| MANAGING THE CLAIMS-HANDLING PROCESS by Catherine Oak Independent agencies usually handle the claims function in one of two ways: 1. CSRs or producers handle the client's claims from start to finish. 2. A separate claims department handles all aspects of the claims process. Since the most critical service you 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 track how the carriers are responding to claims to ensure proper and timely service.
Poor claims-handling by your personnel or an insurance company adjuster can cost your agency an account. Public relations can slide when a client who suffers a loss isn't covered or when the claim is poorly handled. These errors can also cost you future clients and irreparable damage to your name and reputation. Even though the insurance company might be at fault, and even if the producer finally gets the claim properly handled and reimbursed, nine in 10 instances will cost your agency 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 these situations: 1. When an agency doesn't have its file information on the computer; 2. When the agency has a large concentration in targeted classes of business; 3. If there's a high concentration in certain lines of business that require special expertise; 4. When the agency routinely uses draft authority and there's a need for tight controls for issuing claims checks. The key concerns we have for proper management of claims comes from our work in analyzing hundreds of agencies over the years. Here are some claims-handling tips: - Keep an ongoing claims log arranged by company and in chronological order, so that management can keep abreast of how losses might affect carrier relations and contingency checks.
- Don't rely on carrier claims records. Companies often 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.
- Have claims information needs 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 your agency management system, have claims downloaded into the system. Most software programs can pre-complete a claim's ACORD form. Claims information should be input directly into the system 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 among 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 help when they need it.. Have one or two employees cross-trained to back up claims.
- Have a disaster plan. Any agency that has coped with natural disasters, such as Hurricane or Katrina, and the Northridge earthquake, understands the importance of being prepared. Many clients might 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 and Bill Schoeffler can be reached at Oak & Associates, P.O. Box 2047, Glen Ellen, CA 95442, (707) 935-6565 , fax (707) 935-6515 , e-mail [email protected], URL: www.oakandassociates.com/catoak. |