Significantly Reducing Paid Costs in the 15% of Casualty Claims That Account for 85% of Your Losses
My business partner is a former VP of Claims where he led a staff of about 350 adjusters. He has said to me many times that one of the most important observations he made during that time was how the vast majority of claims losses came from a relatively small percentage of claims. He called this the 15/85 rule of claims (i.e. 15% of claims = 85% of losses).
Obviously, these numbers aren’t exact, but the larger point is true: A small percentage of your casualty claims account for the large majority of your losses.
How you manage those claims can make all the difference in your outcomes.
My business partner ultimately discovered and implemented what became a best practice throughout his career – a principle of claims management that we’ve seen again and again that can make all the difference.
The idea is simple:
- Treat routine casualty cases routinely (i.e. the 85% of casualty claims that make up 15% of losses)
- Treat “big” cases differently
If you truly and consistently focus on these large, complex cases, you’ll find great opportunity to reduce your paid costs in a significant and compliant manner – opportunity that may go far beyond what you imagined was possible.
So, what does it mean to “focus” on large loss cases?
Specifically, it means this:
- Putting your best, most experienced adjusters on these cases – with lighter caseloads – to allow them to give all their time and attention to them
- Using well-defined criteria (and, depending on your claim system, tech tools) to identify large casualty cases early in the process
- Assigning nurse case managers to help direct care early to prevent complications, avoid redundant therapies, and produce better and faster functional outcomes
- Always having Medical Cost Projections created early to bring clarity to your case, help set accurate reserves and use as your most effective negotiating tool for paying fair amounts for future medicals
- Often using structured settlements as another excellent tool to reduce your paid costs
- Engaging in medical bill review to flag mistakes, duplicate charges, upcoding, and excessive pricing for care already received
- Owning medical large lien resolution, beginning early in the process so you can be certain of lien costs, and not leaving lien initiation, review, negotiation / dispute, and payment to plaintiff’s counsel
Using some or all of these tools can make a significant impact on your company’s loss ratios and total claims payout. And you do it in a fair and compliant manner – by identifying specific sources of overpayment.
In addition, the research, analysis and documentation can allow for consistently faster settlements, because all damages are quickly made unambiguous and supported by clear and compelling evidence.
Helping manage and mitigate medical expenses in casualty claims is what CP Resolutions does. We are a company created by claims professionals for claims professionals.
We work exclusively with small and mid-size casualty insurers throughout the country. You are “our people” – the people we love to work with.
Our specialties are:
- Medical Cost Projections
- Medical Lien Resolution
- Medicare Compliance
We also offer training on these topics, often for CE credits, in most jurisdictions.
If you would like some training or to learn more about CP Resolutions’ training or services, please contact Greg Bashaw at greg@cpresolutions.com or at 720-775-5502.
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