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The Client and Its Challenge
Providing a range of technology products and support services to the building and aerospace industries, this company faced a growing inventory of open workers' compensation claims. The client determined that its claims inventory, still held by previous insurance carriers, needed to be addressed quickly before the files further deteriorated. At the same time, reserve requirements needed to be reviewed and validated.
The Risk Consulting Solution
Marsh was retained to conduct an aggressive claims closure project. Working with the client and third-party administrator (TPA), Marsh consultants identified 553 claims to be reviewed, some of which had been open for more than 15 years.
Upon learning of the upcoming audit, the TPA almost immediately closed 85 claims. After reviewing the remaining files, Marsh determined that another 83 files could be closed immediately. The consulting team identified another 121 claims with the potential to close in 90 days, providing that the Marsh-developed action plan for each file was followed.
For the 348 remaining cases that did not present an immediate opportunity for closure, Marsh consultants created a resolution strategy for each case. This included:
- Identifying requirements and actions to bring the file to closure
- Determining responsibility for each action item, i.e., the TPA, client, or Marsh
- Providing an action plan with timelines for future activities
Finally, the team reviewed the client's reserve requirements and made additional recommendations based on claims development trends, increased medical and utilization costs, and aging inventory.
Results
As a result of the project, Marsh identified more than $8 million worth of outstanding losses that were closed or could be closed within 90 days. Despite the number of cases closed and dollars saved, consultants also recommended a relatively small increase in company reserves to cover increasing indemnity and medical costs in the remaining open claims inventory—an important Sarbanes-Oxley compliance issue for the client.
Recommendations as to how the client could more effectively manage open claims in the future included: more medical management, resolution strategies for every claim, more involvement from the client's business units, greater attention from the TPA, settlements whenever possible, and offers of employment (return to work) when appropriate.
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