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BI Perspectives 2008
Take seven steps to speed natural disaster recovery
By Jake Parsons and John Cadarette
Published December 1, 2008
According to the Federal Emergency Management Agency, there have been 72 "declared" disasters in the U.S. this year alone, the highest number recorded in a single year in more than a decade.
As in any year, the effects of such disasters are far reaching, often going beyond the immediate needs of physical cleanup and initial repairs. For any company or organization dealing with disaster recovery efforts, the process of filing timely, comprehensive and accurate insurance claims must be elevated to a top priority.
While the insurance claims process associated with natural disasters may seem overwhelming and time consuming at first, there are several steps business owners and leaders can take to mitigate the difficulties, issues and challenges that can arise when filing such a claim. These steps include:
Step 1: Promptly notify your broker of all losses, even those that may not initially appear to exceed the policy deductible or self-insured retention. This alleviates any issue of late notice if an incident later proves to result in a claimable loss. You also can instruct your broker to place underwriters on "notice of potential loss" if you're uncertain whether losses will be large enough to pierce into coverage.
Step 2: Identify and empower a senior-level employee within your organization to manage the claim. It's a good idea to have one person champion the collection and compilation of data required to develop and support the claim. He or she also would be responsible for controlling the flow of information to underwriters, brokers, claim consultants and adjusters, and for coordinating internal communication of important claim information to the executive management team.
Step 3: Establish cost codes in your accounting system to track all loss-related time and expenses. It is difficult, if not impossible, to capture all loss data forensically if costs are not carefully tracked from Day 1.
Step 4: Understand your coverages and review your policy for applicable limits, deductibles and exclusions. Know what's covered, what's not, and what is debatable. You may lose credibility for strong parts of the claim if you include items that obviously are not covered under your policy. Determine whether your policy includes a claim preparation allowance that covers the cost of retaining outside experts to help prepare your claim.
Step 5: Consider engaging outside consultants to assist with claim preparation. The right professional may be able to assist with coverage analysis, claim strategy, claim presentation and settlement negotiations. Bringing a consultant on board allows the business owner to maintain focus on operational recovery efforts and core business functions.
Step 6: Submit claims in well-organized and supported packages. Providing data without support slows the claim review process. Well-organized claims make work easier for the underwriters and adjusters because they often have numerous other claims they are handling at the same time. This especially is the case after a natural disaster. It always is best to provide all the information needed in electronic format. Providing a soft copy of loss calculations with links to supporting documentation will expedite claim processing and ultimately speed the receipt of insurance proceeds.
Step 7: Maintain regular communication with adjusters and underwriters and be responsive to their questions and information requests. This helps to eliminate surprises down the line. Keeping the adjusters and underwriters in the know will lead to a less contentious claim resolution. Resolve the claim items that you can, and attempt to minimize the disputed items to set up for a narrowly focused final claim negotiation.
It is understood that every organization confronting loss issues and property damage has a different set of resources and needs. The above guidelines can serve as a general guide to help you navigate through a difficult process, and help you maximize your claim in terms of efficiencies and recovery.
John Cadarette is a managing director and founder and Jake Parsons is a manager with the Claro Group L.L.C., a privately owned financial and management consulting firm with offices in Chicago, Houston and Los Angeles. For additional information, including an overview of business solutions, client case studies and career opportunities, visit the Claro Group's Web site at www.theclarogroup.com.
Pandemic plans still important
By Mike McGuire
Published November 10, 2008
Get C-suite support for pandemic planning
If you are a risk planner whose responsibilities include managing your company's influenza preparedness plans, you know just how tough it is to keep your agenda on the executive team's list of top priorities.
You know that, at any given time, there are a number of pressing risk issues competing for executive attention--climbing insurance rates, regulatory transparency, data breaches, environmental liability, reputational concerns--to name a few. MORE
Fighting cancer, soaring costs
By Dr. Lon Castle and Steve Russek
Published November 3, 2008
Some 9 million U.S. residents are living with cancer as oncology drug costs rise up to 15% per year. This means health plan sponsors need to develop clinically appropriate strategies to control those rising costs, say Dr. Lon Castle, senior director, department of personalized medicine, at Franklin Lakes, N.J.-based, Medco Health Solutions Inc., and Steven B. Russek vp of the professional practice and chief clinical officer at Memphis, Tenn.-based Accredo Health Group Inc. While cancer therapy is expensive, the human costs of inadequate or inappropriate treatment are much higher, they say...MORE
Anti-assignment clauses require close attention
By Amy Fink
Published October 27, 2008
The pressure to close a deal can cause companies to overlook or cursorily dismiss important issues concerning insurance.
However, as part of the due diligence process, the nature and scope of liabilities being transferred must be assessed. Then, the nature, scope and applicability of insurance coverage, both "present" and "historical," available to protect against those liabilities must be identified and analyzed. Nothing should be taken for granted during the due diligence process, including the fundamental issue of whether and how insurance policies will transfer to a successor. Further, specific steps should be taken to ensure that the issue of whether policies were validly transferred does not later become an obstacle for obtaining coverage against transferred or assumed liabilities...MORE
'Green' energy needs a boost from insurers
By Philip J. Edmundson
Published October 13, 2008
The two most significant problems the world may now be facing are not war or disease, not ideological or religious differences, not haves and have-nots. Our most urgent immediate and future problems are the growing disparities between energy supply and demand, and the impact that humanity is having on our global environment. If these problems are not solved soon, all our other troubles will magnify exponentially...MORE
Structural improvements cut cat losses
By Kurt R. Lindorfer
Published September 29, 2008
The frequency and severity of U.S. earthquakes are on the rise and so is the risk of business interruption. It's an ominous trend, particularly if yours is a mission-critical business, such as a laboratory, hospital, data center or other important 24-hour operation. The structural integrity and strength of the buildings your employees work in are crucial. If you're on the fence about improving building performance--that is, how well, or badly, your buildings behave during an earthquake--consider that the Insurance Information Institute reports that there are more than 5,000 earthquakes throughout the United States each year, 3,724 of them of magnitude 4 or greater on the Richter Scale...MORE
Key questions to evaluate PBM manager
By Richard Adams
Published September 1, 2008
Cost, access and quality are the three legs of the health care pyramid, and missing one or more of these legs in a medical benefit can lead to significantly higher costs and poor health outcomes. The pharmacy benefit is no different. Employers must provide pharmacy benefits that strike the right balance between employee and employer cost, access to local pharmacies and quality formularies...MORE
Few victories for employers in latest court term
By Gerald L. Maatman Jr.
Published August 18, 2008
The Supreme Court's 2007/2008 term presented enhanced expectations for employers and employment practices liability insurers hoping for a leveling of the EPLI playing field. While the Supreme Court took a pro-business stance on many legal issues over the past year, employment law was not one of those areas... MORE
Prepare a formal plan to respond to data breaches
By Brad Gow
Published August 4, 2008
The rash of recent high-profile privacy breaches in U.S.-based companies continues. According to the Privacy Rights Clearinghouse, at least 100 organizations have reported losing sensitive information of more than 9.4 million people so far in 2008... MORE
Recruits could alleviate possible worker shortage
By Roger Nulton
Published July 28, 2008
Corporate leaders have long recognized that talent is the most important factor in a company's success. In fact, hiring, training and retaining top employees is the foundation for sustainable, profitable growth... MORE
Empoyers must egage workers on Rx benefits
By Robert F. Nease
Published July 21, 2008
Many plan sponsors are learning the value of engaging consumers in health care decisions and encouraging more conscientious health care spending. But when employers think of consumers and health care, they almost immediately think of high-deductible plans and account balances. But consumerism in health care is expanding beyond this narrow, economic-based view...MORE
Risk managers must prepare for new tort risks
By Peter Gillon and Reed Rubinstein
Published July 14, 2008
Risk managers have been grappling with insurance challenges posed by the first wave of risks created by passage of the Superfund law and by asbestos, toxic tort, and product liabilities for almost a generation. With a second wave of complex environmental and toxic tort risks on the horizon, risk managers must heed important lessons from the past and act now to minimize future exposure and loss...MORE
Collaboration key to overcome subprime claims
By Richard J. Bortnick and Kevin M. Mattessich
Published July 7, 2008
The past decade has produced more than its fair share of real and supposed crises for professional and management liability insurers and policyholders. Beginning with Y2K and through Enron, WorldCom, options backdating and global warming, insurers have had to constantly revise actuarial plans, re-evaluate aggregations and pray...MORE
Mind the gap in self-insured health plans
By Rhonda D. Orin
Published June 30, 2008
Onetime Democratic presidential contender John Edwards made a cause celebre of the Nataline Sarkisyan story, a 17-year-old leukemia patient who needed a liver transplant but was denied coverage for the operation by health insurer CIGNA Corp. CIGNA relented after a public protest, but Nataline died before the operation could take place...MORE
ERM can play key role in continuous risk assessment
By Katherine Smith Dedrick and Mark L. Frigo
Published June 16, 2008
Risk assessment and risk transfer should be considered primary strategies for protecting corporate assets and shareholder value. The Sarbanes-Oxley Act of 2002 has increased the responsibilities of directors and officers, and it is not difficult to envision corporate management being placed in line for the liability of a company that failed to protect its assets by way of risk management and risk transfer...MORE
Credit insurance can protect account receivables
By Steven Gan
Published April 14, 2008
Account receivables are an extremely valuable company asset, especially since receivables often are the second largest asset on a company's balance sheet and represent all the resources that a company uses to market, sell, create, manufacture and ship its products to its customers...MORE
Contamination clouds insurability of NBCR risks
By Jack Seaquist
Published March 31, 2008
The Terrorism Risk Insurance Program Reauthorization Act of 2007 that became law last year extends the federal backstop another seven years. It now covers losses due to domestic terrorist groups while maintaining other terms, including current "make available" provisions....MORE
Proceed with caution when reporting a D&O claim
By William A. Boeck
Published March 31, 2008
Directors and officers liability insurers want to know what is going on with the companies they insure.
Most companies want to communicate openly with their insurers. While you might think D&O policies would be structured to encourage such communication, as demonstrated by the terms governing reporting of potential claims, that isn't always the case. Paradoxically, reporting a potential claim can be the basis for an insurer's declination of coverage....MORE
Consider auditing workers comp premiums
Process ideally includes the policyholder and insurer, could aid corporate bottom line
By Bruce S. Zaccanti and William J. O'Brien
Published March 24, 2008
Risk managers are under constant pressure to demonstrate that they have scrutinized corporate insurance programs and are providing effective coverage at competitive prices...MORE
When coverage disputes arise, try mediation
Conflict resolution initiative uses a proven, credible process to find a mutually beneficial solution
By Harold J. Moskowitz and Nancy L. Vanderlip
Published March 17, 2008
The International Institute for Conflict Prevention & Resolution, based in New York, launched an initiative this year to promote mediation use in policyholder-insurer disputes. This new initiative provides a...MORE
Follow the money to choose best plan
Claims data shows best ways to design health care coverage
By Samuel H. Fleet
Published March 17, 2008
As many businesses try to balance the escalating cost of health insurance and their desire to provide a benefit package that helps them attract and retain top employees, employers need to weigh their medical plan options carefully...MORE
Nanotechnology poses no minuscule risk
Risk managers face new challenges in evaluating exposures
By Louise E. Vallee
Published February 18, 2008
Research and commercial applications of nanotechnology are advancing rapidly. In the future, we can expect to see nanotechnology applications in numerous industries including electronics, cosmetics, pharmaceuticals and biomedicals... MORE
Rating disease management programs
Simple assessments can show employers true value of plans
By Alfred Lewis
Published February 18, 2008
Even though it has existed for more than a decade, the disease management field is still in its infancy when it comes to providing valid metrics for measuring its value for the managed care industry and large employers that pay for the programs... MORE
Dig deep to win pollution claims fights
By Jerry Oshinsky and Barry Buchman
Published February 18, 2008
Last June, the New Jersey Department of Environmental Protection filed a group of lawsuits against numerous petrochemical, manufacturing and other types of companies seeking substantial compensation for alleged environmental damage... MORE
California court complicates lawsuit settlements
By John E. Heintz
Published February 11, 2008
A recent decision by a California Court of Appeal has made it a whole lot harder for policyholders to settle lawsuits when insurers have denied coverage... MORE
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