How Good is Your Insurer at Handling Claims – Know Before You Buy

When business owners shop commercial insurance coverage, the solvency rating of the proposed insurance company is one critical factor they consider. However, savvy commercial insurance buyers should consider another vital factor — how will the proposed insurer handle your claims?

While a face-to-face meeting with the company’s underwriters or loss control personnel can help business owners feel confident in the carrier they hope to partner with, let’s face it, we buy insurance to pay claims if we have them. In claims handling, some carriers excel, while others do not fare so well. When faced with the choice of several competing insurance quotes, how does your management team decide which carrier to select?

It is critical that commercial insurance buyers research potential carriers before making the leap to a new insurer, including talking with other of the carriers’ insureds in parallel industries and researching court decisions involving the potential company. The reputation of each insurance carrier you consider should play a major role in where you place your coverage, even if you pay higher premiums upfront. Poorly handled claims, especially workers’ compensation injuries, can increase your insurance costs for years into the future.

Here are a few questions you might consider before changing carriers.

• Will the carrier under consideration dovetail reporting procedures and work with you to ensure loss handling begins within 24 hours of receipt of the claim?
• Does the carrier offer comprehensive claims information and quarterly meetings to ensure each claim is handled strategically and with your participation? This is critical if you carry a high deductible or self-insured retention.
• Will the carrier dovetail claims reporting and other claims-handling instructions so that you have a team of dedicated adjusters, or will an adjuster who is unfamiliar with your organization handle your losses on a one-off basis?

These touch points can mean the difference between your company preserving a positive loss record or one that spirals out of control. Poorly handled losses will cost you more money, may damage your company’s reputation and potentially endanger your coverage.

As rates continue their current climb, it becomes even more important for insurance managers to determine a carrier’s claims-handling service standards with the help of their consultants. The choice of where to place your critical coverage should never come down to mere dollars and cents.

Although business owners hope they never have a claim, the reality of running a business in today’s society means claims will occur, even in extremely well-managed organizations. When that happens and a claim occurs, you will quickly discover how strong your insurance carrier really is. Why not determine how your potential carrier handles claims before you decide to switch carriers?

Feel free to contact me at 732.395.4251 or asica@thealsgroup.com if you have issues with a claim or claim-related material.