Belk, based in Charlotte, N.C., and the nation's largest privately owned department store company with more than 300 fashion locations in 16 Southern states, had been using a TPA for its casualty claims management. On balance, Belk was satisfied.
But over time, Basco began to see that while the TPA was responsive and fairly priced, it was not doing well in performance audits. Basco and her team decided to give the TPA market a fresh look, releasing a full RFP for claims management (workers' compensation, general liability and auto liability) for their 2007 policy year. The RFP process resulted in six finalists. One of them, Risk Enterprise Management Limited (REM), headquartered in Cranbury, N.J., fared very well in the selection process, but did not win the contract.
"REM's pricing was very competitive and they were willing to be very flexible," Basco says looking back. "If we had a question, they were honest about it. Their customer retention rate was high. They had experienced adjusters, and very strong supervision."
But in 2007, Belk chose a different TPA and the transition went fine. At renewal time, however, the situation took an unexpected turn.
"Sometimes, RFPs come out so quickly and the responding TPAs don't do a very deep level of analysis," Basco says. "We had a comfort level with the TPA we selected from the RFP, but its pricing began to change at renewal. We were not happy with that situation, so we asked REM to quote our program again."
This time, in late 2008, REM dug in and won the opportunity to serve as Belk's third claims TPA within three years.
"REM analyzed our performance requirements and matched it with their operations. They were, and still are, very focused on best practices across the board."
Belk required fair pricing, retail claims expertise, and proven outcomes. They needed a TPA that was large enough to manage their claims program, and assurance that their program would transition smoothly.
According to Paula Maguire, REM's senior vice president of field operations, just the thought of transitioning to a new provider can prevent companies from moving to a new TPA.
"Fear of change can be a major roadblock for risk managers," says Maguire. "Changing TPAs impacts your organization across all of your operations. Just the idea can be paralyzing."
Having gone through the process twice within 24 months, Basco certainly understands that fear of change. So, not wanting to be stung twice, Belk was very careful when making the decision to change in 2008.
"REM was competitive and consistent in its approach to pricing," Basco says. "We talked about our program needs, and they were able to offer us a strong program design."
Belk, which serves its customer base by providing superior service and merchandise that meets customers' needs, expects the same levels of service from its claims TPA. Basco believes Belk has found just that type of TPA partner in REM.
As Basco explains, being in the retail industry means longer tail claims, as they often tend to stay open a little bit longer than claims within other industries. REM serves many customers in the retail industry, and the REM team understands the claim challenges retailers face.
REM delivered a custom service plan that matched Belk's retail business - with a specific emphasis on improving long-tail claims outcomes - together with a data mining and analytics process to boost in-store loss prevention and safety for Belk employees and customers.
"I think our experience serving large retailers really gave Belk the confidence that REM could deliver service to meet their high level of expectations," says Maguire. "We understood their needs and pain points, and offered solutions."
Nevertheless, Belk faced a delicate situation in light of the 2007 TPA switch, leading to a request that REM enter into a specific performance guarantee.
"We told them that if they fail the audits, we get a return on our fees," Basco says. "They had no problem with it, and we found that to be very positive."
Belk and REM agreed to a number of key performance factors, including a cap on adjuster workloads. "REM agreed to the workload caps, and after some research, came back with recommendations for other performance indicators that met both our needs."
Maguire emphasizes the fact that earning a customer's trust really starts during the transition process, particularly with customers like Belk, that have had difficult experiences in the past.
"They made the decision to change TPAs, but were naturally concerned about the risks of switching." Maguire says. "We know customer trust is earned slowly, based on keeping our promises and our overall performance. Of course, we're pleased the trust factor is growing."
Basco also emphasizes the importance of the transition process when building a relationship with a TPA.
"Transitioning claims services is time consuming and detail-oriented," Basco says. "The timeline must be in place and updated during the entire process, or it will be painful."
Some key issues include understanding the data flow from the former RMIS system to a new system, and Basco gave the REM team high marks on that front.
Basco also said the transition can't be a long, drawn out process. It needs to be done right, but quickly.
"We took a deep breath and REM was ready to go within 60 days," Basco says. "I honestly have to say that in the end, REM has exceeded our expectations every step of the way. During the transition, in particular, they have been very proactive and flexible."
Basco says that the two most important needs from a TPA are: delivering results on performance guarantees, and being true to its word on service fees.
"REM has done and is doing both," she says.
For more information, contact the REM sales team at 1-800-347-4494 or email@example.com.
piece is part of our continuing Insights series designed to highlight key products and services to our readers. This paid-for
Insights was written and edited by Risk & Insurance®
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December 2, 2009
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