Today, we’re sitting down with Simon Glairy, a renowned expert in insurance and Insurtech, with deep expertise in risk management and AI-driven risk assessment. With decades of experience navigating the complexities of claims handling and legal challenges, Simon has seen firsthand how the industry has evolved—and where it’s stumbling. In this conversation, we’ll explore the growing trend of court battles over claims denials, the impact of automation on insurance processes, and the critical role of human judgment in an increasingly tech-driven field. We’ll also dive into specific legal precedents and market pressures reshaping the landscape for insurers, agents, and policyholders alike.
Can you explain why insurers are finding themselves in court more often over claims denials these days?
Absolutely. The surge in lawsuits largely comes down to insurers not being fully prepared to justify their denial decisions. When a claim is denied, the insurer needs to have airtight reasoning backed by policy language and thorough investigation. Too often, though, denials seem arbitrary or rushed, which opens the door to bad faith claims. Common triggers for lawsuits include delays in processing, lack of clear communication with policyholders, and outright refusals to cover claims that appear legitimate on the surface. It’s not just about complexity—it’s about accountability.
How has the legal landscape for claims handling changed, particularly with cases like Joyce v. Fednat in Florida?
The Joyce v. Fednat case was a game-changer, especially in Florida. It involved a denied water damage claim that was later paid after pushback, and it set a powerful precedent for bad faith lawsuits. One of the biggest outcomes was the introduction of the contingency fee multiplier, often called Lodestar, which essentially increases the financial risk for insurers when they lose these cases. It’s a mechanism to ensure policyholders can afford legal representation, but it’s made carriers much more cautious—or at least, it should have. This case underscored that reversing a denial can still lead to legal consequences if the initial handling reeks of bad faith.
What’s different about how claims are handled now compared to a few decades ago?
Back in the ‘60s, ‘70s, and even into the ‘80s, the mindset among adjusters was generally to find a way to cover a claim if at all possible. There was a customer-first approach—adjusters saw themselves as problem-solvers. Today, though, there’s a noticeable shift toward a ‘delay, deny, defend’ strategy. The focus seems to be on finding reasons to avoid payment, often driven by cost-saving pressures from the top. It’s a cultural change, and I think it’s tied to tighter margins and a more corporate, less personal approach to insurance.
How do you see automation playing a role in the claims process today?
Automation has its place, especially for straightforward claims like a cracked windshield or minor fender benders. You snap a photo, upload it, and get a check—simple and efficient. But it falls apart with complex losses, like an industrial explosion or major structural damage. These situations need human eyes on the ground to assess nuances that no algorithm can fully grasp. While tech can streamline small-scale processes, it’s not a replacement for experienced adjusters who can interpret context and intent behind a claim.
What are some of the problems you’ve noticed with AI-driven tools in valuing property for insurance purposes?
One major issue is how these AI tools often inflate replacement costs for buildings. I’ve seen cases where the calculated cost to rebuild is just astronomical—way beyond realistic figures. This isn’t just a glitch; it allows carriers to justify higher premiums and larger deductibles, especially for things like wind or hail coverage. Policyholders end up paying more, often without realizing why, and regulators haven’t fully caught on because these practices are buried in complex data models. It’s a subtle way to boost revenue, but it erodes trust.
Can you walk us through Florida’s valued policy law and why it’s a sticking point for some insurers?
Florida’s valued policy law, which has been around since 1899, mandates that in the event of a total loss, insurers must pay the full face value of the policy, no questions asked about actual replacement cost. It’s designed to protect policyholders from being shortchanged. However, some underwriters resist this because it can mean paying out more than they’d like, especially if they believe the property was overinsured. I’ve seen cases where they’ll drag their feet or challenge the law’s application, which just adds friction to an already stressful situation for the insured.
How are independent agents impacted by these trends in claims handling and automation?
Independent agents are often caught in the crossfire. They’re the ones policyholders turn to when a claim is denied, even though they don’t control the decision. Agents end up as advocates, explaining complex policy language or fighting on behalf of their clients, but they also take the brunt of the frustration. With automation, their role becomes even trickier—they’re navigating tech-driven denials while trying to maintain that personal touch. I’ve been in situations where I had to step in personally to help a client find a workaround, like connecting them with a contractor, just to ease the tension.
What’s your forecast for the future of claims handling in the insurance industry?
I think we’re at a crossroads. On one hand, automation and AI will continue to grow, hopefully refining their accuracy and reducing some of the inflated valuations we see now. On the other, I expect more legal pushback as policyholders and courts hold insurers accountable for bad faith practices. There’s also a chance we’ll see a swing back toward broader coverage and fewer exclusions as some carriers recognize that trust and customer loyalty are worth more than short-term savings. But it’ll take a concerted effort—both from within the industry and through regulatory oversight—to balance tech with the human element that’s still so crucial in claims handling.
