Large insurance carriers and self-insured business enterprises have a lot riding on accurate, fair claims outcomes.
With that, it’s no surprise that they often turn to third party administrators (TPAs) to handle that critical bottom-line and delicate balancing act. After all, many if not most of these entities – whether they are self-insured, using a captive or have a program via an insurance carrier – look to outsource claims administration and subrogation for specific, sound business reasons.
For example, in the case of a self-insured or captive program, the business typically lacks the core competency of adjudicating complex commercial property and casualty (P&C) claims. In the case of a P&C carrier, they would have internal resources for adjudicating claims, but they may see the value-add and flexibility in outsourcing pieces of that process to the right TPA.
Success in both scenarios happens when communication and true partner-building take center stage, according to John Ketch, Senior Vice President of EMCAS (Engle Martin Claims Administrative Services), the TPA entity at Engle Martin & Associates, a leading national independent loss adjusting and claims management provider headquartered in Atlanta, Georgia.
“Of course, a TPA needs to have the depth of expertise and technology as part of their strengths,” Ketch said. “But early relationship building among all stakeholders needs to be done right because there is very good reason why an entity is engaging a TPA, and the first 120 days are critical to onboarding their program successfully.”
For example, Ketch cites the important fiduciary relationship that exists between a TPA and its clients. After all, the TPA receives a loss fund to manage, with the expectation to pay all covered claims and expenses within the delegated authority.
“That is a lot of responsibility for the TPA and why it’s important to create a true partnership with not just the carrier and risk manager, but also with the broker,” he said.
At EMCAS, anyone who touches the program – from business development to subject matter experts – is well aware of the unique complexities of onboarding a new client’s program. For example, there is the challenge of gauging specific client needs, what types of claims to expect, compliance issues, knowledge of multi-jurisdictions, reporting needs, data requirements and electronic data interfaces needed.
“While it sounds simple, the word communication can’t come up enough with that type of complexity behind the scenes,” Ketch said. “The better the communication, the better the outcome. And the more reason you should create a designated team of professionals from the onset to handle any given customer.”
Ketch explained that Engle Martin, with approximately 70 people in the TPA unit, will not randomly assign a new incoming volume of claims to each one of its professionals. First, the EMCAS core team will determine client needs and expectations, and then it will leverage the right people within its organization to direct a positive claim outcome.
He added that many would be surprised how often a failure of communication and the lack of managing expectations at the onset can cause problems. Instead of partnership, you have plain vanilla claims management with no one watching out for the client’s bottom line. Also it means keeping their clients’ insureds happy, and that means no discernible drops in service.
“A thorough review of the program, policies, binding authority, territories involved, and expected claims volume goes a long way,” said Ketch, noting that EMCAS does a tremendous amount of London business through Lloyds. “We should be able to leverage our experience to make valuable recommendations to our customers.”
For example, if a potential client has a commercial property program, it will require experts in that specific coverage. EMCAS looks to understand the opportunity, and its nuances, and then align that information with an EMCAS expert. If EMCAS doesn’t have specific expertise for part of a client’s needs (it does not do workers’ compensation, for instance), it will either search for an entity that can assist or go out and find the expertise to bring in-house.
“We can source it and that’s where partnership comes in,” Ketch said. “We don’t try to do everything.”
Also, EMCAS has worked diligently on its improved suite of data analytics in the fiduciary process, tracking severity, frequency and types of claims in helping to accurately reflect the range of loss levels. The idea is to proactively show clients that information along with key metrics, such as average days to close a claim.
Ketch says he has seen first-hand at EMCAS how quickly a program can be onboarded successfully, but in past roles he has also seen how overpromising can lead to problems.
“Some clients require a full end to end solution,” he said. “Expectations differ among clients. While we may be able to handle the claims themselves right away, all the back-end data takes time to migrate.”
As a result, EMCAS, which values its brand and image, is completely up front about the time it takes to load a client’s data into its system.
“That’s also part of why creating a partnership at the outset is important,” he said.
Finally, Ketch noted that EMCAS is big enough to be a serious TPA player, but small and flexible enough to become that bespoke solution for new clients.
“We are sitting in just the right spot,” he said, adding that while there are great smaller TPAs that can handle 2-3 states, they have no national footprint. On the flip side, there are the very large multinational TPAs, who may not be able to deliver personalized service or have the right custom solutions.
“With large TPAs, you might not know who you are dealing with and not carry a high value, depending on the size of your program,” he said.
EMCAS leverages Engle Martin’s 59 offices across the U.S., which translates to experts across nearly every business sector to deliver the right scale as well as claims and subrogation expertise.
That said, EMCAS will not take on any client for the sake of building its book of business.
“Some situations may not match up with our strengths,” Ketch said. “But once we make the decision to move forward, we are going to treat every client as a high-value customer.”