Independent Claim Audit Services - Issues to Consider

 

Managing an insurance agency can be a challenge. New business can be hard (and expensive) to find and keep. Client retention may or may not depend on the price of the insurance products themselves, but the service and knowledge your agency provides. Most business owners view insurance as a necessary evil but most do not understand how it works, it is an intangible product. Unfortunately, use of the "product" only comes about after an accident, incident, or disaster when stress and tension run high.

One of the services you can provide to your clients is following up with the claims department for status after the claim is filed. Clients are not in the insurance business and the process can be confusing.
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However, does your staff have the time and expertise to obtain detailed updates from various claims examiners handling multiple lines of coverage?

A periodic claim review or audit should be considered if your agency places a large volume of business with an insurance carrier. If handled appropriately, a claim review can be an efficient, effective, and proactive way to communicate with insurance company claim examiners. Independent claim review services can provide beneficial facilitation of the claim review process that is not skewed toward the insurance carrier or the client by providing a neutral review of facts and reserves.

Prior to engaging the services of a claim review service, there are some points you need to consider:

1) Does the have a claim background and did the auditor work for an insurance carrier or self insured? If the person chosen to do the audit does not have a claim background, he or she will lose credibility with the insurance carrier claim personnel.

2) What lines of business did the auditor handle? If you intend to do an in depth claim review, including possible coverage issues, then the person doing the audit should have background and familiarity with the coverages involved.

3) Does the auditor have experience doing claim reviews and/ or agency experience?

4) Have you formulated goals for the audit? Do you have a set format you would like to used? It is important to know what information you are seeking prior to setting up the claim review. Areas to consider are reserves, investigative practices, coverage issues, and litigation management.

5) Remember selection of files can be key so choose some files with high reserves, some with low reserves, some in suit, some not in suit, and so on. Choosing files with low reserves allows the reviewer to spot possible low reserving trends within a claim department.

6) Be sure to give enough advance notice to carrier. Giving the carrier at least 30 days notice of a claim review will go a long way to establishing good communication between your agency and the insurance carrier. Adequate notice allows the claim examiners and supervisory staff to review and prepare the files to be audited.

7) Will the review be of a "paper file" or a conference call informal discussion?

Claim reviews should not be a witch hunt or be done with an antagonistic attitude. When done correctly, a wealth of information can be exchanged between all parties in order to make the claims process a smooth one for all involved. You may be able to provide information on behalf of your client that is helpful to the claim examiner and the claim examiner may be able to provide you with valuable information on the status of the claim. You will then be more able to provide thorough and comprehensive updates to your client. Providing this proactive value added service to your clients can be a cost effective technique to increase your client retention rate.