One Mission – One State In A Changing Claims World
Midland Claims Service, Inc. has been in continuous operation in the State of Montana since 1946. For a number of years, MCSi expanded operations to Idaho and Washington. As a regional P/C independent adjusting company, its seven offices provided services for nearly 300 insurance and self-insured organizations. In 2001 MCSi purchased Industrial Injury Claims Service and incorporated workers’ compensation claims administration into its operations under the trademarked name Industrial Injury Claims®.
While much of the company’s successful history has been spent helping on the P/C side, there have been relatively significant changes in the P/C industry with respect to how daily claims are investigated, evaluated and settled. We can recall having full settlement authority and actually writing checks for now well-known insurance entities including USAA. It was our job to ensure a timely, complete investigations, always subject to audit and oversight. The IA throughout this time has been the hub of the claims process wheel, connected to disparate parties in every step of the process. Of course there are duties and ethical responsibilities to the principle, or the insurance or self-insured entity who pays for our services. There are also considerations that must be observed the insured, claimant and other directly involved individuals/organizations. For our company, it was not a threat of litigation or the heavy hammer of the Department of Insurance that drove us to do the best, most fair job possible. Our drive, and how we trained our staff (several hundred throughout the years), was based upon the concept that we do the right thing. Do the right thing in all circumstances. Do the right thing even when no one is watching. Do the right thing.
Being “in the middle” is where the independent adjuster spends their working life. For three generations of the Marsh family, it has been our lives. Being in the middle, asking questions, attempting to learn the facts from which an evaluation can be done and seeking out in all circumstances a ‘fair’ resolution has become a way of life…on the clock and around the dinner table.
With the passage of claim statutes prescribing certain processes necessary to properly handle claims, such as in Montana the statutory provision 33-18-201 MCA entitled Unfair Claim Settlement Practices Prohibited, the general tenets of our way of doing business became a requirement placed upon the entire claims industry. Not only was it a dinner table discussion in our house, but handling claims in good faith became a daily discussion topic. For those not from Montana, nearly anyone involved in a claim can be brought into a ‘bad faith’ lawsuit. This includes adjusters. They can be named personally and individually. Imagine having a family, raising your children, waiting to close on a loan for your first family home, and then have the financing stalled because you (the adjuster) are a named defendant in a multi-million dollar lawsuit. Will my employer defend me? What is their Errors and Omission insurance coverage? Are the limits high enough? Will the client insurance company ever use us again? Even if the allegations are groundless and patently untrue? The exposure to bad faith is a real and valid concern for an IA.
Several issues have in our experience proven instrumental to the intrusion of differences in the P/C claims process. Some of these are obvious, such as the telephone system. Can you imagine in this day and age having to drive 300 miles one way to an appointment to inspect a property loss or meet to statementize an injured party or witness, and before your return having to find a pay phone to call the office to learn if there are any messages or new claims in the area? No, we just keep our 4G cell phone cranked up (5G won’t legitimately be in general use in Montana for at least another 5 years). Imagine returning to the office, where all employees worked (home was for non-occupational pursuits) and using a Dictaphone with the blue plastic disc, giving the disc to the office secretary, who would then type the entire report with (in our case) an IBM Selectric, with three copies through blue, messy single use carbon paper? Nope, now we simply dictate the information into a computer using dictation software, save the Word document to a shared cloud server and distribute the report by e-mail. Computers, telephone service and the internet have fundamentally changed the claims industry.
There is more to the changes than procedural or a move from office to ‘work from home’. In the P/C industry, much of the claims process has moved from the field to internal. Loss assignments received daily in the 1960’s and 1970’s have become routine internal processing claims within the company’s claims department. Small thefts, small to moderately sized water claims on homes, automobile collisions without significant injuries…all sorts of claims that previously were an important part of the IA mix of business have been integrated into insurance company operations. This has been acutely important in lesser populated states like Montana. If a claim can be handled without litigation and with some degree of stakeholder satisfaction, and overall claim expense can be reduced by elimination of the IA expense, then it will be handled directly by the company by phone and e-mail.
From the perspective of the rural state IA, however, these smaller claims were our training claims. This is where new to the industry colleagues would learn the business of claims, investigation and fairness. These individuals would handle hundreds of the more routine, smaller dollar exposure claims before working up to more complex, high exposure claims. Without these types of claims available to train people with, not only was the IA segment hit with a reduction in top line income, it ceased having the opportunity to bring new people into the business. At the same time, the exposure to litigation remained as much a pressing concern as in the past. The talent pool began to shrink. Where there were 20 – 30 small IA firms in a state of less than 1,000,000 people in years past, that number shrank to fewer than 5. As IA principals began to reach retirement, rather than pass the business down to a family member or the employees through an ESOP, these individuals simply worked their way out of the business. It is remarkable how many fairly sizeable IA firms have been worked down to the point of two or three people, typically a husband and wife team, until the retirement decision is made. Then the business, in many cases with service to our industry for 30, 40 years, closes, never to be heard from again.
With these closures, the decades of service experience disappears with it. Not just reading a policy type experience, or taking a statement or how best to evaluate hail marks on a roof, but ‘real’ experience. The ‘real’ experience referred to is “soft skills”. The soft skill experience where one with decades of service in the industry can get to the facts quicker, know which questions to ask, know which individual on the Sheriff’s Department can get a copy of the report and photos quicker, can evaluate a claim more thoroughly, and can deescalate a tense situation effortlessly. For the many more routine claims, those handled internally by insurance company staff by phone and e-mail, these soft skills perhaps are of lesser importance. However, for a multi-million dollar exposure or claim with multiple grievous injuries and deaths, soft skills can be one important claims component to driving a claim to a quicker, more fair resolution. Where this has left the industry, at least for more rural, less populated states, is without a pool of insurance claims professionals learning these valuable face to face soft skills.
MCSi recognized this trend back in the late 1990’s. It was one of the factors that led to our move towards handling as our primary business self-insured workers’ compensation claims. Comp claims is a human business. One hundred percent of the time the claims administrator TPA is dealing with an injured or deceased human being. Self-insured organizations are not driven by a profit motive, they understand for the most part the value that the claims experience has on its employees. If the claims experience can be one that engages the recovering worker, that worker will heal more quickly and thoroughly. That same worker can in more cases return to their time of injury job sooner. And importantly, where the human being is treated humanely, litigation and other process expenses are significantly reduced. The concept that we brought to the Montana workers’ compensation claims market in 2001 was Humanize the Workers’ Compensation System. In the process, we have been able to maintain a pipeline of trained workers’ compensation claim professionals. These folks get their experience by working through the chairs, from clerical and processing work up to Medical Only claims to Complex Medical claims and Indemnity claims. The opportunity given to us through our client agreements to have these individuals learn the business by handling smaller, less complicated and less dollar exposure claims has saved these same clients literally millions of dollars.
So Midland Claims Service, Inc and Industrial Injury Claims®, never heard of your company. How does your experience have anything to do with my employer insurance company or self-insured organization? You probably only handle a few claims, right?
Compared to any major national insurance company or TPA, MCSi is small. But we are intensely proud of what we have done in the workers’ compensation claims industry. We are in Montana, one of the most difficult jurisdictions in the U.S. Bad faith is not limited in workers’ compensation by exclusive remedy. Fewer people live in the entire State of Montana then in the County of Sacramento California. The state has a single judge workers’ compensation system of jurisprudence, and that one judge is a political appointee. The only remedy from the Workers’ Compensation Court is to go to the Montana Supreme Court, judged recently as the 5th most liberal court of the 50 states. In that context, our company has been responsible for handling and resolution of:
- 33,930 claims
- $67,000,000 in payments
- $10,456,000 in medical bill review and fee schedule savings (18% net savings)
- Overall litigation involving any plaintiff or defense counsel of 1.95% of reported claims
- Evaluated, issued and signed 256,074 workers’ compensation checks
We believe this success, shared by our client organizations, their recovered workers and our professionals is primarily due to our commitment to the concept of One Mission – One State. Do one thing. Do it right. Do the right thing. Humanize the Workers’ Compensation System.