Insurers are bringing in outside legal counsel earlier in the claims process than they used to, and the shift is creating friction with brokers who feel decisions are increasingly being made by lawyers rather than the insurer itself, according to Brian Rosenbaum (pictured), national claims director at Aon, who raised the issue directly with a group of insurers at a recent symposium hosted by the brokerage.
Rosenbaum stressed that these insurers are among the most collaborative in the industry, willing to speak directly to clients about insureds' pain points rather than being a source of them.
Rosenbaum said the trend traces back to a deeper structural problem within insurance companies themselves, one that has been building for years and shows few signs of easing. Many carriers have watched seasoned claims professionals leave the industry, and finding qualified replacements has proven difficult across the board.
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"Generally, many insurers, not all, are utilizing outside legal counsel earlier in the process than they ever have," Rosenbaum said. "Part of the reason for that is resources and expertise, some of these insurance companies have lost a lot of their in-house expertise on the claims handling side, and they're also short-staffed. It's hard to recruit in insurance."
The problem, Rosenbaum said, isn't that outside counsel gets involved at all, it's the shift in mindset that tends to come with it. Lawyers, in his experience, approach a file differently than an insurer's own claims team would, often looking for reasons a claim might not be covered rather than weighing the broader business relationship with the client. That difference in orientation, he said, is where much of the friction with brokers and clients actually originates.
"They have a little different way of looking at things and a different motivation," Rosenbaum said. "They're trying to impress the insurer for future work. They're trying to find a reason not to find coverage most of the time, as opposed to making business decisions."
That dynamic creates a specific, recurring frustration for brokers, Rosenbaum said: once outside counsel has issued a legal opinion, brokers advocating on behalf of a client are often told the insurer's hands are tied, leaving little room to continue the conversation on a client's behalf.
"When we try to advocate directly with the insurer after a legal opinion has come in, the answer we get is that they can't go against outside legal counsel's position," Rosenbaum said. "Once we get into that entrenched position, it's difficult."
That framing, Rosenbaum said, isn't accurate, and he made a point of confirming this directly with the insurers at the symposium rather than simply accepting it as an unavoidable feature of how claims are handled once legal counsel enters the picture.
"Universally, they said it's our decision. We make the decision at the end," Rosenbaum said.
That answer matters practically, he said, since it gives brokers a concrete way to push back the next time a claims handler cites outside counsel as an immovable obstacle rather than one input among several factors an insurer ultimately has to weigh.
"If a mid-level claims handler tells us they can't go against outside legal counsel, we can now say that's not what your boss said," Rosenbaum said. "That gives us a way to actually reopen the conversation."
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Rosenbaum was careful to note that the practice isn't universal across every insurer, and that some circumstances genuinely call for outside counsel's involvement. Complex, layered risks with multiple carriers holding differing views on coverage, for instance, are a legitimate reason to bring in outside legal expertise to help sort through competing positions before a claim can move forward. Insurers operating out of markets like London, he added, often have no choice but to retain local outside counsel since they lack an in-house legal presence in Canada, a structural reality rather than a preference.
"There are exceptions to that that are legitimate," Rosenbaum said, "but that was the discussion around that point."
Despite those exceptions, Rosenbaum said the broader trend of counsel being introduced earlier and more frequently into claims is now common enough to be a genuine point of friction across the industry, one he raised specifically because it's a recurring source of frustration for the clients his team represents on a regular basis.
"It's more prevalent now," Rosenbaum said, “and it can be polarizing."
