Making trial and settlement decisions

My favorite movie in the world is Double Indemnity, starring Edward G. Robinson as stressed out claims manager Barton Keyes. When he tries to convince salesman Walter Neff (Fred McMurray) to take a pay cut and transfer to the claims department, Neff will have none of it. To him, handling claims means being nailed to a desk in a dead end career.

Keyes, of course, sees it differently: “Desk job? Is that all you can see in it? Just a hard chair to park your pants on from nine to five, huh? Just a pile of papers to shuffle around and five sharp pencils and a scratch pad to make figures on? Maybe a little doodling on the side? Well, that’s not the way I look at it Walter! To me, a claims man is a surgeon; that desk is an operating table. And those pencils are scalpels and bone chisels. And those papers are not just forms and statistics and claims for compensation. They’re alive! They’re packed with drama, with twisted hopes and crooked dreams! A claims man, Walter, is a doctor and a blood hound and a cop and a judge and a jury and a father confessor all in one! And you want to tell me that you’re not interested? You don’t want to work with your brains. All you want to work with is your finger on the doorbell for a few more bucks a week!

Back to earth…

OK, so maybe the life of most claims professionals is a bit more mundane than that. But Keyes
wasn’t entirely off the mark. For example, the decision to settle a lawsuit or go to trial can often be a high stakes gamble – and the fallout can go far beyond the financial implications for the insurer. The reputation of a community and
the careers of its accused employees can also be affected. What are some of the factors that have to be evaluated in deciding whether, and for how much, to settle a claim?

Decisions, decisions

The law: Will governmental immunity apply? What is the likelihood that the court will dismiss the lawsuit before it gets to a jury? If the case is eventually reviewed by the higher courts, does the potential exist to create law that will assist or harm governmental entities in other situations?

The cost: What is the likely range of damages that might be awarded by a jury? How much time, legal expense and emotional investment will be required for all the parties involved?

The facts: How will a judge and jury view what happened? Are there any aggravating circumstances that will make them especially angry?

The injuries: How did the injury affect the plaintiff financially and emotionally? Are there any “horror” factors, such as severe disfigurement or traumatic death that would increase juror sympathy?

The players: How likeable and credible are the plaintiff, defendants and witnesses? Does the judge have a reputation for favoring one side or the other? What is the likely attitude of the jurors? What are the strengths and weaknesses of the attorneys involved?

The insured: What may be the consequences for the community and the affected employees? Will media coverage be a factor? Could a verdict exceed the policy limits? Is it possible that some of the allegations won’t be covered by insurance?

Rolling the dice

Finally, consideration must be given to how the insured feels about the possibility of trial or settlement. Each case has to be weighed carefully, balancing the insurer’s responsibility to the individuals involved with those of the membership as a whole. No doubt, most of the trial and settlement decisions faced by the claims staff and the municipal officials they represent are not as “packed with drama” as they were for Barton Keyes – but as anyone who has ever been through the process would likely attest, it’s no boring exercise in “paper shuffling” either!