Adjusting Firm Carves Out Program Niche

James Sweeney, executive vice president-corporate development, said the claims technology York has developed can capture 35 unique data elements on a program-by-program basis, in addition to 250 standard data fields that are more typically captured by most third-party administrators.

Mr. Aussicker explained, for example, that for a large transportation program York handles, one of the 35 blank data fields might be customized to track information about how the load on a truck is tied down. Another might track how long it has been since that driver last had a drug test. And still another, how many hours the driver was behind the wheel before an accident.

"These are all things that are not typical in a [third-party administrator] or carrier claims system," he said.

"For every client, we don't care if you have two claims per year or 20,000. We can customize those fields specific to your needs," he said, going on to give another example of an educators' program where the issue is professional-liability type exposures, so possible data elements that York's technology could track might include the years of service that teachers have. Also being considered is the possibility of tracking prior criminal records employees might have and situations that did not prevent them from being employed but could be indicators of higher claims potential.

Accumulating such data pays off, according to Mr. Aussicker, who gave an example involving a large country club program. After a heavy cold spell, there were a lot of buildings at the clubs that incurred freeze-up claims, he recalled. By reviewing the data, York found that the majority of the freeze-ups were occurring in poorly insulated attic areas.

York shared the information with the program administrator, who then got the word out to the association and its members. "The following year, which was actually a little colder than the prior one, they had significantly less freeze-ups," he said.

"It really is a circle of communication that we develop," Mr. Sweeney said.

York gets involved "not just at the claim level–not just with money going out." In addition, Mr. Aussicker said, the adjusters are working with underwriters, loss control specialists, actuaries and the association "to help drive down loss ratios, and ultimately make programs more profitable." In contrast, he said many TPAs often just focus on relationships with carrier claims personnel.

He also noted that York adjusters tie their efforts back to loss control when they are investigating claims, alerting risk management specialists about on-site hazards previously flagged for correction during initial inspections that may be sitting uncorrected. "Even though we're only out there on a $2,000 slip and fall, [the insured] may still have a back room full of kerosene. Helping to get that removed may prevent a much bigger loss down the road," he said.

Mr. Aussicker stressed, however, that it's not just a matter of having field adjusters keep their eyes open. If they're noticing, for example, supermarket employees mopping floors without putting up those little yellow caution signs–or that the signs are in English while the clientele speak primarily Spanish–that information just can't get tucked into a file back at the office. Instead, it needs to be communicated up to account managers, who then speak to underwriters at the carriers and to the supermarket association to ultimately change behavior.

Mr. Sweeney highlighted York's account managers in distinguishing the firm from others that adjust claims for programs. He explained that an account manager–who is the single point of contact for the MGA and the carrier underwriter–will meet with the MGA or underwriter when a new program client comes on board to understand its unique characteristics. The MGA will go over policy forms–reviewing coverages and policy interpretations, in addition to providing input on the adjuster workflows and data requirements, he said.

For some programs, the underwriter and MGA may want supervisory review within the first 30 days, while others don't get any information for 90 days.

As each program relationship develops, Mr. Sweeney said account managers also have a view of the entire book of claims on that program. Adjusters, typically, "are very transaction oriented. They look at the individual claim; they don't look at the whole book of claims," he said.

In contrast, account managers "have the ability to see the forest as opposed to the trees," he said, referring to the fact that they can identify common threads that emerge and work with MGAs and underwriters to either modify coverage or institute loss control measures.

Mr. Aussicker noted that each account manager manages only five-to-10 programs, allowing them to get heavily involved in the nuances of each. In addition, adjusters in York's program segment have an average file count of 80-to-105, he said, contrasting that with north of 120 files for adjusters handling claims on more standard customers with self-insured retentions.

"With fewer files, you're going to have more time to spend on reaching a better ultimate indemnity result and preserving the profitability of the client," he said.

In addition, Mr. Sweeney noted that like MGAs working in the program business arena, adjusters working in York's dedicated programs unit are specialists in their own right. While York operates in four distinct market segments–program business, residual markets, self-insured retention/risk management business, complex property adjusting–a program adjuster may not handle SIR claims, and likewise a residual market adjuster won't work on programs.

The work of adjusters and account managers in York's program unit is supplemented by professionals in two additional groups–a complex claims unit and a central quality assurance department, the executives said.

Mr. Aussicker explained that the complex claims unit consists of individuals with experience of 15 years or more, on average. "When you get the right team of experts on the file early–whether it be legal, cause and origination, accountants for large business interruption losses–it can significantly reduce the costs of potentially disastrous claims," he said.

He noted that determining the appropriate threshold for shifting claims to the complex claims team is another aspect of each program that is determined individually–program by program–by account managers in concert with MGAs and underwriters.

Explaining the quality assurance department, Mr. Sweeney said this group conducts rigorous self-audits of offices and claims files. As is the case with MGAs, carriers also monitor TPAs by doing their own audits, Mr. Aussicker said, noting that most perform no less that two or three audits per year–sometimes per program.