EUO Demand Indicator #3:
Pressure for a Quick, Low Settlement
One of the clearest Examination Under Oath (EUO) demand indicators arises when an insured—or more often, their attorney—pushes for a quick, low settlement. This pressure is frequently accompanied by threats of bad faith accusations or lawsuits. While these tactics may seem routine, they often signal deeper issues within the claim.
Here’s why these scenarios demand closer scrutiny and how the EUO can provide clarity.
Why the Push for a Quick Settlement Raises Questions
A typical claim involves the insured providing necessary documentation, answering questions, and working with the company to resolve the claim fairly. But when you encounter an insured or attorney pushing for a quick settlement, it’s worth asking: why?
- Unusually Low Offers: If the settlement being requested is significantly lower than the insured’s entitlement, it’s a red flag. Why would someone entitled to $20,000 agree to settle for $5,000?
- Diverting Attention: The push for a quick settlement, especially when paired with threats, may be an attempt to distract the company from scrutinizing the claim.
- Avoiding Scrutiny: Threats often arise when you start asking critical questions or addressing key discrepancies in the claim.
Understanding the Threats
Threats of lawsuits or bad faith allegations can be unnerving but are often a tactic to shift focus away from what’s really at stake.
- Lawsuit Threats: An attorney threatening to sue is a common diversion tactic. If the EUO hasn’t been demanded, the company loses the opportunity to conduct one if the insured files suit.
- Bad Faith Accusations: These are often baseless and intended to intimidate. However, assuming the company has done nothing wrong, these threats are more indicative of the insured’s intent to avoid further scrutiny.
Why the EUO Is Essential in These Cases
When faced with pressure for a quick, low settlement, the EUO becomes a critical tool:
- Uncover the Truth: The EUO provides a structured setting to ask the important questions, gather missing documentation, and address discrepancies.
- Protect the Company: Once the EUO is demanded, the company’s protections are activated, helping to mitigate the risks of threats or bad faith claims.
- Expose Underlying Issues: Quick settlements often suggest fraud or manipulation. The EUO can help uncover these hidden issues.
Conclusion
A legitimate claim should proceed without undue pressure or diversion tactics. When you encounter an insured or attorney pushing for a quick, low settlement, consider it a significant EUO demand indicator. This behavior often signals deeper problems that require the clarity only an EUO can provide.
Stay tuned for the next part of this series, where we’ll explore another EUO demand indicator and its role in claims handling.
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Danny Vazquez
Danny Vazquez is the National EUO, LLC CEO.
Danny is a central leader on Claims, Investigations and EUOs in the insurance and legal industries.
As CEO, Danny took the knowledge and insights gained throughout his 25 plus years legal career to establish National EUO as the Nation's leading company on EUO services and EUO training.
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