Marsh

Soraya Erickson

Soraya Erickson is Vice President and Senior Claims Consultant at Marsh, bringing nearly two decades of diverse claims leadership experience. She has led commercial claims teams across all lines, with expertise in litigation, employee development, and strategic claims resolution. Known for her analytical skills and hands-on leadership, Erickson has held key roles at Marsh McLennan Agency, Tokio Marine, and Sentry Insurance, consistently driving operational excellence.

In today’s market, it is no secret that taking claims to trial can be costly. Even with complex claims where liability may be in question, the time and expense of litigation can be exorbitant. Many insurance companies for this reason are exercising the practice of early resolution when settling bodily injury losses. So what is early resolution and what factors should be considered in determining its efficacy?

Early resolution in the claims world is quite simply just that- an early settlement with a third party that resolves their injury claim most often in exchange for a release of all claims. It is not an admittance of liability or responsibility, but rather a mutual decision to settle a claim before it reaches litigation with the insured’s best interest in mind. Years ago, this was often done in mild injury cases where liability was clearly established. Litigation was avoided as the chances of winning in trial were next to non-existent. Presently, however, the factors considered when settling a loss prior to suit have changed. No longer are soft tissue only cases considered. With a growing industry and economic factors at play, insurers are now looking at a much larger picture when making the decision to fold their hands and avoid litigation. Below are some examples of factors considered in early resolution strategies.

Venue-when an insurer is facing a bodily injury exposure even with compromised liability, where the incident occurred is highly influential. Is the venue liberal with a jurisdiction that often produces nuclear verdicts in favor of the plaintiff? Or do we have a more conservative venue with a jury pool that tends to favor the insurer?

Looking at past cases and trends in this arena is crucial to understanding if a claim goes to litigation what the possible outcomes will be. In addition, each jurisdiction has its own time limits, procedures, and laws when it comes to civil suits involving bodily injury. Some jurisdictions may be better equipped vs others to handle specific types of claims due to the availability of specialized courts, judges, or legal professionals. Understanding the varying laws in each venue and legal avenues available are important to the overall view of the claim. The type of injury allegation-soft tissue injury cases tend to be mild but even in larger injury cases now, understanding how these injuries will affect the optics of a case at trial is crucial.

“Early resolution is not an admittance of liability, but a mutual decision to settle a claim before litigation, with the insured’s best interest in mind”

Does the plaintiff have extensive damages including TBI (traumatic brain injury) or is this just a minor concussion? Is the claimant disabled with prior injuries that were exacerbated in the case? How old is the claimant and will the injuries pose more sympathy from a jury looking at the case at trial?

Perhaps you have a claimant, an elder who has undergone epidural injections as part of their treatment for the injuries sustained in an auto accident. The insurer in this case would need to consider if this type of treatment in a particular venue could be considered surgical. A surgical procedure as a result would drive up the cost of a claim and likely garnish a higher value verdict. In this case, an insurer may decide to settle the claim early and avoid suit, as there is a higher risk that the settlement at trial could be much higher. It is a cost effective decision.

Lastly, the overall litigation expenses need to be reviewed before making the decision to settle early vs going to suit. An insurer should always approach a claim as though a suit will be filed. In that case, what costs would be associated with the loss?

Many bodily injury suits involve the hiring of experts (doctors, accident Reconstructionist to name a few). The hiring of these experts takes time and money. The more experts you need to properly evaluate the defense on a case, the more costly the expenses will be. In addition, the assignment of defense counsel is a largely added expense and if the case is complex, the amount of time needed on a case will be large which will inevitably drive up cost. Thus, if an insurer for example values a claim prior to litigation at USD 60,000 and the claimant’s attorney has provided a demand for USD 100,000 but we know the litigation expenses could be upwards to USD 40,000 or more with the risk of losing at trial, an insurer will likely decide to settle the claim and avoid suit. In this case it is a business decision and one that is likely in the best interest of the insured.