Looking at things from an individual perspective
Choosing whether to keep claims management in house can be a complicated business for a captive insurer. Bermuda Captive examines the options available.
the company—just considerations that need to be made about its individual circumstances.
I
This is particularly the case when deciding whether to keep claims handling in house or to farm it out to a third party administrator (TPA). There are several judgements that need to be made surrounding a company’s needs, argued Paul Ross, business development director at claims management fi rm, Sedgwick.
“Management have to consider each situation individually,” he said. “First they need to establish what their captive’s claims volume is: does the amount of claim merit outsourcing the handling of those claims? They also have to consider the geographic spread. For example, if they are a single state employer in the US with a couple of hundred claims a year, then it might make sense for them to deal with those claims in house. But if you take that same employer and scatter them across all 50 states, it can be very diffi cult to control such a programme in house.”
Lisa Hartman, director of claims and loss control at Albert Risk Management, pointed out that using a TPA provides economies of scale and greater access to expertise. “It allows for a wider group of people to tap into, with professional expertise in a wide variety of areas. They will have a better capacity to investigate the claims,” she said.
Chad McGee, claim analytics manager at consultancy Artex Risk Solutions, agreed. “When you’ve got a large footprint it is hard to
t is a generally acknowledged truth that no two captives are the same. Given that they cover the risks of individual companies, it stands to reason that they are all different. This means that there are few right or wrong answers when considering how to structure
have one or two people versed in the nuances of every single state or jurisdiction around the world,” he said.
“They all have so many subtle differences in their statutes that it would
be hard to have an in-house team that covered just the US, which has 50 states. In contrast a smaller company might cover fewer jurisdictions, so might fi nd it easier to handle claims in house.”
Whether a Bermuda-based captive is covering business in the US or around the globe, it is crucial that they understand the nuances of each
46 bermuda captive 2012
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