Sponsored: Engle Martin & Associates

If Your TPA Doesn’t Do These 6 Things, Your Next CAT Claim Could Be Disastrous

Clear communication, fast, and reliable funding, accurate reporting and compliance with state law are all critical to a positive outcome.
By: | July 11, 2018 • 6 min read

Despite many communities still bearing scars from Harvey, Irma, and Maria, hurricane season is back again.

As much as businesses in hurricane-prone areas should do their best to storm-proof facilities, risk managers should also know what to expect after a major loss if they want to rebound quickly. To get through a catastrophe claim successfully, they need to rely on the expertise of their Third-Party Administrator (TPA).

As the middlemen between carriers, brokers, adjusters, and policyholders, TPAs are the cornerstone of claim management. To ensure the best possible CAT claim outcome, all of these parties should rely on a TPA with mastery of these six critical factors:

  1. Immediate Initial Contact

Once a business reports a loss, there’s no time to waste.

“Timely communication immediately following a catastrophe is paramount,” said Bruce Federspiel, Senior Vice President of Engle Martin Claims Administrative Services (EMCAS), the TPA of Engle Martin & Associates.

Second to the damage itself, the greatest source of stress after a catastrophe is the element of the unknown. Especially if a company has never suffered a significant loss before, the risk manager may be unsure of how the claim adjusting process will unfold.

Bruce Federspiel Senior Vice President of Engle Martin Claims Administrative

The field adjuster, for example, may disagree on the damage assessment. In this case, the TPA may send out an additional adjuster or engineer to do a second report. Being aware of this possibility ahead of time can help an organization build a realistic timeline for the course of their claim.

“At minimum, entities should be contacted within 24 hours of reporting a loss. They’re going to be concerned, and it’s critical to get in touch with them early and explain how the process will work, who will be contacting them, and when. It provides some peace of mind and lets them know that someone is watching out for them and working to help them move forward,” Federspiel said.

  1. Ongoing Communication

Lack of regular updates on a claim’s status leaves insureds feeling in the dark and frustrated during an already tough situation. Regular follow-up communication is vital to keep all parties in the loop, including the insured as well as both domestic and London-based carriers, brokers, engineers, and independent adjusters.

“If you have a large commercial property with a $10 million loss, there will be public adjusters, engineers, and likely a management company involved. There’s a lot going on, and it’s important to let the insured know that incoming information is being handled promptly,” Federspiel said.

“A best practice is to get a field report in our internal adjuster’s hands within two weeks of the loss and relay those findings to the insured. For an ongoing claim, a minimum standard is 30 days of regular communication and updates. After a natural disaster, of course, that timeline may be extended.”

  1. Reliable Funds at the Ready

The ultimate success of a CAT claim hinges on whether that claim gets paid on time.

Post-disaster, when entire communities have suffered extensive damage and all properties are filing claims, parties that are not proactive about establishing funding mechanisms risk receiving late payments, especially when multiple carriers are involved.

“A large commercial property policy could have as many as 11 different syndicates or London-based insurance carriers sharing responsibility for a loss,” Federspiel said. “The TPA’s job is to gather the funds from each of those carriers and pay the claim on their behalf.”

For normal daily claims supported by an established loss history, this process is not typically challenging for a skilled TPA. But catastrophes are unique.

“With a catastrophe, you’re never really sure how bad it is until you can get in and look. That makes it more difficult to determine the amount of funds needed and usually calls for a separate catastrophe funding mechanism,” Federspiel said.

Each syndicate may require its own loss funding account specific to claims from a particular catastrophe.

“A TPA has to be proactive and persistent with communication to the syndicates to get the initial proper funding set up and avoid customer service issues with the entity that has suffered the loss,” Federspiel said.

  1. Speed to Pay

Businesses need quick liquidity to get the ball rolling on cleanup and repairs. The longer it takes to rebuild, the harder it is to recover lost business, and regain momentum. The ability to issue advances for covered losses is critical to get companies operational as fast as possible.

“As long as underwriters are willing to do it, it is certainly a best practice to issue advance payments after a catastrophic loss, without the insured having to ask you first,” Federspiel said.

These funds are especially important because many contractors will not begin debris removal or repairs without proof of ability to pay. Like adjusters, contractors are in high demand after disaster strikes. Having payment available  may help a company secure a contractor before someone else does.

  1. Fast and Accurate Loss Reporting

Carriers need frequent reporting in order to gauge the scope of total loss and adjust reserves accordingly. Post-catastrophe, carriers have to account not just for current losses, but also for claims incurred but not reported. After major events, some entities may not report losses until months after the fact.

“We were still getting claims in January and February from Hurricane Irma that hadn’t been reported,” Federspiel said. “The current loss run is critical information to carriers and brokers, and many times they want that report daily.

“TPAs have to have the technology to do that well, do it quickly, and get it sent out.”

  1. Compliance with State Statutory Requirements

Following natural catastrophes, states have different legal standards regarding quality of repairs and timeliness of claims payments, among other factors.

Florida law, for example, dictates that if 25 percent or more of a roof is damaged, the entire roof must be replaced. If an insured is in Texas, the carrier or TPA is required to get a claim payment into their hands within 30 days after finalizing the proof of loss.

As many large carriers insure properties across the country, keeping track of and adhering to all local regulations can be a complex challenge.

“It comes down again to being proactive and prepared. Being aware of local laws in play even before a hurricane makes landfall means you’re ready to respond appropriately from day one,” Federspiel said.

Why Companies Trust Engle Martin in the Wake of Disaster

In the wake of 2017’s active hurricane season, CAT adjusters were stretched thin. For the best possible claim outcome, companies need to partner with reputable and well-resourced TPAs who can deliver on their promises even in the toughest situations.

“If you’re an EMCAS client, we do our best to have an Engle Martin field adjuster looking after your loss who is attuned to providing superior customer service,” Federspiel said.

Many of Engle Martin’s property adjusters have carrier or TPA backgrounds, so they understand what those parties need in order to process a claim efficiently.

“Engle Martin was established as a property field adjusting company, and EMCAS grew out of the need for the London market to have a U.S.-based TPA to handle its claims,” Federspiel said. “Property adjusting in is our DNA.”

To learn more, visit https://www.englemartin.com/tpa/.

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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 Engle Martin. The editorial staff of Risk & Insurance had no role in its preparation.




Atlanta-based Engle Martin & Associates is a leading national independent loss adjusting and claims management provider. Privately held and owner operated, the firm delivers a comprehensive line of property and casualty claims service offerings.

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.