Group Captive Program
This Captive program was rapidly expanding during extremely soft market conditions. They had developed an impressive safety and loss control program, and the policyholders were pleased. But the Captive was facing challenges in one area–claim administration. They had partnered with a large national third-party administrator (TPA) to provide these services. And initially, they were thrilled with the capabilities that TPA had to offer. However, they quickly realized that the TPA suffered from staggering levels of employee turnover. In fact, the primary adjuster dedicated to their business changed four times within the first year. Not surprisingly, poor claim handling and general neglect of claim files led to rapid deterioration in the Captive results.
The program manager decided it was time to transition their claims away from the TPA, and contacted their fronting for a list of approved TPAs. They soon turned to Athens, and we agreed to take on the clean-up project, as well as ongoing claim administration for the program.
Because we knew the claims we were about to inherit would be in poor condition, our first step was to bring together a powerhouse team. We then moved forward with a formal action plan, assuring that no time was lost during the program transition. We immediately attacked the files, assessing each individual claim. Major areas the team examined during the takeover initiative included:
- Reserve adequacy – Inadequate reserves are a typical side effect of weak claim handling. Which meant confirmation of reserve amounts was a crucial step. We knew that once we could validate the reserves, the Captive manager would once again be in a position to confidently make decisions about reinsurance levels, collateral and the general condition of the program.
- Confirming all claims were current – It was vital to ensure benefit payments were being made on time and all diary events had been satisfied.
- Claim closures – When there’s heavy turnover or inadequate staffing on a program, closing ratios is often one of the first things to suffer. It’s not uncommon to take over a program and immediately be able to accomplish a significant number of closures.
As the takeover initiative progressed, we also began converting all of the legacy paper claim files into digital files. Once in place, the paperless system allowed for greater day-to-day efficiencies in claims handling.
In addition to attacking the takeover claims, we also established definitive claim-handling guidelines and communication standards to be followed by the Athens staff that would be assigned to the program. The goal: to ensure that the Captive manager was comfortable, confident and secure with how their program was being managed.
The program has experienced a number of positive outcomes since the transition:
- Increased staff consistency – In the year since the program takeover occurred, there has been full continuity of claim-handling staff on the program.
- Increased claim closures – We significantly drove down the open indemnity inventory.
- Robust partnership – We regularly collaborate with and contribute to the Captive’s Loss Control program. Regular interaction and partnership between Loss Control and Claims was a major operational goal of the Captive managers for the program.
- Improved confidence and productivity – The Captive manager is now able to spend more focused time managing and growing the program.