The insurance industry is filled with myths and urban legends that just won’t seem to go away. Red vehicles have higher insurance rates; You are more likely to have an accident close to home; It’s illegal to drive barefoot; Getting a parking ticket means your insurance rates will go up; and auto insurance follows the driver (see HERE for an interesting MWL article on this one). These are all false, of course, but there is one legend that remains very much true, and all subrogation and claims professionals can use it to their advantage.
After forty years of handling subrogation claims around the globe, MWL can confirm that insurance claims settle more frequently and more favorably at the end of the year than any other specific time during the year. There is simply something magical about the end of the year and the upcoming holidays that adds motivation for everyone involved to find a resolution. The reasons for this phenomenon are understandable if you take the time to think about it. Subrogation plaintiffs and defendants both have interesting motivations for resolving disputes before the beginning of the new year. Many subrogation professionals work on incentives which reward year-end subrogation totals. From the tax perspective of insurance companies (and even self-insured corporations), money received in the current year is preferable to waiting until the new year because taxes are usually only going up and all eyes are on performance numbers and stock prices for the current year. This motivation is true for both subrogation plaintiffs and subrogation counsel (although the latter’s motivation for settlement really shouldn’t enter into the picture). There is a simple yet understated benefit to all parties in a disputed claim to pay or receive the settlement money and fees before the next tax year.
There is also an element of “good cheer” which necessarily accompanies the holiday gauntlet of Thanksgiving, Christmas, and New Year. As subrogation professionals, we should be putting in overtime during the last six weeks of the year, rather than taking time off. At MWL, we understand that this is crunch time for a large percentage of subrogation claims that we are handling—both in litigation and still in the pre-suit phase.
For the defendants, many carriers strive to clean out old claims that are filling up their books. Liability claims adjusters’ influx of new files never stops; so, they really like the idea behind cleaning out the chaff and starting the new year with fresh claims. The type of subrogation cases that are ripe for year-end settlements depend on many factors, but newer, lower value cases are prime candidates. Smaller claims are perfect targets for holiday resolutions because the costs and legal fees needed to defend them are disproportionately larger than for the larger cases. Not to mention that once the calendar rolls over, the American business sector embraces New Year’s resolutions, renewed energy in the marketplace, and a commitment to drive a harder bargain on pending claims.
Older, larger subrogation claims are also good candidates for potential year end settlements because resolving them means improving the year-end numbers. Mediations and pre-trial settlement conferences proliferate during the last few months of the year for this reason. Mediators and Judges are swamped in October through December because liability adjusters and subrogation counsel don’t want to drag these large claim anchors into the new year.
Trial lawyers warn their clients not to fall victim to low-dollar offers around the holidays. Their clients know that settling cheap can mean the ability to buy that new video game console for their children or taking that holiday trip with the family. Pun intended, but around Christmas time subrogation litigants are just in the mood to get things wrapped up.
Settling subrogation claims around the holidays requires a strategy. At MWL we prepare settlement demands and packages in advance and spend a lot more of our attorney and paralegal time on the phone talking settlement with the other side. We understand that for our subrogation clients, the time value of money means that $50,000 is worth more on December 15 than it is the following June. This is especially true for our insurance company and subrogation vendor clients.
Another insurance urban legend which rings true and is related to the settlement opportunities presented by the holidays is the notion that year end also brings an increase in property insurance claims. Recent statistics from the Insurance Information Institute reveal that there is truth in the experience of the Griswolds in John Hughes’ 1989 Christmas comedy, “National Lampoon’s Christmas Vacation.” Things happen and the holidays for many are replete with property damage from storms, freezing temperatures, fires, accidents during holiday travel, etc. Homeowners’ insurance claims skyrocket during the same period of time when claims can be settled more easily. This phenomenon might also explain why cases can be settled more easily during the holidays. Many subrogation professionals don two hats—claims adjuster and subrogation professional. They often don’t have enough time to do both, so resolving some subrogation claims can make room for the influx of holiday claims which arrive every holiday season as surely as St. Nicholas and weight gain.
For those of you who entrust your subrogation claims to MWL, we thank you from the bottom of our heart. We hope our gratitude is exemplified in the great recovery results we obtain for you. But also know that in the six weeks which precede New Years, you can expect more frequent communication from our attorneys, paralegals, and staff as we strive to favorably resolve your claims without additional expense and uncertainty.
If you have any questions on the aggressive and cost-effective subrogation program we implement here at Matthiesen, Wickert & Lehrer, S.C., please contact Lee Wickert at leewickert@mwl-law.com.
Lee R. Wickert is a senior associate attorney in our Austin, Texas branch office. Lee was located in in our Wisconsin office, but transferred to our Austin, Texas branch office when it was opened in May 2019. Lee’s practice focuses on insurance litigation, subrogation, workers’ compensation, health insurance and ERISA, automobile insurance, property and casualty, and insurance coverage. Lee is a graduate of the University of Wisconsin-Milwaukee and obtained his law degree at Marquette Law School and his M.B.A. at Marquette University. Lee is licensed to practice in Texas and Wisconsin.
