Managing The Claims Handling Process

by Catherine Oak

The claims function in a firm is usually handled in one of two ways:

Since the most critical service provided to clients for their premium dollar is the proper handling of claims, it's extremely important that:

• the function is well managed
• proper follow-up occurs to guarantee client satisfaction
• personnel keep track of how the carriers are responding to claims to ensure proper and timely service

Poor claims-handling by the firm's personnel or an insurance company adjuster can cost the firm the account. Public relations can slide when a client who suffers a loss isn't covered or when the claim is poorly handled. These thing can also cost a firm future clients and irreparable damage to its name and reputation. Even though the insurance company may be at fault, and even if the producer finally gets the claim properly handled and reimbursed, nine in 10 instances will cost the firm the account due to the client's suffering stress and strain.

As consultants, we don't hold a strong preference as to whether the firm keeps a separate claims department or makes CSRs responsible for claims. It's up to management to decide whether clients are better served by having the person they know handle the claim (the producer or CSR) or by having a competent claims person take care of it.

We recommend a separate claims department in the following situations:

The key concerns we have for proper management of the claims comes from our work in analyzing hundreds of firms over the years. Here are some claims tips:

• Keep an ongoing claims log arranged by company and in chronological order, so that firm management can keep abreast of how losses may affect carrier relations and contingency checks.
• Do not rely on carrier claims records. Often, companies make mistakes in calculating contingencies, setting loss reserves, coding claims information, etc. Your own records can alert you to a claims problem developing with a particular carrier.
• Claims information needs to be recorded in the client files, so CSRs and producers are aware of claims activity when a separate claims department exists. This isn't only important for marketing and underwriting, but also for communication with clients. It can be embarrassing if your CSR or producer isn't aware of a claim in the client's hour of need, especially if problems are traced back to claims handling.
• When client file information is on the computer, claims should be downloaded into the computer. Most software programs can pre-complete a claim's ACORD form. Claims information should be input directly into the computer when the client calls. This will speed up claims processing, diminish duplication of work, and help reduce mistakes.
• Use pre-printed forms or word-processed letters to speed up the flow of claims correspondence between firms, claimants, and insurance companies.
• Back-up for claims phone calls is essential in enabling clients to report claims in a timely fashion and receive assistance in their hour of need. One or two people in the firm should be cross-trained to back-up claims.
• Have a disaster plan. Any firm that's coped with natural disasters, such as Hurricane Hugo or Andrew, and the Northridge earthquake, understand the importance of being prepared. Many clients may need to report claims and obtain assistance at the same time.

Follow the guidelines in this article to improve the claims function in your firm. Proper claims management will result in improved productivity of your servicing staff and, most importantly, will help you retain accounts.

Catherine Oak, along with Bill Schoeffler, runs Oak & Associates in Glen Ellen, CA. Their consulting firm specializes in agency management, automation, clustering, Errors and Omissions, evaluations, mergers and producer compensation. You may E-mail Oak at [email protected] or call her at (707) 935-6565.