“WHEN YOU’VE GOT A LARGE FOOTPRINT IT IS HARD TO HAVE ONE OR TWO PEOPLE VERSED IN THE NUANCES OF EVERY SINGLE STATE OR JURISDICTION AROUND THE WORLD.”
issues to discuss there is no better resource than to do it through the local law fi rm.
“They will really dig into the requirements and regulations for each
of the jurisdictions in which you are involved. And a Bermuda fi rm is likely to have working relationships or tie-ins with a host of companies globally.”
Whitehead also said that captives must also consider the lines of business that will be covered, when choosing whether to deal with their own claims or to have them dealt with by a third party.
“If it is a large company with its own robust internal risk management operation and it’s a highly specifi c type of line that’s being underwritten, internal management of those claims may be a very appropriate way to handle it,” he said. “As long as they have somebody checking the compliance issues within the jurisdictions in which they administer those claims, that’s fi ne.
“However, if it is more far-reaching and broad-based, such as global
auto coverage, then that might not be the appropriate approach to take. It’s very specifi c to each of the customers, their situation, their needs and the coverage they’re talking about.”
Ross agreed that the line of business being covered is a crucial consideration, with an example being product liability cover. “That will pretty much always be something that a company will want to deal with in house,” he said.
So whether a captive chooses to keep its claims management in house or to outsource it, what characteristics is it looking for in a claims manager? First, there is the need for an analytical mind, argued Ross.
“By having a captive, companies are insuring and taking on their own
risk, so they need to have a claims manager who can look at data, develop strategies on a pre and post-loss basis to mitigate losses, and identify trends within the claims,” he said.
McGee agreed, adding that a good claims manager needs to be
able to effectively interpret those trends. “They can look for trends in the exposures that their company has, for example several cases of a certain type of claim or even a particular branch that might have poor management. A big claim could point to a systemic problem that a certain location or state could have in its management,” he said.
Ross noted that a claims manager should have a strong background
in insurance, and the knowledge to go with it. “They are going to have a large voice in what the captive does, and the captive is an insurance company,” he said. Hartman also noted that communication skills are very important. “As a claims manager you have to be able to communicate with everybody throughout the organisation, whether they be attorneys, claimants or on the shop fl oor,” she said.
McGee pointed out that an effective claims manager should be both aggressive in managing their captive’s or client captive’s money and able to see the big picture. “You’ve got to be aggressive when managing your money, you’ve got to keep things organised and also understand the big picture of how the captive works, how the dollars work and how it fl ows back to the company,” he said.
“If you’ve got a risk manager who is just focusing on the claims, that doesn’t include the big picture. You need someone who can see things from all angles in a captive scenario, so when they make a decision on this side of the table, they understand how it is going to affect things on the other side of the table.”
Finally, Whitehead added, integrity is everything. “The only way you’re going to be able to measure that as you’re going about and looking is through a very rigorous and thorough referral process,” he said. “You need to get a list of referrals from the risk managers that you’re considering. I would also include in that list of referrals accounts that are no longer with that client, if you can get them. People part ways not always for bad reasons, things just happen, but it’s important to get a perspective from former clients or employers, depending on whether you are farming the work out or keeping it in house.” ●
48 bermuda captive 2012
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