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Sponsored Content by AIG

Five Critical Factors for Claims Success That Are Often Overlooked

These overlooked factors are significant in determining if your company can survive a loss.
By: | May 1, 2017 • 5 min read

Nothing is more important than getting claims resolved successfully. After all, at the heart of the insurance contract is the promise to cover losses.

That’s why the financial strength and claims reputation of carriers is so critical. These characteristics demonstrate a company’s ability and willingness to pay.

But when a business suffers a significant loss that severely limits its operations, there are several additional factors that will determine if the company will survive. In these circumstances, repairing the damage and getting back to work as fast as possible is critical.

Therefore, it’s vital to work with carriers who demonstrate these five traits:

  1. Responsiveness

Dean Owens, Head of Property and Special Risk Claims, U.S. and Canada

Recovery is a race against time, and the clock starts ticking as soon as a loss occurs. Even with Business Interruption coverage, competitors will not be sitting idle waiting for your business to get back to work.

This is why speed is critical.

Waiting weeks or even months to receive a claim payment can seriously hinder a business’s ability to become fully operational again.

“Whether a loss is large or small, companies need some working capital in the early stages of recovery to put the business back together,” said Dean Owens, Head of Property and Special Risk Claims, U.S. and Canada, AIG.

AIG recognizes that need with its ‘AIG Property Claims Promise,’ which assures that policyholders will receive a payment of up to 50 percent of the agreed total loss estimate within seven working days, which accounts for cleanup costs, property repairs, and extra expenses incurred during the rebuilding process.

The willingness and ability to pay quickly also shows clients that their insurer has the resources to support them for the long haul, even in the event of large losses.

In 2016, for example, a large resort complex suffered a major fire that destroyed several hundred of its units and 70-90 of its buildings. Claims handlers were on the scene within two days, while the fire was still smoldering. Seeing that it was a total loss, the AIG claims team expedited a $10 million advance within a week on what ultimately amounted to a multimillion dollar property claim. This working capital allowed the resort to kick off the rebuilding process immediately.

  1. Domain Expertise

Your business and industry are unique. There are complexities and peculiarities that require experience and expertise to understand. Working with claims handlers that have deep knowledge about your industry means they understand your top concerns, and how to minimize them.

Property damage will impact a casino differently than it impacts a real estate developer, for example.

“A claims handler with casino loss experience knows that a property claim is as much about the business interruption as it is the physical damage. A casino could suffer a very significant business interruption loss in a single day,” Owens said. “You need to understand your clients’ revenue streams, and how to best mitigate losses in the event of a property claim.”

Pairing the right claims handler with the right client is part of AIG’s credo of operational excellence.

“We always want to bring someone to the table who has specialized knowledge of client’s industry segment, and who has the right skills to handle the types of claims that clients are likely to have. It’s about matching the right skills and resources to the right customer,” Owens said.

  1. Access And Availability

Relationships matter. To respond quickly and effectively, a claims team that is familiar with the decision-makers in your business needs to be in place before the loss. No risk manager or executive should be meeting their claims person for the first time when they’ve just suffered a loss.

Whether an insurer has an in-house claims staff or contracts with external adjusters – or a combination of both – a claims representative should ideally be meeting with clients face-to-face as often as possible.

“We strive to get in front of the clients as often as we can,” Owens said. “We want to get claims handler at the table with clients, brokers and underwriters so everyone is on the same page. And we want our clients to know that their claims handler is their single point of contact if they have a loss. No back-and-forth or roundabout communication.”

AIG’s internal Property Claims Field Group, which is involved in about 40 percent of cases that tend to involve smaller claims, further streamlines the process. External adjusters remain critical for large claims, though, especially when multiple insurers are involved.

“We partner with some excellent outside firms, but wherever we can do something ourselves, we do it ourselves,” Owens said. “It puts us in front of the clients, and a stronger relationship leads to an expedited claims process.”

  1. Innovative Technology And Analytics

Claims data holds incredible value if properly utilized. Important insights can be gleaned from loss history about specific exposures, and a better understanding of exposures can be leveraged to improve the coverage and pricing of your risk portfolio.

But to achieve these benefits, the data needs to be tracked consistently, at a granular level and across your global portfolio.

Underwriters who have an integrated view of global claims data can see how much of a claim is for business interruption losses versus property damage. Maybe one or two locations out of a portfolio of 12 are sitting in a hail zone and are responsible for the bulk of large claims. This insight allows them to adjust their underwriting to better match the risk profile of that particular client.

“It’s about making sure you understand what you’re insuring,” Owens said. “Having this data enables the underwriter, the client and the broker to make more informed decisions.”

AIG’s IntelliRisk® system allows clients to directly access that data through an online portal. Along with detailed claims data, it provides tools to run ad hoc loss runs in real time and monitor open claim activity.

  1. Investment Training

Across the insurance industry, talent development and continuity is a pressing challenge that many acknowledge, but few have taken initiative to solve.

AIG continually feeds its talent pipeline by hiring a few interns every year and investing in their development. All of AIG’s handlers go through regular training to keep their knowledge fresh. That could include a course on hail damage or the roof rebuilding process, or some other technical aspect of property risk.

“It keeps their expertise on the leading edge of a skill set,” Owens said.

Staying sharp and continually building talent is also key to maintaining clients’ trust and confidence.

“You’re only as good as your last claim,” Owens said. “We aim to make each claim an excellent experience for our insureds every time.”

To learn more, visit: http://www.aig.com/globalproperty.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with AIG. The editorial staff of Risk & Insurance had no role in its preparation.




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AIG is a leading international insurance organization serving customers in more than 100 countries.

More from Risk & Insurance

More from Risk & Insurance

Cyber Resilience

No, Seriously. You Need a Comprehensive Cyber Incident Response Plan Before It’s Too Late.

Awareness of cyber risk is increasing, but some companies may be neglecting to prepare adequate response plans that could save them millions. 
By: | June 1, 2018 • 7 min read

To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.

“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.

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In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.

This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.

The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.

According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”

They also should bring together key stakeholders and specify end goals.

Jason J. Hogg, CEO, Aon Cyber Solutions

With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.

“Collaboration is key — you have to take silos down and work in a cross-functional manner.”

This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.

“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”

People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.

“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”

Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.

Practice Makes Perfect

“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.

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Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.

“You need to plan for every type of threat that’s out there,” he added.

Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”

“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions

Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.

“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”

For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.

Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.

That includes access to a pool of attorneys who can guide company executives in creating a plan.

“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:

  • Purchase cyber insurance, read the policy and understand its notice requirements.
  • Work with an attorney to develop a cyber event response plan that you can customize to your business.
  • Identify stakeholders within the company who will own the plan and its execution.
  • Find outside forensics experts that the company can call in an emergency.
  • Identify a public relations expert who can be called in the case of an event that could be leaked to the press or otherwise become newsworthy.

“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.

Cyber’s Physical Threat

With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”

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How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.

Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.

“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.

“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”

Support from the Board

Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.

David Legassick, head of life sciences, tech and cyber, CNA Hardy

“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.

However, getting board buy-in or buy-in from the C-suite is not always easy.

“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.

“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”

“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.

“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.

“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.

Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.

He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.

Collaboration and Communication

Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.

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One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.

Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.

“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected] Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]