Claims Consultancy – Expert Witness
SX3’s auditing teams always consist of experienced claims practitioners, people who have first-hand experience of working in claims operations or claims service providers. This deep understanding of the subject matter they are auditing leads to audit results that provide independent and reliable insight.
Nonetheless, assessing and quantifying performance on claims handling is always likely to involve a degree of opinion. When it comes to acting as an expert witness, things are more challenging – to quote Kimberly Owen from Stewarts Law in a recent blog Potential pitfalls when providing expert evidence in personal injury cases :
“The primary duty of an expert witness is to the court, and this duty overrides any obligation to the party instructing or paying the expert. Expert evidence must be objective, independent, unbiased and based on all material facts.”
The blog goes on to specify common pitfalls for the inexperienced expert witness.
SX3 uses proven, robust procedures for ensuring independent assessment in its audits but we still had to go further to meet the needs of the court.
The SX3 client had provided capacity to an MGA. That MGA outsourced their claims handling to a TPA with delegated authority to handle and settle the claims. The insurance account was loss making and the arrangement had ceased.
The capacity provider blamed the losses primarily on poor claims handling by the TPA, so it commenced a Commercial Court action in the High Court seeking millions of pounds in damages.
Audits carried out prior to the legal action were considered by the court to be inadequate and indeed provided conflicting results. SX3 were instructed by the court, on behalf of the Claimant, to provide an independent, objective and detailed assessment of the claims handling performance by the TPA and to quantify any losses arising from failures of the claims handling.
How can the Court be Helped to Accept the Audit Results?
SX3’s claims audit methodology is designed to minimise subjectivity, so that we deliver objective and transparent results.
The challenge when acting as expert witness, is to ensure all stakeholders in the process, especially those who were less familiar with assessing claims performance, could appreciate how we had come to our results.
SX3 created an assessment manual which documented the pre-defined assessment criteria to be used to evaluate the audit results. 38 separate tests were developed to assess the claims handling performance. If any failure was identified in these tests, the auditor then would consider if any losses (leakage) arose from that failure.
Given the fundamental allegations in the legal case, the assessment of claims handling performance was set against the following criteria in descending order:
- Was there a relevant process or service standard contractually agreed by the TPA?
- If not, was there an industry practice / legal precedent / FOS decision in place to use as a benchmark?
- If not, apply an SX3 assessment, based on the detailed assessment manual produced.
To support the assessment process further, average market settlement data was obtained from Verisk to create benchmarks for some of the more common negotiated settlement areas. Any other areas, the auditors provided clear calculations and rationale for each failure and any leakage arising from that failure.
One added complication was that the book of claims was transferred from the defendant to a TPA chosen by the claimant. The auditors therefore had to determine if any errors by the handling of the claimants TPA impacted adversely the outcome of the claim.
Working closely with the Client to Ensure most effective outcome
During the auditing, daily query sessions were conducted with the TPA to ensure data and handling methods were understood – nothing was left to interpretation. Weekly updates were provided to the claimant’s legal representatives.
Recognising the implications of the results being produced by this review, every effort was taken to avoid overstating any failures or losses, whilst still ensuring all performance areas were fully assessed and quantified to help ensure parties had a clear understanding of the extent of potential failures and losses.
The audit identified a substantial number of quantifiable failures. SX3 had quantified the extent and financial amount of those failures, providing written and verbal opinions on the degree of tolerance to be allowed within the results and citing key examples to bring the data to life.
The evidence produced by SX3 convinced the claimant to continue to pursue their claim. Within 3 months, the Claimant and Defendants reached a negotiated settlement bringing early closure of what was likely to be a costly and protracted legal process.
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