AIRMIC Scores Claims With Best Practice Index

AIRMIC Scores Claims With Best Practice Index | Risk & Insurance By the end of this year, commercial insurance buyers could have a handy new guide available to help them gauge the claims-paying best practices of carriers. The Association of Insurance and Risk Managers claims guide will also complement a claims performance index the U.K.-based association hopes to have in 2009.

By MATTHEW BRODSKY, senior editor/Web editor

The guide will be more of a how-to publication for risk managers on what to look for in a carrier's claims service--from its IT capabilities to its timescales, from its operational standards to its willingness to meet the risk manager's needs.

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More intriguing will be the claims performance index, which previously had been known as the "willingness to pay" index. Seven of AIRMIC's insurance partners have signed on in support of the index. It's perhaps because, with the index, AIRMIC will not be doling out scores to claims operations. The index will be qualitative, with AIRMIC providing some judgment on whether a given claims operation meets minimum standards.

These conclusions will be based on audits of individual carrier claims operations, using the guide as a reference, as well as on client experiences.

AIRMIC officials stress that they do not mean to tell risk managers what carriers to do business with.

"Ultimately, it will be for the individual buyer to assess each insurer in light of the organization's requirements," said technical director Paul Hopkin in a news release. "An insurer that meets the needs of one buyer admirably may not be right for another. There's no substitute for human judgment, but this index should ensure that it is very well informed."

And by "informed," in part AIRMIC means to suggest that risk managers ought to not make the mistake of just buying policies; they ought to buy policies that pay claims.

Still, despite that disclaimer, some insurance experts are wary of any sort of index or qualitative grading system.

"It's unrealistic to develop a grading system for carriers because so much of what a claims person does is subjective," said David Siesko, principal at Siesko Partners, a New York-based insurance and claims services firm.

After all, what sort of claims experience could you expect a risk manager to report if they felt jilted on their last property claim? Yet the insurer might have had valid reasons for settling the way it did. With this AIRMIC index, would adjusters have one more thing hanging over their head: How will the insured rate my service?

It would be very difficult to put a claims person in that position and ask them to continue to meet their fiduciary responsibility, Siesko said.

October 1, 2008

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