In the legal realm of insurance claims, the tripartite relationship among the insurer, insured, and defense counsel plays a critical role in managing and resolving claims effectively. This relationship is governed by various rights and responsibilities that help prevent conflicts and ensure cooperative claim handling. However, the plaintiffs’ bar often seeks to exploit this relationship to achieve larger settlements or verdicts through tactics like policy limits demands, particularly in the heightened litigious environment following the pandemic.
Isaac Newton’s three laws of motion provide a metaphorical framework for understanding and maintaining the stability of this relationship. The first law suggests that a claim will remain static unless acted upon by an external demand. The second law equates the momentum of a claim to the efforts expended by the claimant’s counsel, indicating that lesser efforts may lead to pre-litigation settlements. The third law, implying every action has an equal and opposite reaction, highlights the necessity for insurers and defense counsel to respond strategically to claimant actions to preserve equilibrium and negotiate from a position of strength.
The dynamics within this relationship can be complex, especially with the involvement of excess carriers and significant claims that may exceed primary policy limits. Defense strategies, such as detailed responses to policy demands and proactive settlement negotiations, are essential to safeguard the interests of all parties involved and prevent potential legal escalations. By understanding and applying these principles, defense counsel can effectively counteract plaintiffs’ strategies and support the insured and insurer in achieving fair and timely resolutions to claims.