Regardless of what the economy does, claims are coming, in droves. Historically, in economic downturns, claim frequency rises. People fuss over smaller amounts, although in more stable or boom times, they might not have done so.

In recent conversations with attorneys across the nation, we are hearing of new suits and growing intentions of waves of insurance claims for business interruption, loss of business income, etc. There have even been state legislatures passing new laws to make these claims easier to prosecute, to “protect the policyholder.”

We are further all hearing and reading about recent unemployment filings erasing the gains of the past ten years, and the vast inability of people to pay their debts on credit cards, auto, and home mortgage loans. All in all, this type of financial risk activity will affect every one of us, particularly companies in the claims business.

And if that were not enough, there may be some related concerns lurking out there, which probably should be part of the conversation, in the claims business. Notably, and maybe surprisingly, plaintiffs’ lawyers have increased their advertising. We are seeing plaintiff lawyer television commercials, during prime-time nightly news, particularly on the ten o’clock circuit–like never before. So why the increase and why does it matter? As someone wise said many moons ago, “…to understand human behavior, always follow the money….”

Plaintiff lawyer advertising is increasing because it is known within the plaintiffs’ bar, that plaintiff case intakes have significantly slowed. In fact, the core business, or bread-and-butter for many plaintiff firms, has temporarily dried up, solely due to nationwide shelter-in-place orders. This is the case because potential plaintiffs are not driving cars, entering the premises of others, working for employers, etc. This means auto-accidents, slip-and-falls, and general liability incidents are drastically less; like going from 100 to 1 mph. And as one mediator stated to us last week, “…plaintiff’s attorneys are mad as hell about these shelter-in-place orders, because it is killing their livelihoods. And they fear there will be a lull in income, after their older cases resolve and the two- to four-month gap of incoming cases, caused by COVID-19, is fully realized, on the plaintiff firm ledger….”

As such, it might be good for insurance carriers and corporations to consider how this circumstance may affect the behavior of plaintiff attorneys, and thereby, their own buckets of claim indemnity dollars.

In our view, given the two-plus, or likely four-month lull in plaintiff claims, and as the world transitions out of COVID-19 shelter-at-home orders, the following claims activity could occur to drive plaintiff firm income:

  1. Upsurge in claims where causation is very speculative;
  2. Escalation in plaintiff-firm capital investment, in existing and future claims;
  3. Sharp rise in timed policy limits demands;
  4. Explosion in COVID-19 related claims;
  5. Creation of new areas/kinds of claims; and
  6. Jump in fraud or deception-based losses.

As more explanation, and firstly, it may be important to advise your claims team and counsel to be particularly attentive in identifying claims that are based on strained or remote causation. It could be prudent to quickly flag such and pursue early motion pleading practices to dismiss these claims, and/or direct your claims team to remain aggressive. Desperate plaintiff attorneys, or certainly plaintiffs, may do whatever it takes, regarding causation and placing blame, to make a buck, as the next years play out.

Secondly, we will likely see escalation of plaintiff firm capital investment into new or existing cases. In other words, on existing claims, if the exposure is $1-2,000,000, we might expect, if allowed within the discovery process, a plaintiff’s counsel could evaluate her docket of claims, and decide to invest more personal, or litigation funding money, into certain matters. More specifically, instead of angling for the original risk, the plaintiff’s counsel may suddenly start hiring/designating experts or upgrade their mock-trial/trial-presentation plans, to drive-up the damages models. It is likely prudent to have your claims handlers, and counsel, identify where such escalation may come forth, be very sensitive to same, and resolve risk accordingly.

Third, there will be a sharp rise in policy limits demands. Quick settlements will drive plaintiff firm income, to cover the lull. And while on certain claims, this may be good for carriers and the likely defendants, in some circumstances it could result in a knee-jerk settlement, or worse, a settlement refusal triggering excess indemnity risk, which may not be good for the carrier/company bottom line. Whatever happens, these demands will flood the systems in place, which are presently designed to respond to a typical policy limits demand flow. Given such, companies getting out in front of this concern will be training supplemental support employees now, to be prepared for, and properly analyze the demands, so carriers/companies can adequately protect their interests. Moreover, training claims teams to be up to speed on the present state of the law on time limits demands, to carefully discern the merits, is probably a must do.

Fourth, there is no doubt an explosion of COVID-19 related claims will happen. Numerous nationwide businesspersons, and adjusters, who have responded to initial claims, have stated these claims “…will go on for years…,” and “…make hurricane-related claims look like small beans….” The particular markets where these claims will arise are restaurant, hospitality, retail, auto sales and even general business, across the spectrum. Heads of companies and carriers have recently come out of their corner offices to pen open letters to national news media outlets regarding their concerns about allowing such claims, or failing to pass legislation to curtail them. This claims explosion is coming and neither the current Administration, nor another, is likely to stop them. Nor is it probable state legislators will have the gumption to fully cease momentum from the plaintiff’s bar, as many state congresses are filled with plaintiffs’ attorneys.

Additionally, the old saying “…necessity is the mother of creation…,” will apply in the short-term months and years to come. Plaintiff attorneys will not sit idly by and watch their net worth or income subside. As humans have done throughout history, they will adapt, and these adaptations will spawn new kinds of claims, and maybe very creative claims. It is tough to speculate what those will look like, but they too are coming, and almost impossible to reserve for. It would probably be enough for claims teams to be trained to elevate indications of new and creative claims, up the chain of command, so longer-term risk assessments can be made on any new creations.

Lastly, when COVID-19 began dominating the national news, say early March, we began hearing stories about criminal behavior. There were stories of a guy hoarding hand gel and selling bottles for over one hundred dollars each. There were reports of criminals stealing and re-selling masks, and personal protective equipment, at exorbitant prices. There were headlines of wealthy people trying to sneak COVID-19 testing or buy ventilators for their families. Times were crazy. Point being, criminal or fraudulent behavior has always been part of the claims landscape, and we should expect it to jump. Reason being, and not just for plaintiff firm income, job loss may be approaching an all-time high. People will be seeking money wherever they can get it. Fraudulent claims, of all kinds, may achieve new heights. Carriers and companies will need to be very cautious and sensitive to the same. It could even be appropriate to increase claims team training, or add skilled employees, to be ready to better scrutinize or conduct special investigations activities, to sniff out the fraud and properly deny the claims. To be sure, fraud and claims-related deception will leap upward.

In all, what is certain is that those of us in the claims industry will be fully employed, for many years to come, and as such need to plan for the concerns outlined above. That said, what we, personally, would also like to be more certain of, is that we can all safely go out and lead our lives, enjoying human interaction, and working with others to resolve legitimate claims. And frankly, not worry as much about what virus may be lurking.

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