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Setting Reserves & Discovery of the Insurance Claims File 

https://zalma.com/blog

The insurer is required to evaluate a claim based upon its merits, and  without regard to policy limits. Eastham v. Oregon Auto Ins. Co., 542 P.  2d 895 (Or. 1975). 

The adjuster must determine the value of the claim  without a thought to limits of liability in the policy and then compare  the evaluation with the limits available.  Reserves should be set realistically and are recorded in the claim file.  Reserves are the adjuster\\u2019s estimate of the potential recovery the  claimant would receive from a jury. Reserves should be reviewed  regularly, and revised if necessary. Failure to do so can be a factor in  holding the insurer responsible for an excess verdict. Kunkle v. United  Security, 168 N.W. 2d 723 (S.D. 1969). (For further assistance in  setting reserves see Chapter 13, \\u201cEvaluation and Settlement.\\u201d) New York  uses a definition of insurance reserves that can be used everywhere.  It defines insurance reserves as:  The referenced provision states that: every insurer shall . . . maintain  reserves in an amount estimated in the aggregate to provide for the  payment of all losses or claims incurred on or prior to the date of  statement, whether reported or unreported, which are unpaid as of such  date and for which such insurer may be liable, and also reserves in an  amount estimated to provide for the expenses of adjustment or settlement  of such losses or claims (Insurance Law Section 1303 [emphasis  supplied]). Majewski v. Broadalbin-Perth Central School District, 91  N.Y. 2d 577, 696 N.E. 2d 978, 673 N.Y.S. 2d 966 (N.Y. 05/12/1998).  When presented with a challenge to discovery of insurance reserves  information, the trial court is required to make a preliminary  determination of whether the requested information is relevant in that  it is admissible or is reasonably calculated to lead to the discovery of  admissible evidence. In making a determination in the context of  discovery about the relevancy of insurance reserves information, the  trial court should take into account the nature of the case, the methods  used by the insurer to set the reserves and the purpose for which the  information is sought, and only grant requests for disclosure when its  findings of fact and conclusions of law support a determination that the  specific facts of the claim in the case before it directly and  primarily influenced the setting of the reserves in question. [State ex  rel. Erie Ins. Co. v. Mazzone, 625 S.E.2d 355, 218 W.Va. 593 (W. Va.,  2005)]

\\xa9 2021 \\u2013 Barry Zalma  Barry Zalma, Esq., CFE, now limits his practice to service as an  insurance consultant specializing in insurance coverage, insurance  claims handling, insurance bad faith and insurance fraud almost