texas-wide underwriting conference, april 2011 underwriters & depositions: don’t be made to...
TRANSCRIPT
Texas-Wide Underwriting Conference, April 2011
UNDERWRITERS & DEPOSITIONS:
Don’t be made to look the “Fool”
Daniel Perkins, JD, MBA, FALU
Attorney and Counselor at Law
Two-Part Discussion
Theory of underwriting as it applies to the legal foundation for providing testimony at time of deposition or trial
Nuts-and-bolts considerations to avoid being made the “Fool” at time of deposition or trial
2
Main Themes on U/W TheoryIs the methodology used one that is
scientifically proven to be accurate with a high degree of accuracy?
Does the underwriter understand the theory behind the methodology, and can the underwriter apply the methodology to factual and hypothetical situations?
TRAP: Tested, Rate of error, Acceptance, Peer review
3
T: Methodology Tested?
Yes, the numerical rating system has been used for approximately 90 years and has been extensively validated in the scientific and actuarial communities.
4
R: Rate Of Error?For the methodology, what is the
known or potential rate of error?
Are the latest improvements in mortality and morbidity reflected in the rating criteria used?
Does the underwriter correctly apply the numerical rating system?
5
A: Acceptance of Methodology?The numerical rating system has been
extensively validated in the scientific and actuarial communities.
Courts have accepted the validity of the risk classification system but require that it be based on sound actuarial principles or actual and reasonably anticipated experience.
6
P: Peer Review Of Methodology?Research papers
Mortality studies
Medical abstracts
Underwriting manuals
7
A Couple Of Useful Definitions by dpActual and Reasonably Anticipated
Experience: Knowledge gained in accordance with sound thinking as to existing facts and those facts expected in the future (ARAE)
Sound Actuarial Principles: Assumptions of future anticipated experience, based on valid reasoning (SAP)
8
Do’s and do not’s : PhasesFile
Manual
Preparation
Deposition
Experts
9
Do’s and do not’s : FileMeet or exceed all required govt.
regulations for the processing of insurance applications
Follow all company procedures and guidelines, and provide analysis if not done
Underwriting notes should be detailed enough to allow a third-party to read and understand them years into the future
The appraisal of the risk should be based on SAP and/or ARAE, and show a logical progression of analysis 10
Do’s and do not’s : FileHave conformity in abbreviations
No funny comments in file, internal correspondence, external correspondence, etc.
For MD referrals, provide tentative assessment by underwriter
Consistently do the activities noted on these two slides, and do them correctly (reasonably) 11
Do’s and do not’s : ManualNeed correct version of underwriting
manual, both ratings section and explanatory material
Take complete copy of manual to deposition: do not forget any linked material—ex. Definitions
Manuals typically call themselves “guides” but they are actually the “rules”
12
Do’s and do not’s : PreparationReinsurance involvement needed?
Review treaty?
Do not volunteer to testify
If chosen, prepare as thoroughly as possible
Work with your attorney to identify all relevant issues and points for discussion (earlier rather than later)
Organize underwriting file by receipt/analysis 13
Do’s and do not’s : PreparationCreate identifiable underwriting files for
each period of underwriting as well as a claims file
Review all relevant documents in detail but do not try to memorize all information
Review the insurance policy that is the subject of the lawsuit to develop familiarity with contents
Know and be able to discuss all underwriting related sections of the insurance policy
14
Do’s and do not’s : PreparationKnow, in general, the department
functions or activities that relate to underwriting, ex. policy assembly
Be prepared to discuss the theory of underwriting in general, as well as the specific theory (and facts) for the policy the subject of the lawsuit
Prepare notes for deposition in detail
15
Do’s and do not’s : DepositionMost lawsuits won or lost on basis of
depositions and not at trial
What do you say if asked “What is underwriting?” Can you explain it in layman’s terms?
Know what you know and know what you do not know
Depositions can last for hours, eat before you get started
16
Do’s and do not’s : DepositionIf necessary, bring snack food to consume
during breaks
Control the clock: If you need a break, ask for it and do not wait for attorney to suggest one
At time of deposition, it is OK to be nervous if it helps get your adrenaline pumping
Remember, you as the underwriter know more about underwriting than the attorneys
17
Do’s and do not’s : DepositionHowever, attorneys are trained and
experienced in learning new fields of knowledge
The easiest question to ask is often the hardest to answer: “Why?”
Listen closely to the question so you know what is being asked (and hopefully why)
Only answer the question asked and be succinct, except when (?)
18
Do’s and do not’s : DepositionIf you do not remember the entire
question, ask the attorney to repeat it
If you do not understand the entire question, ask the attorney to re-phrase it
Be careful about opining on subjects outside the scope of your knowledge as an underwriter
19
Do’s and do not’s : Experts Consider retaining a consultant or
expert witness early in the litigation
Provide information to consultant or expert as soon as possible
Provide consultant or expert with complete information
Make the consultant or expert’s job easier by doing everything previously discussed 20
Contact Information
Danny Perkins Law Office of J. Daniel Perkins 105 S. Tennessee Street, Suite 101 McKinney, Texas 75069 Ph: 972-529-1111 Fx: 972-542-9149 Em: [email protected] Website: www.jdperkinsattorney.com
Re-locating as of April 1, 2011 with new address and fax number
21