Today, mass data is everything and everywhere in the corporate environment. It is critical to business operations, projects, financial analysis, marketing, product development, strategic planning and – in INDECS’ experience – claims handling.
When an insured suffers any loss (but particularly a large loss), the insurance market can often receive gigabytes of unstructured and unsorted information, much of which they find irrelevant or misleading. To avoid confusion, conflict and unnecessary work, data must be collated and presented in a structured and timely manner or it will hinder rather than aid the claim process.
Companies’ data systems create the framework for tailoring the information that is delivered. These systems hold all the data key to demonstrating factual background supporting the claim, as well as the financial information to assess reserves, interim payments and overall final settlement.
Computerised accounting systems require budgeted, committed and incurred costs to be given a tiered structure by applying unique codes, often referred to as Work Breakdown Structure (WBS) codes. This structure allows data to be extracted and manipulated into a structured format to support an insurance claim, making it easy to distinguish between different heads of claim under the policy. But this is only possible if the WBS system is correctly structured to begin with.
Extracting the factual information necessary to support and present an insurance claim is critically important. Simply producing a data dump and expecting insurers or their loss adjuster to decipher the relevance slows down the process, leads to unnecessary questioning, frustration and often confusion. From the outset, ensuring that technical and engineering departments are fully aware of what the information is needed for and when it will it be required reduces delays in the claim and unnecessary workloads.
An insured should optimise its claim recovery by producing relevant, comprehensive and clear data. If the insured is unfamiliar with the practicalities of an insurance claim and policy conditions, it will need specialist guidance to identify just what is necessary.
The data will be both quantitative and qualitative.
The quantitative data comprises the costs records, such as internal time writing and third party bills. This data will often need to be further split by job grade and include an activity description, standard and overtime incurred will have to be clearly identified.
All third party costs must be supported by invoices or internal pay systems. If no proof of payment can be produced the insured is unlikely to recover the full value of its claim. Electronically linking time sheets, contracts, purchase orders and invoices or vouchers enhances the value of the supporting documents and expedites auditing of the claim. It also provides a single record for the iterations of the audit process between the loss adjuster and insured.
Qualitative data consists of non-financial records that support the facts behind the claim. It drive take the form of images, videos and reports, including root cause analysis to demonstrate a fortuity, damage assessment reports, engineering solutions considered, design details, project schedules, maintenance histories and plans.
Qualitative data will help the insurers to understand the context of the quantitative information and of its relationship to the claim. In our experience, the presentation of the qualitative data is as important as the quantitative in the outcome of the claim, but it is often undervalued and overlooked by the insured.
There are now many platforms for sharing information: large amounts of data are routinely made available on secure dedicated websites without the need for physical, or even electronic, transfer. It is important to keep in mind which parties will require access to this information and what it will be used for. Management of confidential information and recording its distribution is fundamental to the claim process.
Data is uploaded by the accounting system’s “super users” who through their familiarity with the system can assist with structuring the raw data. They will be essential to produce meaningful and useful reports so, for consistency, these super-users should be the individuals creating the WBS structure and extracting the data.
The loss adjuster will audit the presented claim. If the adjuster is able to trust and follow the documentation submitted, the claim process will be much smoother, resulting in faster and often higher recoveries.
The cycle of information requests and delivery is repeated with numerous iterations and additional information arriving throughout the claim. Therefore, it is imperative that the data be subject to a stringent internal review prior to audit by the loss adjuster, to ensure consistency with the claim strategy and the policy coverage. This step ensures shared information is of the highest quality and relevant to the claim.
INDECS has worked on many large and complex claims which have successfully settled with the insurance market. Key to achieving settlement has been our management of large volumes of data for the client. The intelligent use of data to support for the claim facilitates regular payments throughout the process and has meant our clients have not under-recovered through gaps in the information needed to support the claim.
When an insured suffers a loss, time is a valuable resource. The careful collection, storage and presentation of quantitative and qualitative data not only pays dividends in terms of overall time saved, but is a sound investment for the efficient full recovery of its losses. The management of data cannot start too early, but often starts too late, resulting in additional costs, disputes and loss of value in the ultimate claim settlement.
This Insight edition was prepared by the INDECS claims team.
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