Captive Insurance Claims Management Panel Discusses Strategies and Challenges

Orange Knight Chess Piece on a Chess Board with Blurry Blue and White Checkerboard in Background

November 13, 2023 |

Orange Knight Chess Piece on a Chess Board with Blurry Blue and White Checkerboard in Background

At a Vermont Captive Insurance Association conference panel discussion focusing on captive insurance claims management, experts Clare Bello of VCM, William Halligan of Agri-Services Agency, and Dusty Otwell of Clinician Assurance, Inc., discussed the challenges and strategies employed in handling claims effectively in a captive. The following includes highlights from the panel discussion.

Claims Management Systems

The panelists discussed challenges with transitioning between claims management systems and the importance of integrating third-party administrators (TPAs). Taking into consideration how reports are generated when designing and implementing claims systems is key to ensuring access to real-time claims information and regular data feeds from TPAs. This reduces the need to rely on TPAs for ad hoc reports, thereby increasing efficiency.

Data Analysis

Another related and crucial aspect of claims management is the importance of collecting and analyzing relevant data to assist in making data-driven decisions. The panelists emphasized the need to measure various metrics to assess a program's performance such as understanding the causes of claims, how claims are being adjusted, the associated costs, and how long claims remain open.

Collaboration and Communication with TPAs

The panelists highlighted the importance of collaboration and communication with TPAs through setting clear guidelines and procedures for TPAs to follow. These guidelines ensure consistency in managing claims and help maintain a transparent and efficient process. Also stressed was the importance of the captive maintaining control over ultimate settlements and reserves, rather than, for instance, incentivizing TPAs based on the number of cases settled, underscoring the importance of transparent and effective communication with the TPA.

Addressing Challenges of Social Inflation

The discussion also touched upon the challenges posed by social inflation, which has affected the expectations of jurors, particularly in urban areas. Social inflation can lead to higher settlement figures, and the panelists stressed the importance of managing these expectations and presenting counterarguments to provide a more balanced perspective.

Balancing Medical Costs

For captives that include workers compensation, panelists stressed the importance of managing medical costs by providing appropriate care to injured individuals to facilitate their recovery and return to work, ensuring that care is both necessary and effective in achieving these goals.

Regular Review of Expenses

Regularly reviewing expenses, including legal fees, investigative fees, and vendor costs, is key to maintaining cost control. Quarterly reports are instrumental in identifying any unusual spikes in costs, allowing an organization to address issues promptly and maintain cost-efficiency, according to the panel.

Claim Review Criteria

Criteria for claim reviews was also addressed. Claims with foreseeable outcomes are generally given priority, ensuring quick resolution. Also emphasized was the importance of accurately reserving for future exposures, particularly in claims that remain open for a long period, developing tail claims, and claims that experience significant cost spikes.

Selecting and Evaluating Defense Counsel

Regarding the role of defense counsel, the panel discussed the process of selecting, evaluating, and maintaining relationships with defense attorneys. They emphasized the significance of assessing how well attorneys adhere to strategic litigation guidelines, their ability to assess the potential verdict for a case, and their effectiveness in managing experts. The panel also highlighted the importance of ongoing communication with defense counsel and the need for evaluating their performance.

Building an Internal Claims Team

As for building an internal claims team, the panel suggested that organizations should carefully consider their own specific needs, past claims data, and long-term objectives. Any transition from a TPA to an internal team should be planned well in advance. Depending on the nature of the claims and the volume, organizations may need different levels of personnel and should allocate caseloads accordingly. The panelists also discussed the role of attorneys within the internal claims team, emphasizing the need for compliance attorneys to handle reporting requirements.

November 13, 2023