Apologies Necessary

Doctors do it. Kindergarteners do it. Should insurers do it?

Despite the prevalence of apologies in our society — think Lance Armstrong, Tiger Woods, Mel Gibson and Bill Clinton — the idea of offering an apology as a result of a claim is rarely considered in the insurance industry.

“By and large, our industry never makes an apology,” said Christopher W. Martin, founder partner of the Texas-based law firm of Martin, Disiere, Jefferson & Wisdom, who spoke at a recent panel discussion on the subject at the PLRB national conference held in Boston, Mass.

He said that’s because, historically, insurers assess blame by examining the actions of the insured and claimant, evaluating contributory negligence and determining whether other parties are at fault.

If it’s somebody else’s fault — like the builder or manufacturer — according to Martin, the industry tends to stop the evaluation at that point.

Jeffrey A. Mills, director of claims operations for Ameriprise, said there are 37 states with statutes that provide protection or act as an “apology shield,” and that many in the industry aren’t aware the apology protection statutes exist.

Martin said insurers should consider apologies as an option or strategy during resolution of a case, especially in states considered “safe harbors for certain apologies.”

“If someone following an accident makes certain kinds of apologies, it cannot be used against them in a court of law,” Martin said. However, an apology that includes a statement of negligence or conduct is admissible. Martin offered an example, “I didn’t see the red light, I’m sorry.”

There are benefits to offering an apology, too, the experts said. The emotion tied to a claim tends to drive an unreasonable demand, Mills said. Consider an injury that results in a life-changing event. An apology can potentially reduce the likelihood of a lawsuit being filed and result in reduced defense costs and damages. Plus, an apology can decrease the chances of a bad faith claim being filed.

Maybe an apology for bad claim handling or bad agency customer service would result in a retained customer and happier outcome? Such manners may even lead to a better reputation for the entire insurance industry.

Both Mills and Martin say the industry and carriers should consider apologies in some claims situations and lawsuits, and that there is a science behind the apology, especially during trial. And timing is important.

Think again before avoiding apologies to customers in your agency. The right apology contains remorse, responsibility, repair and reform. A simple gesture of empathy may save a lost customer, avoid a potential error and omissions claim or just make someone feel better.