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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.

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]