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Customs, Standards, Practices & Duties - P&C
The claims audit is the anathema of day-to-day claim operations. Nothing is more disruptive. Yet, if properly defined, nothing is more informative and helpful in improving a claim management program. This article will examine the need for a regular auditing program and provide a recipe for a three-dimensional approach to the process in order to maximize the accuracy of the audit results.
The need to conduct regular claims audits has already been widely discussed. With the magnitude of self-insured claims programs (including self-funded programs) and the millions of dollars spent on claim administration fees, what better way to verify whether the money spent has been justified or wasted? In essence, an audit of closed and open claims should accomplish several things.
“Directors and officers liability policies have long been issued on a “pure claims-made” basis (a
phrase this writer first coined in 1990). That is, they were written with no prior act date (also
known as a retroactive date). As a result, wrongful acts of the directors and officers dating
back to corporate formation were covered as long as the claim was first made against the insured
during the policy term. To minimize the singular risk D&O insurers were taking (i.e.,
“what probability exists that a claim will be first made against the insured during the policy
term?”), they began using a “continuity date” and/or a “prior/pending litigation exclusionary”
date that was the same as the inception date of the first policy issued. The date the insured
first obtained coverage thus became known as the “first coverage date” so the “continuity
date” could be honored at renewal. This was reinforced by a warranty within the application
for coverage stating that the insured was or was not aware of facts, incidents, or circumstances
that could give rise to a claim in the future.”
Property and Casualty Insurance Expert Witness with a 45 Year background as an Insurance Broker. Expert witness since 1989 with a primary focus on 1) agent and broker standard of care; and 2) coverage issues. Topics addressed have included: Property/Crime; Business Interruption; General Liability; Executive & Professional Liability; Workers’ Compensation; Umbrella Liability; Automobile; and Homeowners.…
Nancy Germond’s three decades of risk management experience give her unique insights and abilities as a consultant. An accomplished risk and claims manager, Nancy authored scores of risk-management related articles, White Papers and has presented for organizations like the Public Risk Manager Association (PRIMA) and the Society for Human Resources. She is the Executive Director,…