This week we’ve been lucky enough to have team up with Airmic to bring you a summary of their claims best practice guide. The full guide is only available to Airmic members but we've been given exclusive access and permission to give you an overview of the guide. If you'd like to know more you need to contact Airmic about becoming a member.
As you are probably aware, Airmic is the association for anyone who has a responsibility for risk management and insurance for their organisation. So they are a great resource to draw on for advice.
According to Airmic, “The objective for an organisation is to achieve a claims handling approach that ensures claims are managed in a consistent, flexible and fair manner. The claims handling approach must feedback into the organisation informing continuous improvements in claims performance, insurance programme relevance and the organisation’s overall risk and incident management.”
The guide is more geared towards teams that manage insurance claims in house, but the principals can be applied to those that outsource claims management.
Airmic have identified 8 components of claims handling best practice:
- Culture and philosophy
- Claims procedures
- Data management
- Monitoring and performance review
Below we outline the meaning and importance of each element and give practical advice on how claims teams can implement best practice. As well as evaluating current performance, the guide can also be used as a means of identifying areas for improvement.
Want an off-line copy of this blog? Then download the guide.
The 8 Components of best practice
Component 1: Culture and Philosophy
Culture of excellent client service and a philosophy of client-focused claims management that represents best practice and is fully documented.
Component 2: Communications
Arrangements for effective, efficient and transparent communication with the insured and all other relevant stakeholders.
Component 3: People
Suitable and sufficient number and range of skilled, qualified and experienced personnel, with emphasis on development, training and supervision.
Component 4: Infrastructure
IT and other non-people resources sufficient to handle the number, value, nature and complexity of claims and communications with all stakeholders.
Component 5: Claims Procedures
Client-focused procedures designed and implemented to support and enhance the claims handling processes and activities.
Component 6: Data Management
Structured protocols for the secure management and analysis of all relevant data in compliance with legal and regulatory requirements.
Component 7: Operations
Handling of claims in a consistent, yet flexible and fair manner that is transparent, accurate and timely, as well as secure and compliant.
Component 8: Monitoring and Review
Arrangements for routine review of claims performance, capabilities and procedures, including evaluation of client satisfaction.
Demonstrating the 8 Components
The following features should be present regarding each component.
1. Culture and Philosophy
- Documented philosophy and acknowledging importance of claims handling function
- Commit to excellence in claims handling, with Board oversight and board member responsibility
- A commitment to the FCA’s guidance on “Treating Customers Fairly”
- Strategy and budgets acknowledge the need to continuously enhance claims capabilities
- Client Charter with detailed service promises, including a commitment to handling claims and complaints in accordance with best practice
- Adequate management controls to ensure regulatory compliance as a business
- Established roles and responsibilities for the insurance team with appropriate level of seniority of the team for the size, nature and complexity of the claims
- Communications structure with clear escalation process to decision makers
- Documented procedures for reporting of appropriate claims data when appropriate
- Complaint and other feedback processes established with SLAs on time- scales and remedies
- Communication protocols established with relevant co-insurance and excess markets to ensure coordinated and consistent handling of large claims
- Ensure the necessary skills, qualification and experience levels are in the claims team
- Sufficient staff available for the size, nature and complexity of claims
- Succession planning in place to ensure continuous staff skills development
- Senior staff assigned to large claims with necessary levels of authority to make decisions and ensure appropriate level of service
- Staff retention levels set to ensure availability of skilled staff to maintain service delivery
- Clear job descriptions with level of authority and required level of supervision if needed
- Personal development plans for staff and regular evaluation
- Appropriate IT systems specifically designed for handling claims and capable of handling data in an efficient manner and producing appropriate reports
- Investment in claims handling IT infrastructure to eliminate any legacy systems and ensure adequate future investment to maintain excellent service
- Business plans to develop and continuously enhance the IT infrastructure
- Suitable communication networks with insurance companies keep up to date with technology and data interface protocols
- Appropriate premises to provide efficient and effective client support at all times and in specified territories
5. Claims Procedures
- Written and agreed procedures that reflect the number, value, nature and complexity of anticipated claims
- Established claims processing time-scales that provide access to decision makers at all stages
- Subrogation procedures established that describe the protocols with clear claimant requirements and responsibilities
- Stress-test exercises on claims scenarios, with review and implementation of lessons learnt
- Management of run-off claims described in the procedures to ensure correct management of such claims in the event of changing insurers
6. Data Management
- Access controls and procedures to ensure data protection, integrity and compliance with the DPA
- Mechanisms and controls to ensure data is reliable and accurate, including data input records to validate data entry details and staff identity
- Systems to identify suspicious claims, invalid data and detect/investigate apparently fraudulent/inaccurate claims
- Data retention, analysis and sharing protocols established defining data management standards that provide support for claims handling activities
- Robust business continuity and disaster recovery plans to ensure that there is no unplanned disruption to data management activities
- Documented flowcharts to record processes and levels of authority that include flowcharts and are shared with the client and other interested parties
- Involvement and management of third party service providers controlled by written agreements and deadlines established for third party reports
- Adequate qualified senior staff always available to supervise operations, ensure compliance and adherence to established procedures
- Consistent interpretation of policy terms and conditions by validated routine operational review and by auditing of open and closed files as necessary
- Procedures in place to ensure minimum time between claim settlement and payment
- Claims review meeting minutes etc. to document discussions and confirm agreed actions
8. Monitoring and Review
- Established performance monitoring and review standards with routine independent assessment and include evaluation of claimant feedback
- Routine claims handling operations evaluation against the standards, including post settlement meetings
- Board Claims KPI reports, including claims handling, data management, people and infrastructure evaluation
- Client feedback and complaint procedures as part of the monitor and review protocols including complaints procedures
- Post-settlement review meetings on large claims with procedures to track implementation of recommendations afterwards
- Periodic review of client charter and protocols, as well as monitoring compliance with existing protocols
Achieving best practice
In order to achieve excellence in insurance claims handling, all 8 components mentioned above must be in place.
Individual insurance claims handling organisations can use the guide’s structure to evaluate their current status. When doing so, they should bear in mind the different requirements and/or different claims handling priorities in the organisation.
Particular features of this guide may be less relevant to some organisations. For that reason, individual claims handling organisations should develop their processes using the principals of the guide rather than trying to stick to the letter.
We encourage organisations to evaluate their performance and capabilities against the features described for each component. The results of which can be used to highlight strengths as well as areas for improvement regarding claims handling arrangements and capabilities.
The evaluation of current performance can also be used as a means of identifying areas for improvement. It is not intended that this guide should be used as a means of quantifying performance or producing a league table for comparison.
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