Success Stories:
Aggressive Claims Management, Collaboration and Contractual Risk Transfer Reduces Premium

Client Issues

During an evaluation of the loss experience of a prospect, KMRD repeatedly noticed several large slip and fall claims that exceeded $100,000. When requesting more specific information, the client could not provide any more than what we already had. Based on our experience they indicated a deficit of the following:

1. Communication on the claims management strategy, process or perspective from the carrier or broker.
2. Client engagement in the process. They were unaware of the positive impact their involvement would produce on claims reserves and results.
3. Aggressive defense of claims by the carrier or involvement by the broker to push for resolution.

KMRD Assessment

KMRD gathered loss information, analyzed the results, developed and executed a strategy as follows:

1. We prepared a summary of their losses in a manner that clearly revealed the clients average losses as compared to their premiums and exposure basis (square footage).
2. We categorized losses by location so that the client understood where their frequency of claims were coming from.
3. Using a dollar threshold, we identified "large losses" (severity).
4. Finally, We opened up the lines of communication by pursuing the carriers claims representatives on all of the large losses.We asked the following questions:
   • What are the facts and circumstances surrounding the claim"
   • What is the rationale behind the reserves?
   • What is the carrier's strategy for resolution?
   • What is the expected time frame for resolution?
   • What can the client do to assist in the defense?
   • Are there any risk management recommendations?

Positive Carrier Response

The carrier's response to our initial inquiry confirmed our diagnosis:

1. Many of the claims had not been reviewed by the claims person in some time.
2. The logic in the reserving process needed an overhaul. Our questions triggered a re-evaluation of the reserve logic and yielded $150,000 of reserve reductions over the 5 year loss picture. Just by asking the above questions!
3. Many of the claims were tendered by the carrier to the client's subcontractors for resolution. These included landscaping firms, snow removal firms, janitorial service contractors, etc. None of the tenders were being accepted by the subcontractors' carriers. In our assessment, the contractual risk transfer program needed to be reviewed.

Next Steps

1. Analyzing the rationale behind the reserves.
2. Further questioning the logic behind the reserves.
3. Analyzing the defense strategies of the carrier and their claims counsel.
4. Analyzing the effectiveness and efficiency of the appointed outside law firms from the clients perspective.
5. Suggesting alternative strategies.
6. Suggesting re-assignment ("firing") of counsel where appropriate.
7. Analyzing the subcontract and certificate of insurance program from an insurance and risk transfer standpoint.
8. Ultimately redesigning the subcontract and certificate of insurance program to effectively transfer risk.

KMRD Value

The efforts of our Claims Advocate settled many claims. This created a further reduction in the total loss picture by an additional $350,000 over the 5 year loss experience yielding a total decrease in the average losses over 5 years of $100,000!

Over the next several years many of the slip and fall losses were tendered to the clients subcontractors under the new process. The claims experience dropped dramatically. The underwriters targeted a 50% loss ratio to arrive at their pricing. With this improved loss picture their average insurance costs were reduced by $50,000 per year. Over 10 years, beyond the operational improvements, we will document over $500,000 in savings for just this policy alone.

As seen in the scenario above, our risk partnership in action helped dramatically reduce the cost of risk. Imagine what KMRD can do for your company. Contact us today.