You wake up to news of a catastrophe: mass injuries and property damage. The claimants, reporters and lawsuits will soon follow. What do you do next? At the RIMS 2018 Annual Conference, a panel of experts discuss the strategy to manage the catastrophic claims. The panel included Larry Reback, Managing Principal, Integro Insurance Brokers and Tabitha Prestler, Director of Risk Finance & Insurance, Wilbur-Ellis Holdings, Inc.
There are many common issues of focus in catastrophic claims. Crisis management includes mitigation of damages. Mitigation of damages includes but is not limited to what steps can be taken to stop or lessen the harm, communication to the press and public, what is going to be communicated and how is it going to be communicated. Coverage for PR firms costs/fees may be included in various insurance coverages. Then evaluation of the coverage. It’s important to analyze multiple policies and adhere to them.
Avoid these 10 liability claim handling common mistakes
- Delayed/late notice to the carrier -prejudice required/notice of circumstance.
- Failing to notice all potentially relevant policies – umbrella/excess, historic occurrence policies and first party policies.
- Retaining counsel without consent – conflicts and right to independent counsel.
- Incurring costs or liability without consent -voluntary payments, pre-tender expenses, and agreeing to settle/admitting fault without carrier consent
- Not timely or appropriately updating the carrier – carrier litigation guidelines and attorney/client privilege issues
- Failure to tender claims to other responsible parties – indemnification and sub rotation and additional insured issues
- Internal disconnect between legal and RM departments – may result in late notice or incurring pre-tender fees and legal maybe not fully understand all potential triggers
- Non-disclosure of material information on application – denial of claim and rescission
- Failing to contact broker/outside consultants when needed – early engagement
- Failure to understand effect of all policy terms – negotiate favorable policy terms at renewal and customize terms to fit particular needs of the organization
Wilbur-Ellis is an international marketer and distributor of agricultural products, specialty chemicals, and animal feed ingredients. Established and family owned since 1921. Ranked 138 on Forbes “America’s Largest Private Companies”. In June 2014, 286 complaints came in against Wilbur-Ellis for possibility of contamination of products.
Mitigation steps followed by Wilbur-Ellis
- Multidisciplinary action team formed immediately upon notice.
- Agronomic team initiated.
- TPA call-in number established.
- Claims investigated within 48 hours of call.
- Intense efforts with potential claiming representative.
- Labs established to verify potential damage.
- Recognize the issue and move with speed.
- Worked intensely with stakeholders to increase salvage and mitigate future damages.
- Created 3rd party teams of experts to address the incident and authorize them to settle.
- Created a clear and agreed settlement process.
- Created clear loss determination process and documentation required.
- Defined “no-loss” claims and advised impacted parties.
- Dealt with customers and non-customers equally.
- Involved insurers early and often to access intellectual capital and assistance to resolve claims.
Additional steps taken by Wilbur-Ellis include a website provided as collection site for all claim information for ease of access by carriers and others, engages other responsible parties early to obtain contribution to settlements, and steps taken to protect rights against other parties. It’s possible to get through a crisis if you have the right team in place. It is recommended not to take on the crisis alone. Vital to work together with your entire company and outside resources to people address the crisis. Critical takeaways from this session include speed of first response is critical, cooperation with insurance partners helps minimize loss, positive PR and customer satisfaction led to faster claim resolution, engaging experienced agronomy professionals early proved key in reducing claim exposure, and last but not least, open, honest and fair communication is important.