13 Key Areas to Review: The Case for an Annual Claim Department Operational Review

Posted on December 3, 2024 by Marc Lanzkowsky

In today’s ever-evolving insurance landscape, the need for claims departments to stay agile, compliant, and customer-focused has never been more critical. As we near the end of yet another year, an annual review of operations is not just a best practice—it’s a cornerstone of maintaining excellence in claims management.

By systematically evaluating key areas, claims departments can ensure efficiency, compliance, and satisfaction across the board. Let’s explore the vital components of this review and why they are indispensable.

1. Best Practices and Leakage Quality Audits

Best practices ensure claims are processed effectively, while leakage quality audits identify areas where financial inefficiencies might be lurking. A thorough annual assessment can:

Uncover process bottlenecks.
Detect overpayments or missed subrogation opportunities.
Benchmark performance against industry standards.

This proactive approach safeguards the bottom line and enhances operational credibility.

2. Review of Staffing Model

The claims landscape is dynamic, and staffing models must adapt to workload fluctuations, claim complexity, and organizational goals. An annual review ensures:

Adequate adjuster-to-claim ratios.
Optimization of roles for efficiency.
Preparedness for peak claim seasons or emerging risks.

3. Adjuster Licensing and Compliance

Staying compliant with state and federal regulations is non-negotiable. Claims departments should annually:

Verify adjuster licensing across jurisdictions.
Audit compliance with regulatory updates.
Address gaps to avoid penalties.

4. Privacy and Security

With increasing cyber threats, protecting sensitive claim information is paramount. Annual reviews should focus on:

Compliance with data privacy regulations like GDPR or CCPA.
Strengthening cybersecurity protocols.
Training employees on data security best practices.

5. Data Quality

Accurate data fuels every decision in claims management. Reviewing data quality ensures:

Elimination of duplicate or outdated records.
Enhanced data integration across systems.
Reliable reporting for trend analysis and forecasting.

6. Aggregate Tracking

Tracking aggregate claim data helps in identifying trends and managing reserves effectively. Annual evaluations ensure:

Monitoring loss patterns.
Adjusting reserves based on historical trends.
Informing underwriting and pricing strategies.

7. Adjuster Authority

Adjuster authority levels should be calibrated to reflect experience, risk, and claim complexity. A review includes:

Reassessing monetary thresholds.
Balancing empowerment with oversight.
Reducing escalation bottlenecks.

8. Litigation Management Updates and Review

Litigation is costly and time-consuming. Annual reviews can:

Analyze case outcomes for patterns.
Update litigation guidelines and adjust counsel partnerships.
Incorporate predictive analytics for case management.

9. Training and Development

Continuous learning is vital for keeping adjusters and managers sharp. Annual training plans should address:

Emerging trends like social inflation and AI in claims.
Regulatory updates and compliance.
Enhancing negotiation and communication skills.

10. Customer Satisfaction

Customer experience is a key differentiator. To measure and improve it:

Implement surveys post-claim resolution.
Analyze feedback for actionable insights.
Develop initiatives to enhance claimant interactions.

11. Technology Enhancements

Technology evolves rapidly, and claims departments must keep pace. Annual reviews should:

Assess current technology for gaps.
Explore automation opportunities.
Plan upgrades to align with strategic goals.

12. Reporting Adequacy and Updates

Effective reporting is essential for transparency and decision-making. Review reports for:

Completeness and accuracy.
Alignment with organizational KPIs.
Inclusion of insights for all stakeholders.

13. Manager Reviews

Finally, evaluating management effectiveness is crucial for organizational health. Annual manager reviews should:

Assess leadership in driving claims outcomes.
Provide constructive feedback for growth.
Align individual goals with departmental objectives.

The Path Forward: Building a Resilient Claims Department

Annual operational reviews are not just checklists; they are opportunities to elevate the claims department to new heights. By addressing these areas comprehensively, claims leaders can foster a department that is efficient, compliant, and customer-centric. The result? Enhanced trust, reduced costs, and a strong foundation for future success.

Is your claims department ready for its annual operational review? What areas are you focusing on? Share your thoughts and best practices in the comments below!

Why Engaging an Independent Claims Expert is so Critical to Successful Technology Implementation

Posted on October 29, 2024 by Marc Lanzkowsky

Yes, I am biased. I am an independent consultant, but I have also worked at a large consulting firm. The current insurance environment is in a rapid state of change, where claims departments are struggling to be competitive and efficient due to increased claims volumes and complexities. Technology could transform every step of the claims process, from intake through resolution—but successful implementation requires more than just technological know-how. But to make that a reality, subtle understanding is needed from the claims landscape itself.

To bridge this chasm, what insurance leaders require is not some standard-issue consulting firm but a professional claims expert well-versed in the deeper nuances of the claims process. For large implementations that span multiple years the large consulting firm can be an invaluable resource. However, when the implementation is small or your company is smaller, hiring an independent claims consultant can make all the difference in realizing a technology implementation that not only transforms the operations but does so with efficiency and precision.

1. Process-Driven Technology Integration: Understanding Claims from the Inside Out

The processing of claims with high levels of accuracy and efficiency, but with empathy nonetheless, constitutes the core mission of the claims department. Without an implementation approach which places the process of the claim at the forefront, technology can quickly turn into a disruptive force rather than a supporting tool. Unlike larger consulting firms, independent claims consultants focus on bringing in technology to meet the unique workflows and departmental business objectives. This ensures that the process of claims drives the technology, not the other way around.

2. Solutions Customized with Flexibility for Real-World Claims Challenges

Independent claims consultants bring an unprecedented level of agility and customization that larger firms simply cannot match. Because they are not bound by rigid frameworks, they can move more nimbly to meet the particular needs of each department, from property to casualty claims, without unnecessary layers of oversight. This will introduce flexibility for active consultants to tailor solutions within the existing ecosystem, including claims data analytics, fraud detection, and maintaining the human touch necessary in ensuring customer satisfaction.

The scalability of the solution will also be catered for by a focused consultant to enable your department to evolve with the technology over time. They have practical experience in how to spend each working day projecting the daily challenges an adjuster and manager face so that the technologies implemented will be as pragmatic as they are innovative.

3. Cost-Effectiveness: Maximize ROI without the Big-Firm Overhead

One of the values in retaining an independent consultant over a large consulting firm often has to do with bottom-line economics. Independent claims experts are unencumbered by all of the trappings and demands of higher overhead-greater office space, for example, more administrative personnel, an extensive marketing program-and maintain a lean approach focused exclusively on delivering results. That is to say, more of your budget is directly invested in the project, yielding a larger return on investment for your claims department.

Another major factor: essentially, independent consultants have a stake in the success of every case. They will work hand-in-hand with internal teams, offering hands-on guidance throughout the process. This kind of processing will typically result in faster project turnarounds and faster adoption, which means a faster return on investment.

4. Proven Process: How a Claims Consultant Drives Successful Implementation

New technology implemented within a claims department requires a clear, structured approach beyond generic project plans. Here is one specific way an independent claims expert would drive a successful implementation, step by step:

• Assess and Plan: First, take a deep dive into where current claims workflows enhance pain points, resource needs, and department goals. The result is that the technology solution will focus on the particular needs of the claims department, not just industry standard needs.
• Solution Design: Having worked in close cooperation with the department heads, the consultant now designs the solution to be adapted for smooth integration into the workings of the department. The focus is then on nuances of the claims process, so that one may target areas where technology will add value without disrupting processes.
• Pilot Testing and Iteration: Before the rollout, pilot testing paves the way for live insights and iterations. A claims-focused consultant can quickly identify and rectify any issues to make technology work right in the life conditions of claims.
• Training and Adoption Support: The successful implementation of technology requires user adoption. More often, independent consultants provide hands-on training, tailored for different roles within the department. They help each member of the team understand how the new technology makes their workflow easier and more intuitive to perform their tasks.
• Ongoing Review and Adjustment: The true claims expert knows that after implementation, the work is not over. They remain involved with performance monitoring, suggesting adjustments, and ensuring the technology meets their changing needs.

5. Partnership, Not Just Completion of the Project

Probably one of the most valued elements in working with an independent claims consultant is the relationship they will build with your team. Unlike larger consulting firms that might simply focus on delivering the project and moving on, independent experts truly invest in a partnership. They work side-by-side with internal teams, understand their challenges, and adjust in real time to feedback for long-term success. This harmony makes for trust and confidence in the new technology as team members learn to fully welcome the change. Over time, the partnership offers consistent ways it assists departments in not just attaining immediate implementation goals but also in fostering a culture of continuous process improvement and innovation.

The Strategic Advantage of Partnering with a Claims Expert

The challenges of claims implementation require much more than a one-size-fits-all solution. In engaging an independent claims expert, C-suite executives and claims leaders receive a partner focused on expert-level talent, flexibility, and hands-on involvement their large consulting firm counterparts often cannot match. Using their specific knowledge, they make sure that new technology underpins the claims process for tangible gains in greater efficiencies, customer satisfaction, and financial performance, amongst other benefits. The right consultant will be the difference between ‘disruptive change’ and a ‘transformative solution’ in today’s competitive insurance landscape. Embrace expertise that puts your claims process first, and watch technology become an enabler of growth rather than just another operational hurdle.

4 Keys to Managing a Successful Outsourced Claims Operation

Posted on October 30, 2013 by Marc Lanzkowsky

To be Successful One Must Have Strong Oversight and Controls From the Beginning

So you have decided to hire a Third Party Administrator to handle your claims and it seems like a reasonable decision at the time. You either have some new specialized business you are writing and don’t have the expertise in-house, or you don’t want to set up a new regional claim office or you are a new company and want to have an experienced claim department in place. Yes – the TPA is the answer to all your concerns.

All things being equal there are many fine TPAs in the market that will provide wonderful service to your insureds in a cost effective and comprehensive manner. Initially you think you have chosen a good one. However, as time goes on you realize you are not exactly getting what you expected from your TPA. So what happened?

It matters little what your reasons for outsourcing were. Bottom line is if you didn’t take certain steps to properly select and manage a TPA you are likely to end up with problems. The partnership you form with your TPA will be fruitful if you take these key steps to select and manage them in a way designed to foster long term success.

TPA Selection – Do your due diligence. If you are handling claims over to a Third Party Administrator remember they will be the face of your company to your customers. Take their selection seriously. Form a multidisciplinary selection team and engage IT, Finance and Operations in the selection process. Besides the basic questions, look at their staffing and turnover rates. Ask to speak to references and understand how they manage their accounts internally. Do they have dedicated claim units? How strong is their technology? How flexible are they in producing reports? When was the last time they had an independent audit? There are many more questions to be asked but this is not the time to be shy. Dig deep and understand who they are and what they can do.
Oversight – General Guidelines. Don’t rely on the TPA’s claims guidelines. You should develop, and expect the TPA to adhere to, a very specific set of best practices to suit your company’s requirements. Tell the TPA what you expect and hold them to it. When drafting guidelines pay attention to sections involving the retention of counsel, vendors and experts. Make sure they seek approval where appropriate and drive the selection to vendors that have been vetted by you or better make them use your own panel. Be specific about what claims you want to know about and when. Make sure you review these guidelines regularly and adjust them where appropriate. Remind the TPA will be using these guidelines to measure their compliance.
Strong Internal Formal Claims Program. Just because you have outsourced your claims management to a TPA does not mean you do not need to maintain a strong internal claims program. The successfully managed programs work with a combination of oversight and strong in-house claims account managers watching the TPA’s activities. It is important that internal claims staff be well versed in the expected handling practices and the ability to spot issues before they become problems. Internal claims professionals should have skills similar to a department manager that can handle trend analysis as well as being able to have difficult performance discussions with the TPA. No successful program works without skilled in-house claims resources.
Audit – Review and Re-review. Unless you are reviewing the TPA’s work for compliance through regular claim audits you are setting your program up to fail. Reacting to individual claim issues will not create a balanced efficient program and will cause the TPA to react to whatever the issue of the month is. Regular audits identify problems and force solutions to be addressed by the TPA. Some of the best run programs audit their TPA’s 3-4 times per year. In addition to regular best practice compliance reviews conducting specific targeted reviews can strengthen a program’s effectiveness (i.e. reserve review, vendor management or financial controls).

Working with TPAs can be a very rewarding and cost effective method for handling claims. Many are experts at what they do and have well run efficient operations. Regardless, the old adage about the squeaky wheel getting the grease is never truer than in the oversight of a TPA. Get squeaky!

What are other things needed when selecting and managing a TPA?

Claim Reviews Empower Better Decisions By Putting Critical Information In Hand

Posted on March 30, 2011 by Marc Lanzkowsky

Are making blind decisions the way to go?

Insurance is as much about having the right information at the right time as anything. Whether it’s an underwriting choice to price a risk correctly or a claim decision to when to pay a claim, having the best data available can make or break an organization. Despite this fact, many organizations fail to take advantage of tools and rights available to them prior to making critical business decisions (see our previous post “The Importance of the Pre Bind Claims Review in the Reinsurance Context“).

A reinsurance company looking to bind a new risk, or an excess carrier following the fortunes of a primary, should not leave decision making to what is found on a loss run or in an application. Loss runs can be misleading without an understanding of what is behind them. At Lanzko we recently found an audit where the underlying carrier failed to reserve for expense in what was a well run claims department. In that particular company, expense reserves were handled by actuarial. Our client had not been aware of this and was able to adjust pricing accordingly, avoiding a significant underpricing of the risk.

It is important to understand that most reinsurance or excess contracts allow companies to inspect the organizations they underwrite. If this right is available then why not take advantage of it to learn more information? Data runs can give you a basic overview of a firm’s existing losses, but they will do little to give you an understanding of the underlying organization that created those numbers. To get a complete picture of how a claims department functions one has to go beyond the numbers and conduct a claims department and file review.

Resources, Resources, Resources

Not every account can be reviewed. Whether you in-source or outsource claims reviews, the costs can add up. There are also other things that come to mind when determining when a review is cost effective. If you conduct reviews using claims staff focused on handling claims there is a risk that the time out of the office is not as valuable as the time spent on existing file management. It should also be noted that in-house claims staff may not be properly equipped to understand other parts of the operation they are reviewing.

If you outsource, it may increase your costs and your vendor may not provide enough value for the report they provide. Unfortunately, many companies do not even budget for a review program. It was suggested to me that if you had a $100 million book of business and set a budget of 0.0025% of premium you would be able to conduct an outsourced reviews of your top 15 accounts.

Is 0.0025% of premium a reasonable cost to pay to get better information about the risks you underwrite?

8 reasons when a claims review becomes critical

Whether it’s a resource allocation issue, or just simply enough time, getting to conduct reviews regularly may be difficult. Nonetheless, there are times when a review must be done and should seriously be considered in these situations:

Account Renewal
Late, inadequate or infrequent claim reports
Significant management changes or turnover
Financial problems with Cedent or Primary
Loss results are too good to be true
Unexpected claims in lines of business
Historically volatile product lines
Change in company participation

A successful review means going beyond the claims files

Reviewing the highest exposure claims is certainly of value, however it will not give you a complete picture of the organization and their ability to consistently manage claims. High exposure claims are almost always reviewed by various layers of management and are usually well worked up. Despite this, many organizations only choose to review those files that may impact their layer. What about the files that don’t make it to the senior level?

Understanding the process for how claims move through the system is critical to ensuring they are properly reserved and manged. Consistent claims handling comes from an organization that has good process, strong systems, good technical results and an oversight program. When looking at a claims department you need to look at the whole operation to learn more about:

Organizational overview and structure
Authority levels
Systems
Management/Staff Experience
Reserve Management and Expense Control
Quality, Controls and Compliance
Best practices
Spend management (vendors and counsel)

Doing a claims review is not just smart business, it is becoming a requirement

In Europe, new risk management standards are being implemented as part of sweeping regulatory changes contained in Solvency II. As part of these new regulations, companies that rely on others for their claims are going to be more responsible to ensure those third parties are operating effectively. This will effect everyone from reinsurance companies to cover holders to those who outsource claims to third-party administrators. The United Kingdom’s Financial Services Authority (FSA) described it best in a proposed CEO letter about reserve adequacy when they wrote:

[W]e expect firms to take a considered and proportionate approach to the reserve-setting process, and have robust processes in place which adequately capture the risks associated with an increasingly challenging claims environment. We expect such processes to include, as a minimum, the monitoring and assessment of:

The adequacy of individual case reserves;

Underlying claims processes;

The adequacy of data quality; and,

The reserve projection and selection process.

Claim reviews, if not already being done, will be a requirement in order to truly understand the “underlying claims process” as well as the “adequacy of individual case reserves.” If you are not able to answer these questions you may be subjecting yourself to significant regulatory scrutiny.

Create a process around your process

The importance of these reviews cannot be overstated. But having accepted the fact that you need to do more reviews, make sure you are managing that process properly. Develop a “best practices” guideline for claims reviews which should include:

When reviews are done and what are triggering events for the reviews (see examples above)
How are files selected for claim reviews
Outline different types of reviews with standard objectives
What department criteria will be reviewed and what claim file criteria will be examined
Understand who will be doing the reviews (claim handlers may be good at reviewing a claim file but may lack in experience when it comes to other operational aspects of a department)
Have a standard understandable rating system
Manage your claim reviews in a central location
Document the process to be able to respond to inquires from interested parties (regulators and stakeholders)

Even if you decide to outsource your claim reviews, it is important that you ensure your vendors have a documented process to provide consistent reviews and can maintain appropriate records.

When managed correctly, a proper claims review program can save the company from making bad decisions. Given that the costs, relative to the risk, are relatively minor, along with changes in regulation and oversight requirements, failing to make claims reviews a regular part of your organization could be a critical mistake.

Quick SPOT: 6 Security Tips To Keep Portable Technology Safe For Claims

Posted on August 27, 2010 by Marc Lanzkowsky

Protect that claims data with common sense tips

If you are like me you keep everything on your laptop and cell phone. Numbers, corporate information, claims data, and even some of the dreaded non-private personal information of others. Claims data is filled with information that if lost or stolen could be detrimental to both the company and the individual. Many companies today issue corporate cell phones and blackberry devices as well as laptop computes in place of desktops. It’s a modern world and we are all expected to be connected. Partial work at home arrangements also mean this information is traveling from location to location which can increase the risk that things may be lost or stolen.

Recently I read in the Sophisticated Litigation Support Blog about 6 Security Steps To Take With Laptops, Smartphones, and Flash Drives. As they noted according to William Quick, a sole practitioner in Clayton, MO who teaches and lectures on technology topics, “Identity theft is a mushrooming problem that Congress and the states have been trying to deal with any way they can.”

6 basic steps to prevent a loss

Sophisticated Litigation support suggested these 6 steps to help lower your risks:

Be careful not to lose the device in the first place. Pay close attention to where your equipment is.
Have a written plan that details your firm’s action if a data breach should happen.
Only keep what you need. Decide what information has to be saved and then back up your data to a secure location on a regular basis.
Lock your computer when you are away.
Encrypt all devices – most statues don’t require you to inform your clients of encrypted data breach.
Invest in back-up-plan software. Some software allows you to protect your data security after the fact.

But what happens if you loose the equipment anyway?

I had a manager that no matter how hard he tried would loose something all the time. In one year I believe he lost 3 cell phones and a laptop. He actually almost lost another when he left it in the seat pocket in front of him. Loosing equipment should be avoided at all costs, but if you do loose it, the Sophisticated Litigation Support Blog notes:

If you lose your equipment and someone obtains this information, you need to alert potentially affected parties of the loss – and that’s a lot easier said than done. It may also land you in some hot legal water (at several hundred bucks an hour, there really is no other water temperature in the legal world), because 46 states have data breach laws. So there could be some liability issues that come up.

Clearly having to explain to customers and claimants how you lost their information would not be a good thing. So discuss these issues with your group and incorporate some of the security tips to avoid a problem later.

Tell us your “I lost my equipment” story

The Importance Of The Pre Bind Claims Review In The Reinsurance Context

Posted on June 29, 2010 by Marc Lanzkowsky

Don’t leave the gate open. Let a pre-bind claims review ensure you are secure in that new risk

I recently had a conversation with one of our Lanzko Associates, Nigel Shepherd, about the importance of conducting a pre-bind review in the reinsurance context. He was relaying a story from his past about how a POST bind review showed a significant exposures, which had not been reflected in the line of business profile contained in the client’s submission. This unknown exposure was largely responsible for that reinsurer going into run-off. It was a preventable event had the review taken place prior to binding.

A lot can be uncovered when reviewing claims in advance of binding a new risk

Pre-bind reviews can greatly improve the information normally found on a submission. Claim numbers are just numbers when there is no context of information to understand the operation that supported them.

A good pre-bind review can help to:

Uncover unknown issues about department staffing and operational deficiencies that could affect future reserves and loss payouts.
Understand the reporting and reserve controls to see if there are impediments to setting appropriate reserves.
Determine the nature of the reserve philosophy and how it is employed to learn if reserves reflected are likely to be increased or decreased significantly prior to payments.
Ensure a claims system can handle reporting needs of the reinsurer as well to see if it is designed to improve efficiencies and help, not hinder, the managing of claims.
Learn how effective cost cutting initiatives, such as anti-fraud programs, litigation management and subrogation, truly are.

Why take the risk?

I asked attorney, and fellow blogger, Phil Loree of the Reinsurance and Arbitration Law Forum, as to his views on pre-bind reviews and he said:

“A pre-binding audit is a dispute-prevention technique. While reinsurers can in appropriate cases obtain rescission when a cedent fails to disclose facts material to the risk, why buy a costly lawsuit or arbitration proceeding that could have been avoided by a modest, upfront investment of time and money?”

So why do companies take the risk of not conducting pre-bind reviews? There are always a multitude of factors that can come into play and mostly center around cost. Reinsurance companies with no in-house claims departments sometimes don’t have the staff to handle these types of reviews. Even the ones that do are usually faced with departments with claims to manage, and accounts to audit, with pre-bind reviews running low on the priority list.

Regardless of the reason, the failing to conduct a pre-bind review can be a risky venture.

For a healthy dose of good business judgment, an ounce of prevention goes a long way.

6 Essential Elements To Explore When Choosing A Third Party Administrator

Posted on April 27, 2010 by Marc Lanzkowsky

Don’t Roll The Dice To Choose A Good TPA Just Do A More Complete Due Diligence

A Third Party Administrator (TPA) is often the best way to handle claims for an organization. Many self-insured and captives choose to outsource their claims instead of creating their own internal operation (see my prior post of A checklist of the 8 critical issues to be concerned about when self-managing claims). Whether to get expertise in a particular areas, or not wanting to invest in the infrastructure to build a claims department, using a TPA can be a smart business decision. In fact, many insurance companies will outsource some, or all, of their claims for the same reason. Regardless of what type of company you are, choosing the right TPA is imperative. The TPA will become the face of your company for claims and, how well or poorly, they handle claims will be a reflection on your organization.

So what make a good TPA and what should you look for? In order to find out you must conduct a comprehensive due diligence of the TPA you are about to hire. This is especially the case when that TPA will be holding and managing your claim dollars. Besides understanding the financial strength and capabilities of the TPA, it is also important to know whether they will be able to meet your data needs, provide consistent claims handling, and work to lower costs where they can.

While not an exhaustive list by any means, below I address 6 essential elements, and questions, that should be explored as part of any due diligence when selecting a TPA:

Claims Systems – A strong claims system is an essential tool for any claims organization. Take time to understand the capabilities and limitations of a TPA claims system. Can they provide remote access so you can review your claims online? Do they have a paperless file system? Can they capture information that would be critical to your organization such as specialized loss codes or basic policy information? Do they use any other systems to help lower costs such as litigation management billing software or some unique estimating program?
Reporting Capabilities – With a good system loss reporting should be easy. Regardless, it is important to understand the types of loss runs and reports that can be provided. How frequent can they be provided? What format will they be provided in? Can you easily request specialized reports, or do they have a system that you can customize reports on your own?
Litigation Management Program – Litigation management is one of those things that seem to be less emphasized in a lot of organizations. Nonetheless, this is an area that if ignored could result in higher legal costs. Ask if the TPA trains their staff on litigation management cost reduction techniques. How are legal bills reviewed and what kind of program is in place to review counsel performance? Do they have a panel of law firms, and if so how are those firms selected?
Quality Control and Internal Audit – Consistent handling across multiple claim offices is difficult to accomplish without clear handling best practices and internal controls. Does the TPA internally review their claim handler’s performance? How often are claim files reviewed for good practice compliance internally? What kind of metrics do they use to ensure files are proactively managed and consistent across the board? If they produce an annual internal audit report, ask if you can review it and see how they deal with deficiencies. No operation is perfect, but how well they recognize and address problems can be very telling.
Subrogation/Salvage Capabilities – Many claims organizations fail to actively push subrogation and salvage opportunities. These areas, when done correctly, can lower claim loss dollars and return money to the coffers. How aggressive is the TPA in driving these key cost savings initiatives? Do they have a separate unit, or are the handlers expected to manage subrogation and salvage? How are they tracking returns? Are their results within industry expectations for a particular line of business?
Special Investigation Unit and Anti Fraud Initiatives – All TPA’s will tell you they train their staff and actively pursue fraud when identified. This information should be readily available and reviewable. Ask the TPA how many fraud referrals they made to the states for a given line of business. Is the number consistent with the industry expectations on fraud reports? Do they have an SIU onsite or do they use and outside vendor to manage fraud? Have the TPA’s claim handlers received their annual fraud training as required by certain states?

A few other items worth considering would also include:

Management structure
Reserve philosophy
File loads per adjuster
Turnover
Financial stability
Banking arrangements

Hiring a TPA is a critical process that must be reviewed carefully. Take the time to perform a thorough due diligence, or hire an expert to do it for you. Getting a comprehensive analysis will ensure you are choosing the best TPA for your organization.