Bryan Falchuk, President & CEO of Property & Liability Resource Bureau (PLRB), joins Bill Kanasky, Jr., Ph.D. to discuss several topics related to the insurance industry. Bryan shares some details on his background and describes what PLRB is, what they do, and the help they provide insurers/MGAs, service providers, and outside counsel. Bill and Bryan talk about current trends in the insurance industry, key issues around litigation, and Bryan describes how he used to manage litigation during his time as a Chief Claims Officer for an insurance carrier. Bryan shares his perspective on how the plaintiff’s bar has increased their leverage in litigation and how players in the insurance defense industry are contributing to the current unbalanced situation.
Full Episode Transcript
[00:14] Bill Welcome to another edition of the Litigation Psychology Podcast brought to you by Courtroom Sciences. I am your host and fearless leader Dr. Bill Kanasky. With me today, Bryan Falchuk. Bryan is the president and CEO of an industry trade organization in the insurance industry called PLRB. He’s a thought leader in the industry and he is the author of “The Future of Insurance” book series, which is something that we all may want to dive into. 25 years in the insurance industry. Bryan, how are you today?
[00:53] Bryan I’m doing well. Thanks for having me on, Bill.
[00:55] Bill Bryan, this—this is cool because again, we’ve had a couple of people from the actual insurance industry on in the last five years, but it’s been few and far between for various reasons. And um, you see so much um about the insurance industry on news, on social media, on LinkedIn, and uh, I think it’s great to get somebody um from this side of the equation. I think it’s great, so—so thanks uh so much for being here. Now, before we get started with with some questions, tell me about um how did you get into this industry? Because something tells me you weren’t like—you weren’t at career day uh in high school at 15 years—15 years old saying, “Hey, I’m gonna be uh a big player in the insurance industry,” right? I—I didn’t think that. It’s probably not the way it happened, right?
[01:47] Bryan No, no. I think the joke that everyone says is they got into insurance by accident. And I always add, like, unless your parents were agents, that seems to be the only way that you get like the generational insurance. So, for me, it—it was the same. Although, like, my dad and I are both car guys and when I was a little kid, a Ferrari went by—I think I was like seven or eight—and you know, as—as you should do as a little kid when that thing happens, like, I was “Wow, that’s incredible.” And uh, he just looked at me and he’s like, “Do you know how much it costs to insure a car like that?” I don’t know why he said that, like, he’s not in insurance and like, you can still appreciate the car even if like I’m not buying it. I don’t—you know, I don’t care how much it costs to insure. But I—I do think maybe the seed was planted in that moment and I just didn’t realize it yet. But yeah, I—I got into it by accident. You know, um, great job opportunity to do management consulting and it happened to be an insurance company and—and I’ve never looked back.
[02:44] Bill Yeah, my first exposure to insurance was when I turned 16 years old and uh was put on my parents’ um uh insurance and the looks on their faces when they got the first bill was quite—was quite shocking. And guess what? Now I have a 16-year-old and my insurance uh quickly doubled. Yeah, and so now I’ve uh suffered this nightmare twice.
But you know, funny enough, um—and this is what we see with our jury research—um insurance tends to have a very negative connotation. Whether it’s, you know, whether it’s um health insurance, right? The cost of that. Um, you—we see all kinds of things um um neg—like there’s never really a positive um type of story going on about insurance. And then again, you know, we—we—we hear mock jurors and things like that um not—not a—how—how do you—how do you work in an industry um and kind of keep it together, right? Uh, when—when so many people have a—kind of a negative slant towards it? Because it’s not all negative and we know that there’s this positive side. I think the problem is, I don’t see society—society and the people, i.e., the jurors, the voters, they never see the positive side. Do you see that to be a challenge in your job?
[04:04] Bryan Yeah, it is. I mean, it’s getting worse because of the sort of the tone and the vitriol that we have in this country. I mean, a lot of countries—the US is—is particularly nasty. Um, the thing that I think a lot of people lose sight of is: are there bad claim situations? Are there insurers who are doing the wrong thing at times? Absolutely. Is it intentional? That’s a whole other question. People mess up, people make bad decisions, people have emotional reactions to things and dig in. We end up in bad places. That is not a new thing. Um, what you never hear about is every day there literally—I would imagine—over a million claims that are handled—uh easily.
I mean, I was a chief claims officer at a midsize um small commercial focused carrier, and we did tens of thousands of claims a year and we were, you know, nothing from a scale of the, you know, the major personal lines carriers. So, I’m guessing millions of claims every day. You don’t hear about the vast majority of them. I—I do think it’s like any online survey or customer feedback. Yeah, you only hear about the extremes. Um, I think in the industry we get a lot of the testimonials from people who, you know, like, “This was amaz—” I was just reading some actually um about adjusters, the letters that they’ve gotten from people just, you know, like gushing with thanks. Yeah, that’s not news. No one wants to hear that. Yeah, um, but then you—you hear about the other extreme. Um, but it’s—it’s just damned if you do, damned if you don’t kind of spot where either you’re paying all this money, and you never have a claim and you’re bitter about that—understandably. “Paid all this money for nothing and my rates keep going up,” right?
Um, or you paid all this money, you have a claim, and even if it goes perfectly, you still had something terrible happen to you. Like if anyone has suffered, been, you know, sued, uh had a tree fall through their house, the loss of a loved one, major car accident—I don’t care how well it goes, you still suffered a trauma. So, no matter what—a friend of mine was a CIO, was talking about his—his support desk, and he’s like, “You—everyone hates IT.” He said, “It’s really a goalkeeper job.” He—like, “What does that mean?” It’s a perfect way, I think, to describe insurance. You only hear when the ball goes in the net, right? Do we talk about the saves? No.
[06:23] Bill That’s really incredible because when I work with witnesses um—and I can only use—well, I guess you can use it in Florida, but when I like—when I like, you know, Northern Midwest, right? And I’m—I’m in—I’m in these hockey towns, I tell witnesses, like, “That’s the problem with deposition testimony.” You know, they can fire 55 shots at the net and if two go in, you could lose, right? Right. It’s like how you block shots and uh as you know, the goalie isn’t maybe the most attractive person on the—on the ice and—mask, that big mask—and—and uh they can have a really, really good game and block 98% of the shots and—and two slip by and you can lose and—and—and that’s—and that’s a bad thing, right?
[07:07] Bryan Yeah. Yeah, and the goalie’s rarely the MVP. Very, very rarely.
[07:11] Bill Um, so tell us about P—PLRB. Yes. Who—who are you? What do—what—what do you do? Let’s educate the audience about that.
[07:21] Bryan So the—the hardest part is getting the letters right. And when people ask, “What does it stand for?” I was like, “Don’t worry about that. Let’s just—”
[07:27] Bill Plurb? I’m just gonna start calling it Plurb.
[07:29] Bryan Don’t call it Plurb. That’s—sounds terrible. Yeah, so it—it stands for Property and Liability Resource Bureau. And the thing I always say is, if you hear the word “Bureau,” either you’re in a lot of trouble or something very boring is about to happen. So, call it PLRB and that’s fine and that’s how most people would know us. Um, so we are a nonprofit trade organization of the insurance industry. So, carriers in the US are members. We’ve got about 70% of uh of the the core lines of business covered by our members um or written by our members, I should say. So, you know, really good representation across the market. And we are focused really on helping support the delivery of coverage. So, what—what does that mean? Yeah, um, it’s primarily at the coalface, at claims. So, we’re—we’re helping adjusters and claims professionals in the delivery of that promise. I say “coverage” more broadly because we have underwriters who turn to us, we have, you know, wordings and—and product people, actuaries, etc., who come to us as well. So, it’s not just claims, but it’s ultimately about that delivery of claims, which is—which is coverage.
Um, we have legal supports. We have attorneys who will help, you know, help you interpret what’s going on with, you know, “The endorsement and the policy wording seem to be at odds, here’s a claim situation, I don’t understand, what do we do?” You can send that all to us. We’ve got a database of uh literally tens of thousands of pieces of legal analysis we’ve done. So, you can search, like, “Who has dealt with matching in Illinois on, you know, siding on a house?” Like, obviously I’m not the first person to face that. Is there an answer on how I navigate this? So, we’ve got a lot of legal resources. We have weather analytics and mapping. We’ve got building codes from around the country um in a really cool interactive database. We’re only one of two places that you can turn to for that other than, like, walking into a town hall um which is not as convenient as just coming to our site.
And um and then our—what a lot of people know us for is our education resources. So, we run a number of in-person events and we’ve got over a thousand modules on our website and we help adjusters get their license credits. So you—we do a lot of CE credit granting um big conferences, like, over 100 classes. We got about 3,500 people who come through and um they burned through a lot of CE requirements like in—in a few short days. So, it’s um it’s great. And it’s—it’s when I was looking at the job, the thing I kept hearing from people I would ask, like, “You know, what do you think of PLRB? Tell me as I’m considering going there.” And uh I—I talked to a number of chief claims officers who were like, “I wouldn’t be where I am if not for PLRB helping me when I was new in the role or, you know, as I was going along handling claims.” And that’s really beautiful kind of purpose. Um, so that’s like—that’s at the heart of our mission is—is supporting those members to make sure that they can be—we say we’re the insurance experts’ resource. We’re not the experts—you are. We’re just here to help you in being that expert.
[10:22] Bill Plrb.org is the website. Go—go—go there for—for more information. Can you give—I’d love your perspective on the state of the insurance industry today. Um, I’m—I’m sure—I’m sure there’s plenty of headaches and worries and concerns. I—I—and we—I want to hear about those. Yeah. At the same time, I want to hear about maybe innovation, new ideas. You have things like AI growing in all industries, and maybe some exciting things uh as well that maybe our audience could uh be educated on and—and benefit from.
[10:54] Bryan Yeah, um, it is an interesting—which is maybe a euphemism for tough—time for the industry. Um, you know, I think we’re—we’re sort of uh pictured as, like, money-grubbing and we’re making all this money and we’re raising rates and people think that means that we’re making a ton of money. And actually, it’s kind of the opposite. So, this is a really unique moment. Um, we’ve always faced tough times. You know, there’s spikes in weather activity, there’s spikes in inflation, social inflation, litigation. What—these things always happen, but they’re all happening at once. And they have been happening at once for a few years now and they’re not stopping.
So, we would get these blips, rates go up, the—the holes of uh losses are filled and we’re profitable again and the industry continues. And then there’s another blip. This is the insurance cycle. Things are a bit different now. And I don’t think that this is an aberration. I think this is a—I hate the term “new normal”—but I think that’s sort of what it is. Is um much more frequent and severe activity. Whether it’s weather activity, whether there’s lawsuit activity. I mean, you know, this is not news that when there’s a class action—a class action lawsuit—and there’s a settlement or a judgment, that becomes a new floor. You know, we—we hear a number and, “Wow,” and, “That’ll never happen again.” No, no, no. That is now the minimum. And the next case like it, which is already brewing because there was so much money in that first case—that is the starting point, not the finish. So, we just ratchet up and that’s not slowing down.
Um, if you look at the weather data and you look at the severity data, it used to be years between major events. It’s months now. Um, I just had a—a resilience expert from Northeastern University who studies all this. They’ve looked at a 100 years of data, 1920 to 2020, and it literally—it was years between major events and now it’s months. And so that doesn’t give the industry the chance to recover, which means profitability is severely impacted, which means rates go up, which means people can’t afford their coverage—yet we also can’t afford it to—we can’t afford to sell it even at that higher price.
And so I’m—my concern today is, using the tools we’ve always had—the coverage we’ve been selling since literally the 1950s is when most lines of business were defined—um and the, like, raise rates and pull out of tough areas, that kind of reaction, and—and try to cut costs. Um, those tools don’t work anymore. Like, we have reached what I think is—is the limit of their effectiveness. Short term, they’re fine tourniquets, but you can’t pull out of every geography and every line of business because none of them work. It—like, ultimately that doesn’t—that’s not viable. So, I think this is an interesting moment where you mentioned innovation. I think it’s time where um sort of by necessity, we have to start doing things differently. And um I’m—I’m really tired of the fallback on efficiency and—like, I’m an ex-management consultant, I love efficiency. Yeah, but that’s not the—it’s not our expense ratio, it’s the loss ratio. We have to start addressing the actual quality of the risk that we write, the coverage that we offer for them, and the intelligence we bring to the pricing and response to them. Um, so it’s—I think it’s a major turning point for the industry. I hope.
[14:08] Bill How—how has um specific to litigation um tell us about your experience uh with litigation and then and then also um you know the—the plaintiffs’ bar has put a ton of time, a ton of energy, a ton of money into really attacking everything uh insurance? In fact, um most of the uh whether it’s a billboard or a commercial or a TikTok, these—the one of the first things out of their mouth is, you know, “Hey, the insurance company’s out there to screw you.” Yeah, and that’s, you know, that’s fueled a lot of—of—of litigation. What’s been your experience with—with—with litigation and and what are the kind of the key issues now with—?
[14:46] Bryan Yeah, um, so you know, I mentioned I was a chief claims officer. So, I spent 20 years on the carrier side and my—my last role was running claims for a carrier. Um, because we were a specialist commercial lines carrier, we sold a lot of E&O, D&O, you know, so professional liability, GL—kind of everything we did was around a lawsuit. Yeah, um, so I was around litigation quite a bit. And um you know, we had a fantastic panel of law firms that we got to work with—defense and coverage—um and really relied on them. And my team was mostly made up of of attorneys in-house. We had, you know, plenty of non-attorneys too, but the majority of folks did uh did have their JD. Um, so a lot of legal expertise in and outside of the team.
Um, we—I learned a few things. You know, we were um I think we were on the right side of the—the—the kind of values question of “Do you cover it, do you not cover it?” I mean, there’s a, you know, a rhyming saying, “If it’s gray, we pay.” Um, I think it’s overused. We genuinely lived that. And in specialty lines, a lot of things are gray. So, our take, going back to the company’s founding in—in the UK years ago, was um it’s much less expensive to pay the right amount quickly than it is to uh to nickel and dime and to argue over things and try to cut corners. You’re going to agitate someone. And especially in today’s world, when you agitate someone, they become, you know, a serious adversary that will push and—and like you said, they only need one or two things to win at the end of the day. And there’s always something somewhere on either side. So, it—it’s not all that hard.
So, we—we recognized like, you know, fairness really does matter—matter in how you treat the other side, your own people, certainly your legal partners who are working hand-in-hand with you. And we did try to view them as partners. And that really—one of the things that came down to was on the price side. Um, we were too small to get their attention on volume. You know, I—I can’t promise you what, you know, a carrier 10 times our size is going to promise in volume. But I can pay you a reasonable and fair hourly rate. And uh you know, and adjust bills fairly. When you push back, take that push back and really consider it. And I had lots of competitors who didn’t work that way. And the firms we worked with are like, “Listen, do we get more business from Carrier X? A little bit. But we can eat based on what you pay us.” Yeah, and with them we’re in the hole or we have to farm it out to more junior folks or, you know, we—we can’t take the time on it because we’re already so underwater on it.
Um, and you can argue like, “Are they lying? Is that a negotiation tactic? Whatever.” I don’t think telling me that we’re paying them enough for them to have profit is a great negotiation tactic, so I would tend to believe them. But I can tell you it mattered. When we sent them files, they responded. When we needed expertise and we needed to talk, they talked. And they gave us their best. And we weren’t getting nickel and dimed on the bills either. It was—it was a relationship and a partnership. And I think that if you recognize like trimming your LAE or your defense cost a little bit um—that’s great, you’ll save a few cents. Yeah, if you bring a million-dollar settlement to a $100,000 settlement, we—like, I—I’ll take that all day and pay five points more on the defense costs. Yeah, that’s how we view it.
[18:07] Bill Yeah, yeah, yeah, totally. So, we—I mean, I’ve known—I mean, 23 years of doing jury consulting and civil litigation um you know, I deal with insurance companies every week. They’re many of our clients. You know, we’ve seen a shift to from the um—you know—I give speeches on this topic—you have that kind of like the traditional insurance defense model, which I call “Save money, save money, save money, save money, save money, save money. Oh, this case is not settling. Spend money, spend money, spend money, spend money.” Yeah, which can lead to a lot higher settlement value.
[18:40] Bryan Yeah, it doesn’t average out when it’s exponential growth.
[18:43] Bill Yeah, then, you know, nuclear verdicts, nuclear settlements, right? And so, then we’ve seen this shift uh with our clients—and these are the people we try to align with—uh the clients that say, “You know what? We could be far more proactive early in the case. We can do things like research early. And yeah, we may spend more money early, but our savings on the back end is substantial because we’re—we’re not painting ourselves into a corner to which we’re going to have to write a big check to get out of that.” Can you talk a little bit about how um you know early intervention on many of these cases and litigation uh can ultimately pay off, both strategic and—and economically? Yeah, for everybody.
[19:23] Bryan Well, I mean, I think if you go back to when you brought up the—the plaintiffs’ bar and how it’s spending money to paint a picture. And they are—I mean, the advertising dollars and the unified message is is massive. Um, you—the largest firm spends more than most P&C carriers do um which I—I love pointing that out to people as much as I can because it’s not the message they go around telling you at all. Um, and you know, one of the founding partners did a tour of their home for local media and there’s over a hundred rooms in that house. Like, that’s—it’s just—it’s just him and his wife. Yeah, they’re not—they’re not housing, you know, a population in there.
Uh, so, you know, you look at that and—and you can focus on that piece of it. And I think a lot of people do, just like they want people focusing on aspects of us. We focus on that, we get angry and reactive, which I think they want. Instead, what I would rather people focus on is how strategic and professional their business acumen is um from the fraudsters to the legitimate. Like, it is really smart business. And it burns me. It’s so coordinated across quote-unquote competing firms, right? It’s coordinated, it’s um really strategic, it’s well-thought-out. It’s a very well-oiled machine. And I actually see this in cyber criminals as well. The moment you’re onto the game, they’ve already moved on. Actually, not the moment—long since. Yeah.
Um, you know, I remember one of the the things people were doing with cyberattacks was, you know, you do your night backups, and so when they infiltrate and they send you the ransom note, we’re just going to back up from yesterday or two days ago and you’re gone. No, they’ve been actually sitting in your system for years—we found like two, three years. And so whatever backup you want to use, that back door is there. They’re already there and they’ve got you. That was a brilliant move on the part of cyber folks—cyber, you know, perpetrators. Um, the—the plaintiffs’ bar is just as brilliant with a lot of these moves.
And so, we’re playing this game of like, “Nope, wait. We’re going to 140 an hour.” “Well, you know, our—our going rate is three.” “No, we—we agree 140 and I want paralegals doing this.” And like, it’s fine. It should all be rational and fair. But are you squeezing in the right place? Are you really sitting down? Are you partnering? Internally, is the person who’s managing that claim with defense counsel actually putting their brain into it? They’re saying, “Well, the defense counsel said X.” Maybe—what if you brought your knowledge and understanding to that conversation and engaged with defense counsel? Could they come to a better understanding of the risks? You’re leaving them to their devices with, you know, half the picture, the legal picture, but half the picture you need to bring the carrier side of it. You need to participate in that, too. We need to get more strategic. We need more data and more analytics guiding some of these decisions. And we need to be more engaged and stop worrying about, “Well, but that takes 13 more minutes.” So, you know, it’s—it’s—it’s the wrong—the—the LAE is the loss adjusting expense—is the wrong place for us to focus our efforts.
We used to look at a ratio of that LAE to indemnity, and we also did it with defense spend. Not to say there’s a right or wrong ratio—and it’s going to depend on a number of different factors, market, the lines, etc.—but at least to say like, “This claim’s way out of whack from what we’d normally see. Is that intentional? Are we doing something wrong?” It’s—it wasn’t—it wasn’t to flip things around, it was just to help bring attention. Like, “Should we be—are we missing something here?” Um, there might be an issue we need to hone in on. And—and I think that awareness and taking a more business acumen, strategic mindset um approach pays off.
[22:59] Bill Yeah, yeah. So um many of defense counsel—listen to this podcast um, I speak all over the country and I talk to them and many of them come on the podcast, you and many have um, you know in all honesty you know many of them had said that you know some insurance companies pay terrible rates, yeah, but they promise volume, right? Yeah. And then other insurance company um, you know they—the defense attorney sends in their bill and they’re chopping their bill. Yeah. And then defense attorney says, “Hey, you know I got this bad witness, I want to hire Kanasky,” and they’re like, “No, no, no, prep them yourself.” Okay, fine. “Well, I need two days to prep them.” “No, you gotta—I’ll pay for a half a day of prep.”
And so, a lot of defense attorneys I think feel handcuffed by some insurance companies yeah um on that kind of, you know, protecting you know cost and expenditure up front. And then when they’re asking for weaponry, you know, going up against you know you know one of these particularly a prominent plaintiffs, you could see how um they get a little bent shape, right? Um, is—is that something that you’ve—you’ve come across and have you seen changes in the industry maybe addressing uh that issue?
Because another final kind of complaint—yeah, which this is a big one, this came up on a podcast recently uh with Tad Eckenroad, who had brought up you know him going to clients saying, “Listen, like I need to get this associate grown, right? They need to experience, I need to work them into these cases.” And then you have some insurance companies like, “No, no, no, we want—we only want senior people working on this.” He’s like, “Well, how do you expect our attorneys to grow and become better and professionally develop?” And so there seems to be this kind of budding of heads um with the two philosophies. What are your thoughts on all that?
[24:57] Bryan Yeah, I mean, so have I seen it? Yes. Have I been a part of it? Less so. I’m sure there are claims that happen in my—or that you know someone listening like, “Dude, I worked one of those claims and your person was doing all these bad things.” Yeah, I wasn’t aware of it if it was that. And that wasn’t our approach. But I think uh unfortunately I think these are deep-seated kind of cultural uh regular practice, like SOP, standard operating protocol kind of things. Um, and I think the problem with that is the carriers who do it will always do it and unfortunately hubris gets in the way of them changing. So, am I seeing a change? No. I’m seeing the ones who do it right continue to do it right. You know, unless their chief claims officer leaves and a new person comes in who came from one of the others like, “This is terrible, we’re going to fix everything.”
One—one piece of advice that has struck me lately is you—we’re talking about the carriers getting better data and understanding the outcomes, why can’t the attorneys do that too? So, if you’re a defense counsel and you’re—you’re working for carriers who are you know restrictive and and guiding you, you think, in the wrong direction to the—the wrong result, that carrier only knows its own business. So, it might think that million-dollar judgment or settlement was a good outcome, where you know that could have been a much more appropriate number. But they don’t know that because all they see is all their stuff that they’re nickel and diming and and sort of managing to—to a worse outcome. So, they think that was better.
It—it’s—I don’t know if I’ve ever told you this before—it’s like a bank robbery analogy. I say it’s like, well, if you robbed 10 banks last year and six this year, you’re better? For sure. You’re not supposed to rob banks, yeah, right? So, like the answer isn’t 40% fewer banks got robbed, it’s none. Yeah. So if you also work with carriers where it’s a partnership and there’s a recognition that look, we’re going to need to put in more here, but here’s the upside to it, and you have the evidence from the cases you’ve worked that there’s an upside, why aren’t you compiling that data and try to make that case? And lastly, maybe you don’t need to work with those carriers. So, if you do more work at a money-losing rate, you lose more money, yeah, right? This isn’t the dot-com model of the ’90s. Like selling more at a loss does not suddenly make you profitable. And your work is—it’s human intelligence and hours-based. So, there’s no economies—I mean a little bit, but not really—you’re not facing economies of scale where you can now put out 15 widgets for the same hour. It doesn’t work that way. So, you know your hour is your hour, you can only put that towards one thing. Um, so if it’s not a money-winning—if it’s not a viable business proposition to keep working that way—then maybe that—that needs to be your answer.
[27:43] Bill Yeah, I—I was talking to a defense attorney who—who shall go unnamed, yeah, but you know I have a lot of very private discussions with people because they like to come to me to vent for whatever reason. He said, “Listen,” he goes, “when I’m working on a file and the—the billable rate on that file is capped at you know 150 or whatever it is, right? And then I have a different file for a different carrier and they’re paying me 225,” he goes, “I gotta be honest, Bill, I’m working harder on the 225 file than I am the 150 file.” Whether you intend—or what did they expect me to do? Yeah.
[28:18] Bryan Yeah, because “I’ll give you another 150-an-hour file later.” Like, “Oh, well thank you.”
[28:24] Bill Yeah, it’s—it’s a—it’s a tricky you know how the math works but just how the human psychology is of it, right?
[28:32] Bryan Yeah and—and I think it’s—I don’t think anyone’s—or maybe some people—but the majority of people are not doing—making that judgment maliciously or intentionally. It’s—I mean, we do that with our own people with—with everyone. That’s human nature. Subconsciously at least, you’re going to—to tend towards a thing that’s better for you and then we wonder why we get the outcomes that we do. So yeah, I mean the problem—
[28:54] Bill Get what you—you get what you pay for a type of—
[28:58] Bryan 100%. Um, I do want to talk just briefly in your point about the junior person. Yeah, I’ve seen firsthand where um first of all, seniority and tenure are not skills. They may—they may align, but not necessarily so. In—in the midst of a cyber claim, uh a law firm that we had worked with representing us on—on claims, uh they got hacked. And my boss, the—the group head of claims, insisted that you know we had cyber insurance and they appointed counsel, insisted that the partner handle everything because there was an associate originally and my boss was very upset about that. The partner was terrible. Was he—he was the face of the firm, but he really did not know the intricacies of modern cyber claims. The—the associate we were working with was outstanding, just absolutely outstanding.
Luckily, I had my own cyber team and so I asked like, “Can we coordinate this on behalf of the group?” Because we—the US team—was sort of the cyber experts. And—and he allowed that because he had respect for us. And so, we just worked around the partner. But we needed to have the partner’s name on things for my boss to be satisfied. But we knew better. I mean you could see instantly it was like, “This guy doesn’t know what he’s saying.” But for my boss it was like, “I want the gravitas of the partner.” Yeah, it’s the wrong thing. And it’s—I mean you wouldn’t feel any different in surgery. If you’re having you know LASIK or—I—I had back surgery, very minor back surgery uh microdiscectomy—the last thing I needed was to have my whole back opened up because I’d have scar tissue and all kinds of other stuff. If I went to the absolute best neurosurgeon in the world, they’re going to open me up because that’s what they do. If I go to the guy who just does this one little thing and does it perfectly, that’s great. It may not be as impressive to you that I didn’t go to the dean of you know whatever like Harvard Neurosurgery or whatever, but that’s not the right answer for that case. So yes, it doesn’t help with the learning and the growth, but even if you don’t care about that, shouldn’t you care about the quality and the skill set and the acumen, which isn’t necessarily aligned to the person who’s been there the longest?
[31:07] Bill Yeah, no, that’s—that’s totally true but it might not be. Yeah. Well, I got a couple more questions for you then I—I—I know you’re—you’re—you’re running out of town and that’s—and that’s good for you. Um, here—here’s a little bit of a curve puff for you, okay? Um, this—I’ve heard this idea been kicked around for well over a decade and it’s been popping up on LinkedIn recently and I’ve—I’ve—I’ve seen a few advertisements for kind of CLEs or CEs on this topic and it never seems to get wheels for whatever reason. Is the whole flat fee billing concept for litigation? And uh essentially having yeah would it be beneficial to everybody? In other words, many of people have said on both sides of this equation uh from carriers and from defense counsel, it’s a you know this hourly billing model is—is kind of the fundamental part the problem, right? And if law firms approached carriers with more of a flat fee model—I know some have tried this and some have done it—it’s just not really uh very popular. Does that—does that—does that help the insurance industry? Does it—does it hurt? Where have you ever tried that or been associated with that?
[32:19] Bryan I mean, not on—not on the litigation side or the defense side. Um, I’ve seen it in other places and and in other spaces too outside of insurance. Um, I think there’s situations where it would work out really well and I think there’s some where it would work out really poorly. I think the problem is on the extremes it doesn’t make sense. Um, you need some like severity or complexity adjustment factor in there, but really simple stuff doesn’t make any sense because it’s too simple. The really complex stuff doesn’t make sense because it’s too complex. The lawyers aren’t going to have what they need to do it right. Um, so then I mean it’s almost the problem with insurance. If—if the the best and the best goes away, all you’re left with is the wrong stuff for the price that’s set.
So, um I think that model, it’s an interesting idea. It would need I think a lot of development. I don’t know enough about it to know you know what’s being presented and what the thoughts are around it. I know it’s a problem in the TPA and the the independent adjuster space where it’s like, “You—135 bucks to work this claim. You know, go out, take your pictures, give us a report.” I don’t think that’s necessarily led to the best quality and responsiveness because everyone’s effectively like—you’re incented to just take on as much as more than humanly possible because that’s the only way you’re going to survive, yeah. Um, and so you get unresponsiveness, you get half—you know, half-ass kind of work at times. And um but then there’s other stuff where like, “Well, that was way overpayment for what it was and they did a lovely job of it.” Yeah, but like that should have been 40 bucks and 135. Uh, so yeah, I don’t—I don’t know. It’s a really—it’s an interesting idea. I’d love to see more on it. I think it’s the kind of thing where like pilot it, let’s see what happens.
[34:04] Bill Yeah, it hasn’t caught on yet. Everybody’s talked about it you know as a way to—
[34:08] Bryan People don’t change. Yeah, I mean I—I think there are cases where it would be really helpful or maybe with some firms and some carriers, but I—I think there’s also some downside to it. And the question is like that doesn’t mean it’s a no, it’s just you got to figure out how to mitigate the—those—those opposing forces.
[34:26] Bill Yeah, it’s interesting. Yeah, very—very well, we’ll see where it goes. People keep talking about it. Okay, last question. I’m going to get you out of here, okay? And um I cut and paste this right from a LinkedIn post this morning, okay, from a plaintiff attorney. Are you ready? Here we go. Quote: “The job of insurance companies is to manage risk. When they say lawsuits are driving up premiums, they’re admitting they did a bad job of understanding their risks. What other industry gets a bailout when they fail at their jobs? Investment banks in the 2008 financial crisis, a hedge fund, Long-Term Capital Management, all got bailed out in the ’90s when their trades threatened to destabilize the banking system. It’s time to let market forces work and let companies who are bad at their jobs fail.” What is your response to that?
[35:23] Bryan Well, insurance companies have not gotten bailed out. AIG did, but it wasn’t the insurance part of the business; it was the investment side that destroyed everything. Uh, so technically did AIG get bailed out? Yes. Technically was it the insurance business? No. If they’d split the company apart then the insurance side could have been viable. Um, the Hartfords, the same thing. They got TARP funds by buying a bank and it was their investment side that was the problem, not their insurance side. So, at its core, no insurer uh in that sense has gotten bailout. There are receiverships and insolvencies, but the bailout actually comes from your peers, not from the government. That’s what the uh the guarantee funds are for. So, the—the—this is you know a typical misrepresentation of facts. Um, so that’s a problem. Uh, insurance company’s jobs is not to manage risk. That is—that is not—that is not listed anywhere as the point of insurance. That’s not what the regulations are. Um, insurance company job is to assume risk, to buy risk, yeah, and to transfer it. That’s what we do. So that doesn’t mean there isn’t uh like loss engineering that goes on and you know we don’t try to help people make risks smaller, but uh a risk management consultant—see, that’s their job. So, I don’t know what—what this person’s talking about, but I know that everyone who read it was probably like, “Yeah, yeah, yeah, 100%.”
[36:51] Bill And that’s the issue. And you see that with politics, and you see that with the reputation with the insurance company. Now a final point on this uh and then I’ll get you out of here is um you—you’ll see like on LinkedIn especially and now it’s going to actually it’s going to TikTok, it’s going to X, yeah, is um you know a—a plaintiff firm may post something, “You know, hey, we got this big verdict,” right? And they like to advertise that, “You know, hey, it is what it is,” that’s fine. But here’s what I’m reading so much, which I want to get your thoughts on, is they make it a point to say—they say like, “This was a no-offer case by the insurance company.” Like that’s how bad these—like they—they offered us nothing, or they offered us something terribly insulting. “So that forced us to go get this big verdict. If they would have been smarter, they would have given us something respectable up front.” And that’s kind of like the theme I’m seeing from the Morgan & Morgans and others that tend to advertise this stuff. I don’t know how often that happens, but some of the stuff that you read, like if you read the case synopsis, then you see the verdict and then you’re thinking like, “No offer? Like—like how does that happen?” Do you think that happens a lot, or are they full of it? But I—I don’t—they make a point of advertising that as one. What your thoughts on that?
[38:10] Bryan It’s—to me it’s the same thing as these cases that are like you know that there was an estimate by the adjuster and then the insurance company cut it by X percent. Um, they’re leaving out usually the word “public adjuster,” but it could be an IA who the carrier hired. I don’t know. Um, but I think that’s just it. Do you hear? I just said, “I don’t know.” That’s what’s missing here, yeah, is to make a statement that the carrier cut the—the estimate by 90%. Who said the estimate was valid? Yeah. I didn’t say the people aren’t going through hell. I didn’t say the loss isn’t severe. I just said I don’t know that the estimate was valid. No. You know, I’ve watched like all of these local news channels and Dr. Phil sitting down with you know for people—no, you—your—this segment was just paid for by a plaintiff’s attorney and a public adjuster and that’s what this whole piece is.
Um, it’s people aren’t actually—and it’s the same thing in politics and everything. We are sheep that very easily get triggered and latch on to conspiracy theories because it’s—it gets you fired up and it sells so well and people just get roped into it. And in the industry, we’re not really doing anything to counter that. Um, and to be fair I think when we’ve tried to, it’s been these like warm fuzzy commercials like, “We care.” And we’re like—you’re not listening and you’re not playing the game. Like you’re—you’re painting a picture that all these people who are fired up, “You don’t care, you’re not there for me,” you know, it’s the opposite. “And look what these guys said.” So, we’re—we’re not—we’re not actually addressing the problem as it’s coming up.
Um, I—I’m sure a bunch of your listeners will have seen Loss Ratio on LinkedIn as well. Curtis Goldsboro, yeah, he—he talks about this stuff. I had him on my show and he’s like, “We need to—we need to actually figure out how to—how to do this, how to educate people on the other side.” Um, and he’s doing his best, you know, on his own, and—and he’s great. Like he—takes apart like the Dr. Phil episode and some of the other stuff. Um, but it’s so—no offer? It’s possible. And that doesn’t mean it was the wrong answer. If there’s no coverage, why would there be an offer?
Yeah, it doesn’t mean the person didn’t suffer. It’s like you know we—like in—in E&O, companies that we insured got sued all the time and they did nothing wrong and it wasn’t for things that were covered and they’re like, “But we didn’t do anything wrong! What do you mean there’s no coverage?” Like, has nothing to do with whether you did anything wrong, and that doesn’t stop people from being able to sue you, unfortunately. Yeah. So that’s not what insurance is for. Like there is a contract that lists what it’s supposed to respond for and how it responds, and that doesn’t mean people understand it. But this you know attorney sitting there claiming something else is the facts doesn’t suddenly make them true.
And I still feel bad for the people. Instead of wasting all this money on that, why don’t we work on figuring out—like there’s still a coverage gap, then there’s still an affordability problem. That doesn’t mean that their existing policy should have paid in that—that only makes the affordability problem worse. Yeah, we have to figure out how do we actually address that. There’s—there’s one carrier that set up a—a not-for-profit that um it’s—the carrier is called Branch and they’re a reciprocal. And they’ve set up this—like for their profit stream, they’re a B-corp. Their profit stream goes in to fund this nonprofit, and individuals can apply for a grant to pay for their premium if they can’t afford it. Doesn’t even have to be Branch customers. Like they paid for the coverage of—of their competitors. And if you have a loss that’s not covered or didn’t fully cover you, you can apply for a grant there as well to offset some of that. And it’s because the one of the two founders uh Steve Lekas—they’re in one of my books—um he’s so passionate about the purpose of insurance and being a force for good that he’s is like, “Even if it’s not from us, we need to find a way to make people whole when things go wrong. We need to find a way to get more people insured, not fewer, because that risk pool is what creates the safety in the first place.” So, they’ve structured this nonprofit to try to—I mean obviously like they’re small, they’re a startup, it’s not you know it’s not a huge effort—but they’re doing what they can. Like why aren’t we looking at more solutions like that?
[42:21] Bill Yeah, interesting. Thank you so much for being on the show, Bryan. So, we got plrb.org and I also see futureofinsurance.com behind you. Is that different?
[42:31] Bryan Yeah, future-of-insurance.com. That’s where my books and the the podcast and all that kind of stuff are at. And that’s people can engage there pretty easily and find me on LinkedIn too.
[42:39] Bill Well I listen—I uh I love a good podcast, so I’ll be sure to uh uh tune into to that and uh great. Well, listen, have a great trip. I know you have a long flight ahead of you. Thank you so much for being on the show. For our audience members, thank you so much for participating in another edition of the Litigation Psychology Podcast brought to you by Courtroom Sciences. We will see you next time.
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