a response in a reasonable time frame.

When you finally get through to the adjuster who is handling the claim, you are exasperated by fruitless settlement negotiations because the adjuster will not budge from an unreasonably low offer. You believe you have realistically evaluated the claim but cannot convince the adjuster of its merits.

Ultimately, you resolve the claim for an amount in your desired range, but only after filing a lawsuit and conducting discovery that is costly in both time and expense and that yields no further information about the case than what was revealed in your demand package.

Results like this usually can't be blamed on the adjuster's failure to understand the claim's settlement value. Nor are they typically due to a carrier's defense-oriented claims-handling policy. More often than not, the adjuster simply doesn't have adequate settlement authority. Why? The adjuster's claim file reserve is inadequate.

To obtain the best outcomes for your clients, you need to understand what a claim reserve is and why timely reserve development by the insurance carrier is important. By helping the adjuster set and maintain adequate claim reserves, you can minimize expenses and reduce the time you spend on each case, increasing your productivity.

What and why

Claim reserves come in three types. The first, called an indemnity, or loss, reserve, is an estimate of what a claim will cost. This reserve represents money set aside for the eventual payment of the claim.

Many insurance companies also establish an expense reserve for anticipated...

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