Are You Prepared to Handle a Major Loss?
Being at the centre of a major claim can be a huge challenge for an insurance manager, and involves a significant shift in their responsibilities and role in the business. A slow, mismanaged claim can be catastrophic for an organisation.
According to our report, produced in partnership with Airmic, protecting financial stability following a loss will minimise the risk to an organisation’s ability to compete in the long term. A major, complex loss is rare, and its definition will vary from business to business. Even if, in financial terms, a loss is small, it could have the effect of “stopping the tills”, making it a major loss for the business.
While a significant amount of work goes into managing a complex claim once notification of the loss has been received, much of the work that is important to getting a claim paid will depend on the actions and approach you take before the loss has even occurred.
Managing a claim pre-loss
Businesses can run through scenario analysis exercises to consider what might happen under a potential major loss event, asking the questions:
- What can happen?
- What would happen to the business?
- What would we do?
Before a loss has occurred, insurance managers should carry out appropriate steps to prepare for the unexpected. The following three steps will help you be prepared to more quickly and effectively manage a major loss:
1. Test coverage, identifying any limitations or gaps
Confirm and clarify the interpretation of insurance coverage and test how different polices will interact with each other, checking that there are no gaps in cover. You should also identify any implications for disclosure requirements.
2. Identify the “claims actors” and develop relationships
Meet with all loss adjusters, lawyers, and other relevant parties, and identify who you will need to engage with, when you would need to speak to them, and what information you would need in the event of a loss.
3. Develop claims protocols
Consider the steps required post loss, such as engaging with external experts and developing internal claims protocols.
Although taking these steps will not prevent a major loss from occurring, and much of the heavy lifting will take place after a loss has occurred, such scenario analysis can go a long way towards handling the claim efficiently if it does take place.