Start-up – Lets get down and dirty and pitch in on everything

By Marc Lanzkowsky – January 19, 2010

On day one as Vice President of Claims for Arch Insurance Company I found myself working in cramped space in Lower Manhattan where the CEO shared an office with others and the head of Professional Liability Underwriting found a happy home in an electrical closet. Arch was rapidly growing its underwriting and was binding new policies at a breakneck pace. After getting my credenza in the hall (with a shared phone as there were no more phone lines) I was handed the entire company’s log of claim files to get to work. This consisted of one property loss, and one notification of a casualty incident. It was easy to think that claim counts would be low for a while but that would change quickly. I was hired to manage and concentrate on the administrative operation, which would free the technical claims staff to focus on strong claims handling from the inception.

We needed everything including a claims system, best practices, litigation management, a way to manage and store claim files and methods for making claim payments. Given that we were a public company, all had to be done with strong controls in mind as well. It was a different challenge every day. We concentrated on things at first that would have little impact later. It was easy to go down paths that later became muddied or ones that should never have been followed. It was not known how quickly claims would grow and what types of policies were going to be written. At first we affiliated with Third Party Administrators to handle our intakes and possibly handle claims if needed over time they handled little direct matters and even less as it relates to intakes (they did handle claims our program business which were a whole other set of problems). In some ways we were driving blind as everything changed so quickly all the time. A decision was made that we needed to outsource a call center so off I went to research and meet with various providers. I never believed we would be the type of operation that needed to handle that many calls and over time my belief proved true and that project correctly fell by the wayside. This was common in claims as well as other departments. Decisions were made, paths were followed, change happened, and the path changed.

Trying to connect all the moving parts in the early days was difficult. Each group needed to accomplish tasks quickly and there was no time to stop and connect with everyone. Underwriting needed a clearance and binding system, finance needed a system to bill and account, actuarial needed a way to manage IBNR and rate new clients and we needed all of those things to happen to manage claims. Our path to a claims system also stopped and started. At first we were going to “rent” a system from one of our TPA partners. Then we were going to use a legacy system that had been adopted by underwriting and actuarial as a stopgap (we were a start up with legacy problems already). The path to what would become a home grown state of the art system will be the subject of another posting, but needless to say, like many, we started with a spreadsheet.

Change happened daily but we needed to be ready to handle the technical aspects of running claims. We began to hire heads of claim departments – one for Healthcare – one for Property and one for Directors & Officers. Of course there was no place for them to sit. You knew someone was being hired when someone walked in with a tape measure trying to figure a way to squeeze a new desk in. It was a fun and interesting time for everyone and those who thrived checked their egos at the door and rolled up their sleeves and pitched in where needed. Despite a rich investment, we might as well have been working out of someone’s garage. As they say – it was the best of times.