We hear a similar complaint over and over from our new clients — they’re frustrated with the standard way their claims have been managed in the past. From inconsistent adjuster assignments to quick, baseless settlements, improper claims handling can have significant financial implications for any business, not to mention the needless headaches they can cause.
Click here to listen:
In the next few minutes, I’m going to unpack the seven most common hurdles of claims handling in the standard market and, more importantly, why it’s important to demand a different model of claims management.
Number one. When you submit a claim in the standard market, it’s assigned to any number of adjusters based on geography or type of claim. It could even be reassigned or shared between multiple adjusters. Knowing who to contact with questions or the communication that is shared between adjusters is unclear. The lack of transparency can lead to delays and mistakes — both of which can be very costly to your organization if it involves, for example, getting an employee back to work or subrogation recovery efforts.
Number two. Have you ever been surprised by a settlement? Unfortunately, this happens quite often in the standard market — you report a claim, then hear radio silence until you learn the claim was settled without your input, and at a much higher cost than you expected.
Number three. Formula-based claim reserves in the standard market may have been determined with solid reasoning, but they tend to linger over time without a review for adequacy. What’s more, a standard reserve of $25,000 for, let’s say, a shoulder strain may be more than necessary for an employee in excellent health whose treatment plan is a few sessions of physical therapy. For an employee in poor physical health who requires surgery, the reserve may be too low. Applying a standard one-size, formula-based approach to reserving leaves significant room for inadequacies.
Number four. Unless you are a very large customer in the standard market, chances are you’ve never participated in a formal claims review, because scheduling it with all of the adjusters would be a logistical nightmare. But the lack of regular review can actually lead to bigger headaches. You’re missing the opportunity to review larger claims and identify trends in your loss activity that could be mitigated with increased safety measures.
Number five. There is substantial data in the market which shows the longer it takes to report a claim, the higher the claim settlement will be. If all incidents happened between 8 AM and 5 PM, Monday through Friday, we’d all be in good shape. But the reality is, they don’t. If you’re only able to report a claim during regular business hours, your loss experience could suffer.
Number six. Adjusters in the standard market are typically handling between 150 and 200 claims at a time. This heavy caseload incentivizes adjusters to settle claims quickly and with minimal investigation. In addition, the stress of heavy caseloads is the primary reason why the turnover rate for insurance adjusters is a staggering 20 to 25 percent. More turn over with adjusters means more inconsistency when handling your claims.
Finally, number seven. There is little incentive for an insurance carrier to empower their adjusters with cost-saving strategies when they operate under a turn-and-burn model.
So if this is what we are all accustomed to in the standard market, is there even an alternative? The answer is yes, there is better claims management available – and with the right third-party administrator, you should demand the opposite service than what’s typical in the standard market.
For example, you should have a dedicated adjuster for each type of claim – worker’s compensation, auto and general liability. These dedicated contacts are responsible for every stage of the claim – from first report through subrogation – so you always know who to contact with questions, and even better, can build a working relationship with your adjusters.
And because you know your adjusters and have open, ongoing communication with them, you should never be blind-sided by a settlement.
The alternative to a formula-based model is fact-based. Combined with claims experience, your adjusters should understand that each claim is unique and one-size doesn’t always fit all.
Routine claims reviews should be required. It’s your opportunity to talk through larger open claims and uncover frequent claims that could be mitigated with additional safety measures.
If you think you can only report a claim during business hours, think again. You should be able to speak with someone who will take action on your claim – 24/7, 365 days a year. Immediate action for severe claims could make a world of difference.
In a claims handling model where quality is valued more than quantity, a caseload should sit closer to 120 – allowing adjusters time to investigate and adequately manage each claim. And, the lower caseload often means significantly lower turnover.
And last but certainly not least, the more money you save on claims, especially in a group captive, the more you maximize your returns. There are so many cost-saving strategies to use – you need to work with a cost-conscious claims management team.
Cottingham & Butler Claims Services, or CBCS, is contracted to handle claims as the third party claims adjuster for each Cottingham & Butler captive. The differentiating qualities we have outlined here define the core philosophy of CBCS claims management: handle claims to your satisfaction, improve the captive experience, and ultimately, return dollars to your pocket.
WANT TO LEARN MORE?
Please fill out the below form and a Cottingham & Butler representative will be in touch with you.