Articles

Are you managing your CLAIMS? Or are your claims MANAGING YOU??

Kathleen Peck, Risk & Insurance Consultants, LLC

Do you feel that claims are a cost of doing business or an opportunity to save money on future insurance premiums? Whether your insurance program is a guaranteed cost plan, a more complex program involving deductibles with layered coverage or a stand-alone self-insured program, claims are a fact of life. But how you handle the claims from their inception can be the difference between a favorable and unfavorable insurance renewal scenario.

Most businesses have exposure to claims such as Workers Compensation, Auto Liability or a wide variety of third party actions. While these lines of coverage protect your business, claims that arise from this coverage need to be actively managed to protect your business, its reputation and your assets.

So, how do you create a thorough claims management program?

One of the key points is prompt initial investigation. Have your supervisors and managers been trained in the investigation of claims? This is the opportunity for businesses to learn first-hand how incidents occur and how to prevent these from occurring again. This is also your first line of defense against a fraudulent claim. Claims that are reported "late" should be as thoroughly investigated as the claim that was reported at the time it occurred. The information gathered will be essential in determining the validity and any defenses you have to these claims.

Once a claim is determined to be covered by an insurance policy, the claim should not simply be turned over to the carrier or Third Party Administrator (TPA) assuming it will be handled in your best interest. You, the insured, should remain active in the communication with the adjusting staff. Critical pieces of information such as work restrictions, the availability of light duty, machinery specifications and contractual risk transfers will all have an impact on the final claim costs. Is your insurance company or TPA adjusting staff keeping you fully informed of your claims progress?

For Worker's Compensation, you, as the employer/insured, have a right to regular medical updates allowing you the opportunity to look for work within injured employees' capabilities. For General Liability and Auto claims, you should also be kept informed about the injuries sustained by third parties. Are the injuries being alleged by third parties supported by your initial investigation? Were all witnesses identified by the insured interviewed by the adjuster? Is an Independent Medical Exam needed? Has this been scheduled? Do the daily activities of the claimant support the allegation of disability?

Regular loss runs should be requested and analyzed for changes on the financial forecasting of the claims. Keep an eye on the claims that have been closed as adjusters will routinely make payments on closed claims. The concern is, should that claim be closed? Or should your adjuster re-open the claim to manage it properly? Depending on how your insurance program is structured, claims that have been reserved too high may impact not only your ability to negotiate on future premiums but could even impact the collateral/credit levels required by the insurer. Claims that are over reserved will negatively affect your experience modification factor for workers compensation.

Based on your review of the loss runs, as well as your knowledge of the circumstances surrounding a claim, you should select claims that should be reviewed in a formal meeting with the adjusters. The adjusting staff should prepare a written report for you on each claim you selected for review. While in the claim review you should expect full disclosure of the investigation(s) to support the acceptance or denial of each claim. You should also expect a sound rationale for the monetary value of each claim. This should be supported by a step-by-step plan to resolve the claim as timely as possible. As the insured, you should be prepared to provide light duty work, copies of contracts or other documents as a part of the resolution strategy. This plan should be agreed to and documented with target dates for completion of action items.

Finally, you should be setting future dates for follow-up with your adjusting staff to work through the newly arising claims, the financial values for each claim and the resolution plans. Businesses will benefit from the lessons learned, improved communication, decreased claim costs and the ability to manage your insurance collateral requirements.

Intrigued? If you would like to discuss this further and establish your own casualty claims management program, please contact Kathleen Peck, ARM of Risk & Insurance Consultants, LLC at 612-237-1594, email: kpeck@risk-ins.com website: www.risk-ins.com

NOTE: Risk & Insurance Consultants, LLC is a client of Mansfield Tanick & Cohen, P.A.