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Insurers adapt to promote the timeliness of claims

| Jun 25, 2020 | Insurance Defense

Both insurance providers and policyholders are responsible for keeping the claims process on track in a timely manner. However, unusual circumstances could impact the timelines of claims.

At a time when the Florida insurance industry is experiencing multiple challenges, including hurricane season, COVID-19 and property claims related to nationwide protests, it can be difficult to resolve claims in a timely matter. These factors may leave insurers scrambling to address claims appropriately.

Claims must continue to progress reasonably

Florida law requires insurers to act in a timely manner during each phase of the process, including but not limited to:

  • Acknowledging the receipt of a claim within 14 days
  • Approving or denying the claim in a “reasonable” period
  • Providing full settlement payment within 20 days of an agreement
  • Fulfilling specific terms of individual policies and all laws uniquely applicable to the type of claim

While the law specifies certain deadlines, it also allows flexibility for other aspects of the claims process, such as for investigation of claims. On one hand, commercial and individual policyholders are likely to need payment of claims quickly. On the other hand, insurers need enough time to investigate and process claims. Luckily, this flexibility may provide a degree of relief during difficult regional and national circumstances.

Working around delayed resolution of claims

Insurance providers are finding new ways to work around danger and uncertainty through remote work, new technology and additional filing options. Regardless, delays may still be a possibility.

A delay does not necessarily signify bad faith. Depending on the case, however, an insurer may still encounter accusations of delays in bad faith – despite the many challenges that insurers are now facing.

Therefore, it is important for insurers to act in good faith whenever a delay may occur. This includes communicating clearly with policyholders, thoroughly evaluating each claim and protecting the company against fraudulent claims. It is necessary to devote the right amount of time to ensure that a decision to approve or deny a claim is justifiable.

Insurance companies should carefully evaluate potential risks when working at a lower capacity than normal or when facing a substantial increase in claims. Unprecedented circumstances can create complex legal challenges for insurers. Disputes may take new forms as the year progresses.