The administration of insurance claims is of considerable importance, since the response time to these claims can be lengthy, and there is a high risk of claim rejection if the paperwork is not filled out properly. This issue can be mitigated by adhering to a specific claims administration process.
The core of this process flow is a checklist of activities that must be completed before any claim can be filed. The presence of a checklist keeps the company from missing a key step that could interfere with claim settlement. Other steps should also be included to record the associated transaction and to mitigate the risk of future losses of a similar type. The checklist should include the following items:
- Itemizations. List the estimated cost, replacement cost, and appraised cost of each item to be included in the claim, as well as the sources of this information.
- Cost buildup. Aggregate all of the related costs sustained by the company during the event, for which it may be possible to claim reimbursement.
- Adjuster contact information. Pull from the records the name of the claims adjuster to be contacted, and verify that this information is still correct.
- Internal notifications. Notify those people inside the company who may need to record the associated loss, or to notify investors or senior management of the situation.
- Problem analysis. Review the cause of the claim and investigate whether steps can be taken to keep this type of loss from arising again.
- Asset protection. Ensure that no further damage to the damaged asset can occur. For example, move a water-damaged asset to a dry location. Otherwise, the insurer will only pay for the amount of damage initially sustained.
To ensure that these steps are followed, institute an occasional internal audit to review compliance with the checklist.
It is possible that a company focusing on other issues will have a third party administer its insurance claims. If so, be sure to have a monitoring process to verify that claims are submitted accurately and on time, and that a high proportion of the submissions are paid out.