What Are the Key Claims Handling Considerations for Captive Owners
When a captive insurer is considering whether to self-administer claims or to handle with an outside third-party administrator, Lynn Sheils, general counsel of EWI Reinsurance, advises that the captive owner should think about three key areas: What are the captive's insured coverage lines? What is the anticipated claims volume for each coverage line? What type of captive resources are required for claims handling?
If the organization wishes to put multiple lines of coverage in its captive and handle the claims within the captive, it will take a very large claims department and people with expertise to handle the broad array of claims. Even with fewer coverage lines, a large volume of claims may still exist requiring significant captive resources. The best use of resources for claims handling typically involves using a combination of internal claims handling as well as third-party administrator(s), depending on the claim types.