National Association of Mutual Insurance Companies

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English 101

By Gary Blake, Ph.D.

There are millions of dollars lost each year in bad-faith lawsuits that are attributable directly or indirectly to careless, inaccurate, vague, hedgy, or arrogant writing.

It Didn’t End When College Was Over

Everyone has a memory of an English teacher handing back a paper splashed with red ink. Comments ranged from “poor usage” to “improper word choice” to notations that words were misspelled. Many of us left our formal educations behind gleeful at the thought of never having to write another paper… but the fact is that the art of writing is often integral to the success of an organization. And it’s entirely possible that poor writing costs the insurance industry more than $1 billion each year.

Let’s assume (conservatively) that there are about 2,000 major property/casualty and life/health insurance companies, including HMOs but not counting TPAs, independent adjusters, public adjusters, risk managers at private and public companies or captive insurance companies. If we make a conservative estimate and say that about 200 people work for each of these 2,000 companies, we have a workforce of about 400,000. Other estimates approximate that there are a half-million people working in claims alone in the United States.

Bad-Faith Lawsuits

Studies done for the years 1997 to 2000 by Jury Verdict Research and General Cologne Re found that the median punitive-damage verdict in a bad-faith claim was approximately $1 million dollars. The mean punitive-damage award was between $6,810,071 and $10,581,105. Mean compensatory awards reported in the study ranged between $634,431 and more than $1,061,643. Plaintiffs won 57 percent of their bad-faith cases compared to 35 to 40 percent of other types of cases.

There are millions of dollars lost each year in bad-faith lawsuits that are attributable directly or indirectly to careless, inaccurate, vague, hedgy or arrogant writing. Let’s estimate that each one of our 2,000 companies had only one bad-faith lawsuit a year that was attributable to some aspect of poor writing (sexism, ageism, racism, conclusory statements, etc.). If each settlement was $500,000, that would be $1 billion in lost productivity alone:

2,000

  

Major insurance companies

x $500,000

Average loss

$1,000,000,000

  

Estimated loss resulting from the effects of careless writing on bad-faith lawsuits

When John Grisham had one of his characters (an adjuster) in The Rainmaker write to an insured, “You must be stupid, stupid, stupid,” he was not that far from giving an actual example of the prejudicial, careless and politically incorrect comments that have appeared in documents that have come to light in bad-faith suits:

Taking sides: An adjuster writes, “We have a favorable interview from a neighbor that our insured’s driver was not supposed to use the car,” or “Fortunately, there’s a neighbor who says that John was not permitted to drive the car.” A proper and adequate investigation is an objective investigation. Objective investigations do not identify information adverse to the interests of the insured as good news. They do not reflect an all-for-us attitude as is reflected in these log notes: “We can only hope that the plaintiff’s condition continues to deteriorate,” and “We think this person will die of cancer and we will be off the hook.”

Subjectivity: Other documented subjective comments that have caused trouble include: “This is ridiculous!” (an adjuster venting his belief in the claimant committing fraud), “These people ...” used as a slur against an ethnic group the adjuster felt had ties to organized crime); and “Mr. X dabbles in adult entertainment;” or “This place is a dump. Pigs wouldn’t live here!”

Hanging out the dirty laundry: Claims professionals have to answer to supervisors and supervisors’ supervisors. There may be special investigators working separately on the claim. Everyone does not always play well together in the sandbox. The claim file is not the place to vent about the behavior of others no matter how outraged you may be by a co-worker’s behavior or a company procedure. In a 2002 bad-faith suit, one adjuster’s log notes had the following sentence: “I am darn near speechless on how this appeal has been handled by the other area.”

Stupid, stupid, stupid: “If the claimant calls, don’t take the call.” That’s what a supervisor wrote in an e-mail in an attempt to help an adjuster. It didn’t look so helpful when a jury heard it.

Poor word choice: Nouns and verbs tell an accurate story. “The claimant walked two steps from the wheelchair to the television set.” Adverbs and adjectives tell a jury that the insurer made up its mind without further thought. “The dishonest claimant is perfectly healthy and quickly jumped from the wheelchair, then walked confidently to the television set.”

Prejudice: Careless and poorly trained writers reveal their feelings in e-mails with the same abandon with which they might reveal them at a bar or a friend’s house. There are instances in which adjusters have written: “This Black lady was behind the desk,” “She was an older woman and didn’t remember me,” “The boy was too fat to have exited the car in that manner.”

Slip and fall accidents very often happen to overweight people. Pretty soon, some adjusters begin to develop an attitude toward overweight people. As a way of venting frustration, one adjuster labeled file documents “FLS.” When asked what that meant, he answered, “Fat lady slips.”

Conclusory statements: In general, the opinions of a claim professional work against an insurer. Yes, a reasoned opinion of how the facts apply to the law on liability or damages may be appropriate or even needed, yet we have seen files that contain statements like “They are deadbeats,” “They are procrastinating,” “They don’t have a snowball’s chance in hell of getting what they are asking for,” and “I just know this claimant doesn’t want to go back to work.”

Sexism: One supervisor wrote to his adjuster, “To the ‘chick magnet’ ... this claim has been assigned to you because you have ‘hot hands.’”

The $1 billion loss figure, by the way, does not even take into account the productivity losses resulting from writing issues that exist in the IT department or in Sales, Marketing, Loss Control, Underwriting or Advertising.

Let’s explore other writing issues beyond the realm of bad-faith lawsuits to see if we can arrive at reasonable estimates for additional types of wasted productivity and profitability attributable to poor writing skills at insurance companies.

Poor Tone

In addition to the careless writing that plays a part in some bad-faith lawsuits, there are other lawsuits engendered by letters that alienate insureds and provoke them to initiate a lawsuit. These are issues of stodgy, negative, nasty tone that may prompt an insured to call an attorney instead of settling. If only 10 letters per company per year are of this type and each one results in a suit involving attorneys, corporate time, settlements dragging on and lost productivity amounting to 50 hours …and assuming time is worth only $50 and hour … that would equal a $50,000,000 loss.

Here’s an example of an actual letter that loses points because of nastiness and negativity:

“I am in receipt of your letter dated October 27, 2004, wherein you ‘highlight the accurate facts.’ As a result, I will attempt to be more specific and draw upon the activity log for your project. But before doing that, let me address the issue of the damaged pole one last time.”

I think that not only is the quoting of the vague line from the earlier letter antagonizing, but “one last time” shows barely-concealed rage.

Getting Started

It may not be obvious, but writer’s block may be the most widespread drain on insurance industry productivity. The block is experienced by numerous insurance people who are skittish about their writing and therefore procrastinate when it comes time to do so.

In my claims writing seminars, hundreds of adjusters have told me that their principle writing problem is “getting started” and that it is not unusual for them to stare at the terminal for half an hour trying to figure out how they will organize and phrase a document. Let’s say that there are 50,000 “writing avoiders” in insurance who are procrastinating, some of whom are part of the more radical “I hate to write!” sect. And let’s project that each of these 50,000 people wastes just 10 hours a year in needless procrastination and worry about what they write. Assume that each hour of time is valued at $50. That’s $25,000,000 lost. Many of these people are in the habit of showing their writing to colleagues for corrections, thus wasting even more corporate time – time that would not have been wasted if each person had been a trained and confident writer.

Vagueness and Inaccuracy

In the insurance industry, when a piece of writing is so vague as to provoke the reader to call the writer for further explanation, it is like one domino toppling over many more. There’s a game of phone tag, time taken to explain, time taken to redo correspondence. This is a frequent occurrence because vague writers tend to be vague in whatever they write. They will remain vague until they are trained to write more specifically and precisely.

Let’s say that there are about 50,000 vague writers in the industry – a very low estimate – and that each of them writes only 10 letters a year that are so vague as to cause a reader to query them. If each of those occurrences results in a mere $100 loss, the total bill for this problem would be $50 million annually!

It’s easy to become complacent about claims correspondence going to insureds, but errors get made, insureds get confused, and companies suffer embarrassment. Here’s one recent paragraph in a letter to an insured that would make any claims executive cringe:

“As discovered, your property sustained water damage. It was also discussed and discovers that the damaged is old from a pre-existing problem. The room in question has been paid for on two other prior claims. Since you have not proofed that you have corrected the pre-existing problem or completed the damaged that was a result of that problem.”

Here’s another actual example of a paragraph that would make almost any reader reach for the phone to get an explanation:

“During a recent review of our records, it has come to our attention that your mode of payment is out of synch. Your policy effective date is September 20, 1999, showing an annual mode of payment, paying the policy to October 20, 2003. An annual mode of payment must coincide with the effective date of our policy. Therefore, your annual mode must show a date of September 20, 2003.”

What is the insured to make of “out of synch”? Also, read the paragraph out loud to a colleague. Does your colleague get it? If not, how is an insured supposed to comprehend it?

Innocent-looking spelling errors can cause embarrassment as well as alienating a reader. For example, “I would like to address applicable coverage in regard to allegations that Mr. Cooke was allegedly under the influence of elicit drugs while driving his car.”

If writing skills have not been on the front burner of your training agenda, perhaps you need to rethink the subtle impact poor writing skills have on the industry, your company and your department.

Gary Blake is director of The Communication Workshop and presents claims and SIU writing seminars at insurance companies across North America. Among his clients are Blue Cross/Blue Shield of Tennessee, AIG, FCCI, Foremost Insurance, and SAFECO. Blake is the author of The Elements of Business Writing (Macmillan, 1993), a text used at more than 100 insurance companies. He may be reached at garyblake@aol.com or by phone at (516) 767-9590. His website is www.writingworkshop.com.

Posted: Friday, August 19, 2005 12:00:00 AM. Modified: Friday, August 19, 2005 4:02:11 PM.

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