MANAGING THE CLAIMS HANDLING PROCESS
by Catherine Oak
These ABCs of claims handling can keep your E&O exposure under control.
The claims function in an agency is usually handled by either CSRs or producers, or by a separate claims department. 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, and personnel keep track of 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 the account. Public relations can slide when a client who suffers a loss isn’t covered or when the claim is poorly handled. They 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 times, the 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 these situations:
1. When the 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 and special expertise is needed
4. When the agency routinely uses draft authority and there’s a need for tight controls for issuing claims checks
Our key concerns for proper claims management comes from our work in analyzing hundreds of agencies over the years. Based on this experience, here are some proven tips for dealing with claims:
- Keep an ongoing claims log arranged by company and in chronological order, so that management can keep abreast of how losses may 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 recorded in the client files, so that CSRs and producers are aware of claims activity when a separate claims department exists. This is important not only 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.
- Download claims into the computer. Most software can pre-complete a claim’s ACORD form. Have claims information 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 agencies 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. Have one or two staff members cross-trained to back up claims.
- Have a disaster plan. Any agency that’s coped with natural disasters, such as Hurricane Katrina or 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 agency. Proper claims management will result in improved service productivity and, most importantly, will help you retain accounts.
Catherine Oak, together 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 can reach Oak at (707) 935-6565 . e-mail [email protected], or visit www.oakandassociates.com.