Which of the following is correct with respect to the elements of good-faith claim management?

• A. Consistent supervision, thorough training, and manageable caseloads help ensure that claim representatives are able to handle claims in good faith.
• B. When resolving a coverage question, insurers should avoid the appearance of bad faith by dealing only with those lawyers hired to defend the insured.
• C. If the insured has excess insurance, the claim representative should merely notify the excess insurer of the claim.
• D. Claim representatives should avoid using policy provisions, such as arbitration clauses, to resolve disputes over the settlement amount.

Answer: (A)

In good-faith claim management, a key measure of quality is the environment and processes that let claim handlers act fairly, competently, and consistently. When there is consistent supervision, thorough training, and manageable caseloads, claim representatives are more likely to apply policy terms correctly, assess coverage accurately, communicate clearly, and avoid rushed or biased decisions. This foundation supports responses to insureds and other involved parties that are fair, timely, and aligned with the policy and ethical standards.

This option is the best because it directly addresses the practical factors that enable true good-faith handling: ongoing oversight ensures consistent standards, comprehensive training builds the necessary knowledge and judgment, and reasonable workloads help maintain attention to detail and proper decision-making.

The other statements don’t fit good-faith practice. Limiting communications to lawyers hired to defend the insured can create bias and reduce transparency in the process. Merely notifying the excess insurer without broader coordination leaves important parties out of the loop and can delay or mismanage the claim. Trying to avoid using policy provisions, such as arbitration clauses, overlooks the contractual mechanisms designed to resolve disputes and can hinder proper dispute resolution.