If there is any area where there is perfect application of technology based legal process outsourcing (LPO), then that could be Insurance Litigation. Individuals and organizations purchase insurance policies from different insurance company to protect themselves from any kind of financial loss. The policy holders expect a sense of good faith and trust from these insurance companies and invest ample of money in the form of premium paid on monthly or yearly basis. The policy holders believe that these insurance companies will meet their required obligations when the insured files claim. Insurer that fails to follow on with their obligations may find themselves embroiled in Insurance Litigation. Policy holders, third party or beneficiaries may then file a court suit seeking damages whenever they find that the insurers are involved in unreasonable or unfair practices with regard to insurance coverage and claims. State statutes deal with any of such insurance handling claims and are responsible for the regulation of the claim handling procedure of the insurance companies.
Types of Insurance Litigation
The subject though varies widely but at the end it is strictly concentrated to the bad faith of the Insurance Company. Some also includes allegations like failure to make essential information which must be available to the policy holders. The main subject of Insurance litigation is refusing to negotiate or settle claims. Basically five key components are foreseen to prove bad faith of the insurance company- Use of improper investigation procedure, Timely response, denial of claim, lower settlement offer and refusal to settle the case. Any of these components can be used to file a suit with regard to bad faith against a insurance company.
(a) Use of Improper investigation procedure:
An insurance company is obliged to make research on all research claims in compliance to the legal procedures. In case of using a biased investing harassing or demoralizing methods and procedures that may victimize the insured can be considered as an act done in bad faith.
(b) Delayed or Untimely response to insurance claim:
After the claim has been filed, the insured must respond to the claim filed in a prompt and timely manner. Any kind of unreasonable delay would not be entertained and shall be considered as bad faith of the insurance company. The definition of timely is very subjective here. If in spite of certain calls and request letter the insurance company is not responding to the insurers and is not responding to the covered claims then the insurance company may be certainly exhibiting bad faith. The insured may then file suit against the company regarding bad faith and be awarded consequential and punitive damage with regard to the amount of claim. But the insured need to prove that due to such delay the insured was injured.
(c) Denial of insurance claim:
A company which is denying the claim must specify a contract term or provision under which the claim has been denied in writing to the insured. But there must be an adequate investigation procedure of the claim.
(d) Low settlement offer:
If the company is offering the insured an amount less than the value of the claim may constitute bad faith.
(e) Refusal of settlement of claim:
The insurance company must protect its policyholders against unnecessary additional liabilities and look for ways to pay genuine valid claim. When a company does not protect its policyholders or insured than the act exhibit bad faith.
The first feature of Insurance law that justifies use of LPO is the volume and it involves more of paper work like documents,policies, claims, legal papers and so on. In case of health insurance and worker’s compensation insurance there is abundance of documentation procedure which definitely cannot be unseen and moreover these services have to be performed in cost effective manner.
Another significant feature is the work specialization. Insurance regulation is different for different states. Insurance litigation is therefore considered as a prime candidate for LPO. Moreover significant difference in the technological capabilities also drag LPO’s to such litigation. LPO’s provide desired information on the click of few keys. This reduces effort and concentrated information from various different corners is made available.