Ethical Awareness for Claims People – pt1 – Framing

  • 25 January 2016

This is the first of a four part series of posts looking at ethical awareness for claims people. In each post, I’ll be outlining a particular aspect of ethical behaviour from the perspective of how claims teams work. The first is called framing.

The decisions that claims people make often involve some element of judgement: about the loss, about the claimant, about the settlement. The policy cover may be set out in black and white, but claims are often messy things that need interpretation. And insurance is a business, with managers that expect consistency in how those judgements are made over the many hundreds of claims their teams deal with.

So it’s hardly a surprise that firms present contexts within which they want their claims teams to exercise those judgements. How those contexts are arranged and applied has implications for how ethical the decisions are that result from them.

Framing and Decisions

So one context is performance, which for a business is expressed in terms of what has been set as measures and targets. A similar context is financial, expressed in terms of incomes, expenses and profit. And then there is compliance, expressed as rules and controls. And let’s not forget the context provided by a firm’s values, or the claim team’s professional ethics.

Quite a lot there for the typical claims person to juggle. So how does one context gain precedence over others? That’s where culture comes in. A firm’s culture will determine which context is most influential in framing the judgements made by its claims people.

The Claimant Frames Too

Remember that while the claims team will be framing their judgements in one way, the claimant could well be framing theirs in other ways. This could be around the fairness of their settlement, while another could be around what friends have told them to expect from an insurer. So some claim negotiation can be quite fraught, with to each side framing their judgements in different ways: for example, the claimant might view the amount being claimed for as quite reasonable, while the claims handler might see that same amount as quite unreasonable.

Some insurers attempt to step out of such potential confrontations by allowing different claims teams to frame their judgement in different ways. A special claims team that deals with ‘difficult settlements’ has in effect been mandated to step outside of their firm’s normal frame for claims teams and apply their judgement on more of a case by case basis. Is this flexibility, or an admission that one perspective (in other words, one frame) is not enough?

One area where claims teams need to be particularly careful with framing is around potentially fraudulent claims. Talk about the firm ‘doing whatever it takes’ to tackle fraud could end up framing claims judgements in ways that lead to unintended consequences: claims data illegally obtained and surveillance of a claimants children are two real life examples of how things can go wrong. Does it result in innocent claimants feeling like they’ve been treated as potential fraudsters?

Three ways forward

The right framing helps build trust in insurance claims. So how can claims teams work on this? Here are three ways of doing so.

Recognise that a particular frame is not the only one available to you. Develop some techniques for recognising those other frames, such as asking yourself how the decision you’re about to make would look if your family read about it on the front page of tomorrow’s local paper.

Recognise that there is often more than one frame in play at any one time. Professionalism provides a wider, longer term frame within which to judge what you’re doing. You may recognise that a particular decision is good for this month’s target, but poor for the code of ethics that should guide your professional judgement.

And recognise that rationalising a poor decision (by thinking for example, that ‘everyone else is doing it’) is just an attempt to change one frame for another, to make something seem less bad than it actually was. Be prepared to challenge such reframing, even if it’s your own. It’s better to recognise it for what it was and think instead about how to keep within that better frame next time round.

The next post in this short series about ethical awareness for claims people is here.