claims - namic - home · • luntz, frank. “words that work: it’s not what you say, it’s what...

Claims Tuesday, September 29, 2015

Elise Farnham President Illumine Consulting Grantville, GA Elise Farnham has 40 years of experience in the risk management and insurance industry. She is president of Illumine Consulting, a firm dedicated to sharing knowledge with the risk management and insurance communities through continuing education, claims management consulting, and expert witness testimony. Elise’s company provides continuing education programs, professional and personal development programs, and business ethics programs. Elise began her career in the insurance industry in 1973 with Crawford and Company. She became a multiline adjuster and, in 1978, was promoted as the first female claims branch manager for the company. She has worked in Texas, New York, and Georgia in senior management positions such as regional manager, vice president of the learning and resource center, sales and marketing, and special projects. She has held senior-level positions with The Harmonie Group, CSB Group, and GAB Robins, NA. Elise is a member of the CPCU Society. She has previously served the society as Southeast regional governor, executive committee member, president of the Atlanta chapter of CPCU, and on numerous task forces, including the Ethics Certification Task Force, the CPCU Claims Section Committee, and chaired the Media Advertising Task Force. Presently, she serves on the Consultants, Litigators, Educators, and Witnesses Interest Group committee. She is a member of the education and professional development faculty for the society and presents courses on ethics as well as technical insurance and risk management topics. The Atlanta chapter recognized her as the 2011 Instructor of the Year for her dedication to providing quality education. Elise has assisted the American Institute for CPCU by providing input for the Associate in Risk Management, Associate in Claims, and Chartered Property Casualty Underwriter programs and provided content for textbooks and online learning modules. She served on the Board of Ethical Inquiry for the American Institute for CPCU from 2000 until2008. Elise is past president of the International Association of Insurance Professionals having served on the board of directors for five years. She was regional vice president of Region 1, which is the Northeast. Prior to that, she served two terms as president of the National Association of Insurance Women – New York City. Currently, she is a member of the Insurance Professionals of Atlanta. In 2004, she received the American Association of Managing General Agents Achievement Award from the Georgia Council of IAIP for her contributions to the

association and was recognized at the Most Influential Member in 2011. In 2002, 2004, and 2009, she was named Insurance Woman of the Year in Atlanta, and in 1993, she was chosen National Claims Professional of the Year. She serves on the board of directors for the Registered Professional Adjusters Society. She frequently instructs for the National Association of Mutual Insurance Companies and presents the underwriting and claims modules for the Professional Farm Mutual Manager designation. Elise is an international speaker. Her articles have been published in Business Insurance, The Claims Advisor, Claims Magazine, CPCU Claims Section Quarterly, National Underwriter, Risk Management Quarterly, Today’s Insurance Professional, Canadian Insurance Magazine – published in Canada), and Insurance International –published in the United Kingdom. Elise provides expert commentary on personal lines issues for the International Risk Management Institute. She has just published a children’s e-book, “Monster in the Barn,” available on Amazon, for children ages 3 to9 years. She holds industry designations, including Chartered Property Casualty Underwriter, Associate in Risk Management, Associate in Management, and Certified Professional Insurance Woman. Three Session Ideas Tools or tips you learned from this session and can apply back at the office.

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Learning Objectives• Proper handling of bad faith and fraudulent claims

• Reclaim loss dollars after the loss– Salvage– Subrogation– Restitution

• Conducting claim file audits

• Basic investigation practices and processes

• Develop a claim procedure

• How auditors analyze reserves after the adjuster inspects the property

2015 Connect Differently - Farnham Page 1 of 15

Claims Process“Almost all quality improvement comes from

simplification of design, manufacturing,…layout, processes and procedures”

-- Tom Peters, Author

To close files

To close files

To close files

The Adjuster’s Job


Anatomy of a Claim

• Occurrence or event• Notice• Coverage confirmation• Investigation• Liability determination• Resolution• Recovery

Occurrence/Event• Accidental

– Fortuitous, not intentional– Damages must be unexpected

• Continuous or repeated exposure to substantially the same general harmful conditions

• Results in bodily injury or property damage


Notice and Insured’s Duties

• Notice to underwriter– Prompt reporting to the adjuster

• Cooperation• Provide all information• Enforcement of indemnity agreements, preparation of

defense, provide evidence• Make no commitments on behalf of the underwriter

Coverage Determination

• Policy maintenance and retention• Policy provisions

– Declarations– Definitions– Insuring agreements– Exclusions– Conditions– Misc. provisions and endorsements


Investigation• Gathering sufficient information to make a decision as to

liability and damages• Preservation of evidence• NOTE: insurance carriers have a good faith duty to

investigate

Scope of Investigation

CoverageLiabilityDamages Via…

MailTelephone

Personal ContactInternet


Damages• Compensatory damages

– Special damages– General damages

• Punitive damages• Injunctive relief

Claim Resolution

Closure

Determinelegal liability

Application ofrelevant law

Determinedamages

Evaluatewhether tosettle or defend.

Evaluatevenue options

Identifyadditional

tortfeasors


Ground Rules for Adjusters• Strictly adhere to ethical conduct

• Investigate impartially, negotiate with partiality

• Be courteous and friendly

• Follow specific instructions carefully per guidelines

• Take command of conversations

• Be prompt

• Deserve and expect respect

• Keep an open mind and be alert to changes in the attitude of the claimant/insured

• Manage expectations

Claim Audits“People do what’s inspected, not what’s

expected.”-- Anonymous


ImproveOutcomes

Purpose of Claim Controls

Claims Process Management Tools

• Claims manuals, instructions, guidelines, best practices• Diary, or suspense, systems• Activity log, entry edits• Supervisory/management review• Authority levels• Claim reviews and audits

– Internal and external


Performance Enhancement

“There is no sadder sight in the world than to see a beautiful theory killed by a brutal fact.”

Thomas H. Huxley

Tools

Personnel Management

Hiring Practices

Career Building

Claim Review

Roundtable

Open Discussion

Focus on resolution

Audit

Review financial controls

Review file activities


Improving Performance

Monetary praise or award of merit

Evaluateeffectiveness

Measurable

Analytics

Recognition & Reward

Education and Training

Guidelines / Expectations

Monitor and Adjust

Performance Enhancing Behavior

Clarify Expectations

• Measurable• Communicated

Build Loyalty

• Long term relationship

• Create alliances

• Be courteous

Plan ahead

• Develop strategies prior to the need

• Meet with vendors


Costs due to incompetence

Challenges to competence

Auditors & ReservesAuditors’ Swear Words: “Unsupported Costs”,

“Control Weakness”, “Under Reserved”


Reserving Approaches

• Formula– Average value – Analytics

• Computer data based• Per claim

– Manual/worksheet

• Loss ratio method

Reserve errors• Information is limited or incomplete• Poor planning in conducting the investigation• Lack of expertise• Optimism• Unwillingness to re-evaluate facts• Increasing costs over time• Underestimate future values

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Auditors

Overly Optimistic

Overly Cautious

Necessary Competencies• Good understanding of the law• Good student of human behavior• Good communication skills• Excellent interpersonal skills• Fundamental knowledge of medicine and anatomy• Able to conduct effective investigations• Basic understanding of property damage estimating

• Self-starter with good time mgmt. skills


Characteristics

• Integrity• Intelligent• Empathetic• Positive attitude• Inquisitiveness• Sense of equity• Disciplined

• Able to embrace change• Continuous learner• Analytical• Good self-esteem• Conflict resolution skills• Problem solver• Decisive

Resources• Hoopes, Doris. “The Claims Environment.” American Institute for

CPCU / Insurance Institute of America. Malvern:2000. 2nd Edition

• Luntz, Frank. “Words That Work: It’s Not What You Say, It’s What People Hear.” Hyperion. New York: 2007.

• Popow, Donna. “Claim Handling Principles and Practices.” American Institute for CPCU / Insurance Institute of America. Malvern:2006.


Thank you for attending!


claims - namic - home · • luntz, frank. “words that work: it’s not what you say, it’s what...

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