Risk managers typically don’t have the capacity to invest large amounts of time preparing for a loss that may never occur.
But when you reserve a reasonable amount of time to prepare for certain losses that could be damaging to your business, the effort can more than pay for itself in the long run, says Zac Overbay, Senior Vice President and Partner at Woodruff-Sawyer & Co.
“Being more prepared for certain losses will not only save you time, it can significantly reduce your stress following a large loss or series of smaller losses,” Overbay says.
Smart Business spoke with Overbay about how pre-work can make your insurance claims process easier to manage.
What are some claim types where pre-claim work may be advantageous?
In the area of property claims, you can establish a relationship with a policyholder forensic accounting firm that will help prepare and submit your loss to the insurance company.
Often times, this process involves interviewing a number of firms. The ability to avoid doing this in the heat of a large property loss is definitely beneficial. Once a firm is selected, you may even seek pre-approval and negotiate the approved rates with your property insurer(s).
You should have your company’s asset registers or other listings of all assets at each location. This may be readily available if it was used to determine a statement of values for business personal property at your locations.
If you or your broker have established an effective working relationship with a third-party administrator (TPA) who is paid to manage claims on behalf of your insurer(s), it’s advisable to endorse them onto the policy so that you are assured of your ability to work with that specific TPA in the event of a property loss.
It’s advisable to pre-designate anytime there is an opportunity to control the quality of the individuals working on a loss.
In the area of Errors & Omissions (E&O), gather key vendor/customer contracts that will be involved in a loss. For example, if your company outsources manufacturing of your product and there is an E&O claim involving one of your products, that manufacturing contract will assuredly be requested as a part of evaluating a claim.
Supply chain and manufacturing schematics are often requested by insurance claims personnel to understand the product manufacturing process and/or overall supply chain.
Investing time to gather or possibly even design basic schematics may be beneficial once a loss actually occurs as you may be distracted with a multitude of other claim-related tasks.
When it comes to auto claims, having ready access to key documents that are routinely requested in auto losses is always helpful, especially if you have frequency in such claims.
Key documents include: updated schedule of owned vehicles, lease and/or fleet management agreements for non-owned autos, company policy on use of personal vehicles on company business, and master auto rental agreements.
This information seems intuitive, and it is, but often times the risk manager who has access to these documents is not the individual managing claims within the organization.
How do you make smart decisions through this process?
A good place to start is to consider pre-claim work on two types of losses: high-frequency losses and high-severity losses.
High-frequency losses require you to supply the same information or documentation over and over again while high-severity losses leave you feeling overwhelmed as you try to manage the claim process, even if it’s only a single claim.
The more you can do in advance to be prepared to deal with these claims, the more time and effort you’ll save.
When dealing with insurance claims, there are always certain requests specific to each loss for which you cannot necessarily prepare in advance.
For example, the insurer may need to meet or interview key personnel that have information critical to the claims evaluation process.
Or there may be specific documentation relevant to a specific event or transaction that will be requested. Take care of the pre-work you know will be a part of the claim process so you can focus your attention on addressing any additional requests for which you cannot prepare. ●
Insights Business Insurance is brought to you by Woodruff-Sawyer & Co.