Top claims tips: how to turn disaster into an opportunity

For multinational companies future prosperity can depend on your ability to bounce back after a major claim. But co-ordination of the claim, across many jurisdictions with multiple insurers and local culture considerations, can be a complex affair. JLT Specialty’s Wendie Le Vey offers practical advice for risk managers.

Too often companies place all the emphasis on finding the right insurance programme. But when complex programmes are made up of different coverage layers involving large numbers of insurers, this can lead to differences of opinion when it comes to achieving a settlement. To avoid this and to put yourself at an advantage when something goes wrong; you need a clear strategy for handling claims throughout the life of the policy.

The first step in agreeing claims protocols before a major loss occurs is to identify the expertise within your own organisation as well as your broker, insurer and claims adjusters. This should include geographical spread, IT systems and pro-active risk management support. You should then ensure there are no unforeseen ‘gaps’ in cover and that control of the loss is maintained between the broker and insurer.

Ultimately companies must rely on trusted relationships, robust local service delivery with global co-ordination, and a consistent approach to claims and risk management.

Crucially, companies need to rehearse what may happen in the event of a major global loss. It’s not a simple task.  There are a lot of considerations from understanding potential reactions from customers and suppliers to ensuring first-class communication between teams. The alternative, however, is a nasty surprise.

A claim should not be a disaster – it could become an opportunity to reinforce the brand and business strategy. A successfully made claim should also provide the firm with meaningful data and portfolio analysis, and lead to improved risk management.

In coordinating claims we need to look at four central areas: processes, people, data and funding. If you fail to get the right balance in each area, you will jeopardise the claim outcome. We look at these areas in more detail below.

Processes

Overseas operations should have clear procedures that set out:

• When and to whom an incident should be notified. It is useful to provide templates of the information required for the main types of incident to ensure the information is captured at the outset;
• Monitoring of claims against aggregate or inner limits in external insurance policies and captive insurance arrangements;
• Delegated authority limits and notification;
• Service level agreements (SLAs) and key performance indicators (KPIs) for all parties involved with a claim so that expected responses are known and appropriate;
• Identification of any potential conflicts of interest and their impact on the resolution  of incident, future business relationships  and individuals concerned;
• Complaints procedures should be extended to include any complaints that arise out of an overseas incident.

People

Sufficient numbers of suitably skilled and qualified people are required to resource the claim. International businesses should also consider the people element of overseas claims, taking into account local cultural sensitivities, and reflect these in any processes and procedures. There must be an awareness of local legislation so that local licences, visas and authorisations can be obtained quickly to facilitate people movement.

Data

Recording information correctly will ease the claims payment process. Companies, brokers, claims adjusters and insurers all retain massive amounts of data. Transparency and easy access to information is critical, so that all involved in a claim can see the same information at any point in the process.

However, holding data comes with its own set of risks and companies processing personal information may be subject to myriad privacy laws: the cost of getting it wrong can be enormous.

In general the rules apply to individuals who can be identified by the information which is held so it is important to collect only the minimum information that is needed. If you are able to achieve your purpose without collecting or processing personal information then the privacy laws won’t apply.

As a general guide, we suggest firms:

• Collect only what data is needed for the claim;
• Tell the affected parties what is being collected, for what purpose and by whom;
• Don’t use it for another purpose (unless you notify the relevant parties);
• Keep data accurate and up to date;
• Keep data safe and secure;
• Don’t keep data longer than you need to;
• Make sure individuals’ rights to access their data are maintained;
• Don’t transfer data to another country.

Funding

Ensuring that adequate funds are available when needed is critical. Given the potentially significant sums that will need to be moved about the world, the processes need to be clearly understood beforehand.

While businesses may have an internal common currency and agreed exchange rates for budgeting, the external market may create significant discrepancies simply by using current market rates.

There are several countries where it is hard to move money, so companies need to consider where they operate and, in the event of a claim, where they would like to receive payments. Making that decision upfront can help companies to avoid complicated tax scenarios and reduce overall costs.

Wendie Le Vey is head of global services risk practice at JLT Specialty.

The content of this article is based on a workshop JLT Specialty and Crawford & Company recently hosted.

Wendie Le Vey - JLT Specialty