The key to making the most of your coverage is to work closely with your appointed experts and broker. Let them navigate you through the process of claiming against your policy.
Dealing with a large insurance loss is a complex process and each claim is unique. The nuances of coverage as well as the complexities of quantifying, substantiating, and validating a claim is often overwhelming for claimants.
There are a few very simple steps that an insured party can take which will ease the process and maximise the value of their coverage. Firstly, let’s address the steps that can be taken pre-loss.
Know your obligations It’s crucial that a policy holder is familiar with their obligations under a policy. Often there are requirements for the insured to protect the insurers’ rights and interests with clauses addressing non-admission of fault to a third party, disposal procedures, use of preferred suppliers, timely notifications, mitigation of loss, and a range of other conditions.
If these obligations aren’t adhered to, a claim can be denied or reduced. Often times these obligations only become known to the broader organization post-loss; the real issue here is coverage gaps and expectation management. Know your policy obligations and communicate them widely within your organization.
Don’t make assumptions Policy documents are essentially contracts setting out the terms and conditions of coverage. However, given the variability of insurable events, if policies were completely prescriptive the size and breadth of the document would be unmanageable.
Over the years, policies have been streamlined and generally-accepted definitions as well as precedents are used to determine policy responses. Inexperienced individuals unfamiliar with policy wording may set incorrect expectations within their organization, which creates conflict when the outcome of a claim deviates from those expectations.
If a loss does occur then there’s a reasonable expectation that a policy will respond and cover the financial losses. However, there are still areas where an insured party can maximise their policy response.
Level the playing field the first mistake organizations make when it comes to a major loss is assuming that their accounting or operations department can manage the process.
Conversely, insurers engage a loss adjuster and supporting experts from the outset to ensure that their interests are protected. A loss adjuster is focused on expediency and protecting the insurer’s rights. They have no particular vested interest in ensuring the claimant makes a full recovery under the policy.
By not appointing claims experts to equally represent their interests, claimants cede control on how the claim is presented and interpreted. Very often claims handling and expert support is provided for in a policy and any costs are recoverable from insurers; all claimants are encouraged to appoint advisers from the outset.
Be ready to share documentation when faced with a major loss, the obligations to prove the loss and recovery costs can seem overwhelming. It is not uncommon for organizations to resist and/or delay the provision of key information, thereby delaying settlement, as the relevancy and reasonableness of certain requests may be unfamiliar. Ultimately there is an obligation on the insured and their adviser to support the claim being presented, but that doesn’t mean all documents requested need to be provided.
A good adviser will assess all requests for reasonableness, often pushing back on requirements, which can alleviate some of the workload. They also help manage the flow of information, which given the volume of information being communicated, can be a valuable screening process.
Solution
When a major loss occurs the focus, rightly so, is to contain losses and facilitate the recovery of normal operations. However, the earlier an organization is able to begin the process of claiming under their policy the better the outcome of the claim. Involving all stakeholders from the start and managing the information flow and messaging are the key factors.
Managing a major loss claim can be compared to managing a project and uses a number of the same techniques. A plan to achieve an outcome is formulated with pre-agreed key milestones and timelines. The deliverables are the evidence of the loss, and documentation supporting the cost of recovery.
Letting an experienced claims professional act as your project manager will pay dividends when it comes to managing expectations and maximizing your coverage. They will walk you through the process, manage progress, liaise with Insurers and their representatives, vet requirements, and ultimately negotiate on your behalf to achieve the best possible financial outcome.
The impact in the financial outcome of a claim through the use of claim professionals should not be underestimated. Often a relatively small change in presentation of a claim or approach to a calculation can have a material impact on the final claim number. This is especially relevant for larger claims, as minor changes can often have multi-million dollar impacts to the final number.
For further information, please contact:
Dennis Dalati
Head of Claims, Asia
Dennis.Dalati@marsh.com
Glenn Eaglestone
Practice Leader, Forensic Accounting & Claims Services, Asia
Glenn.Eaglestone@marsh.com
