Tag Archives: Esper

Harvey: Tips to Avoid Claim Issues

When the mayor tells you, “if you’re going to stay here, write your name and Social Security number on your arm with a sharpie pen,” it’s time to get out of there. But, whether residents stay or leave, physical structures don’t have that luxury. So, we are about to see round one of an enormous claims process because of Hurricane Harvey.

See also: 6 Reasons We Aren’t Prepared for Disasters

Disaster mitigation and restoration services are critical after property damage, but how you manage these services may have an impact on the outcome of your claim. Though there are many capable firms that specialize in property damage clean-up and restoration, there are some that will make mistakes, and others may even take advantage of the situation. When it comes to recovering the cost of mitigation and restoration services for an insurance claim, any mishaps can create big problems that may leave you stuck with the bill.

In the best of situations, you’d vet your emergency team before a loss. You cannot be too prepared. Recovery service providers should be identified and interviewed. Make sure the company you choose will be able to handle your potential issues. Involve your insurer during vetting. There are “approved” vendors that insurance companies recommend; however, just because they are “approved” does not mean there will not problems. Notify the insurance company of who you plan to use.

With Harvey, the losses are already upon us, but here are some techniques you can still use to prevent problems:

  • Clarify and document scope of work – Be clear on scope of work with the recovery firm, and make the adjuster part of that conversation. Often, emergency response does not follow the normal protocols of a typical project. There likely won’t be time for detailed estimates, so try to get the adjuster to approve work in real time to avoid second guessing.
  • Take a hands-on approach – Your property may still be underwater, but, once access is granted, you must be hands-on. No one should have access to your facility without the presence of a company representative. Assign a property supervisor to the affected site to keep track of who is there and what they are doing. It’s your property and your responsibility. The bigger the loss, the more people coming in and going out, so it is vital to have a company representative onsite to observe and answer questions.
  • Audit contractor charges before approving – The first weeks after a loss are chaotic. It’s important for policyholders to put controls in place to monitor activity and to verify that work has been completed to specifications and according to the terms of the agreement. Reimbursable insurance expenses should be separated and audited prior to payment for proper detail and accuracy. This needs to be done efficiently in real time. If you don’t have the resources, this step can be completed by your claim preparation accountants i.e. forensic accountants. Having forensic accountants on your team, along with your technical experts, can let you process this information in the context of insurance recovery. Don’t assume your forensic accountants will automatically audit invoices. Identifying errors or, worse, fraud is critical to avoid delays in payment or project completion.
  • Address issues immediately – When the first invoice arrives, insurance companies may act surprised and even deny coverage, especially if the steps above have not been followed. Make sure to get the parties together to discuss the issues. Don’t procrastinate and don’t assume. It is important to be active with any potential discrepancies. The policyholder is responsible if there are unresolved differences. If the adjuster disagrees with the work performed and the invoices are paid, it may be difficult to recover all your expenses. The immediate aftermath of a disaster is stressful and hectic. Preparation and communication can help you weather the storm and minimize unwanted surprises when you’re looking for claim payment.

Using Stories to Make Your Point Stick

If you are in the insurance/risk management industry, you likely have been to many presentations. How many do you remember? How many were interesting? How many were entertaining?

When learning information, the human brain will attempt to relate the new concept to a familiar concept. For example, when Henry Ford described one of his earliest automobile designs, he may have said, “It’s like a horse and carriage without the horses.” That description creates a relatable picture that offers listeners a point of reference. What picture did you see in your mind?

Stories work the same way. As long as they’re relatable to the audience, people will follow along. A good story connects better with the audience than straight technical material, and provides a more effective teaching method. According to a study at the University of Wisconsin, by Jill Eck, when learners are exposed to storytelling in a classroom setting they are highly engaged in the learning process and are practicing reflective learning as they process information on a deeper, more meaningful level.

See also: Strategist’s Guide to Artificial Intelligence  

Here are just some of the ways a story can help with your presentations:

  • Helps to break the ice
  • Helps to engage the audience
  • Helps to relate your message
  • Helps audiences retain your message
  • Reinforces your point

In January 2017, I attended a RIMS event at Minnesota RIMS. During the networking cocktail party, while I was introducing myself to new people, someone stopped me and said, “I know you. You’re the ‘thousand-legger’ guy.” He saw me give a presentation almost a year earlier, in May 2016 in St. Louis, and not only remembered my story but that it was about cyber exposures. I must admit I was a little surprised, but that is how it is supposed to work. If you tell a good story and tie it back to your message, people are more likely to remember. This was just one of many times this has happened over the years, but in this case I was delighted because I added that story into my talk just before I took the stage.

That day, I had my slides together, but I was still struggling with my material, and I had yet to come up with a story to help make my point. I was speaking for the first time about cyber exposures, so I spent nearly all of my time preparing the technical side of the content and gave little thought about a story to go with it. Have you ever been in that situation? I was more concerned with getting the subject matter right and was going to skip the story altogether.

After giving hundreds of speeches and presentations, I’ve learned that what makes your message memorable and your point stick with the audience is telling a good story. As I sat there waiting to go on stage, my mind was searching for a story, and finally it came to me. I immediately perked up and began thinking about how to integrate it. I hadn’t used this story before, so it was going to be a challenge, but I knew the story would to help me connect with the audience and make an important point.

I realize that you may not have tried using a story in your presentations before, and you probably have some questions and concerns, so I will share with you three suggestions to help you get started on the right path.

1. What stories work best?

Though you can use any kind of story, I have found personal stories work best because you know them well and can share them from direct experience. You won’t need to rehearse it to remember it, but you should practice how to tell it.

Personal stories also connect with the audience and can quickly build rapport. Humans have emotions, so take advantage of a variety of them. There are no limits other than time and appropriateness. Not all stories are interesting, though, or have a point, so you’ll want to make sure you have the right components.

2. What are the main components?

A good story is like Henry Ford’s car. It can take you anywhere you want to go, but it must have the right components.

The first part is the set-up. You’ll need to describe the situation so that people can see it in their minds. Where does it take place? Who is there? What is happening? Be descriptive enough to enable listeners to visualize the scene.

Next, it must have a problem or dilemma. People will imagine what that must be like or perhaps even picture themselves in that situation. You want your audience to connect emotionally to the problem because it creates the suspense you’ll need for the next step.

Once you have them where you want them, it’s time for the climax. The climax comes in many forms. If it’s a humorous story, it’s the punch line. If it’s a serious story, it’s the turning point. In either case, the best climax has an unexpected twist that makes it more interesting or funny. Any good book, sitcom or movie has these elements.

Finally, it must have a lesson, a take-home message. When it is a part of a presentation or speech, you’ll need to relate that message to your presentation to reinforce the point you’re trying to make.

3. How do you integrate it into your speech?

Once you have your story, you’ll need to figure out where to inject it. Sometimes, you can start off with the story and then segue into your presentation opener. Other times, it’s better to open the presentation and then work to the story.

The transition is the key. This is the part where you move into your story, in a way that is seamless and smooth. You should not say, “And now I will tell you a story.” The better you get with making the transition, the better the results will be. What you want to avoid is losing the audience in transition. If they are wondering what you are talking about or why, they will not be listening.

Once you’ve told your story, you can reference that point again and again to remind the audience of the connection. This is called a “callback,” and it can be very effective.

Now, let’s explore how I did it in St. Louis. The point of my cyber presentation was that the cyber risk topic is fear-based, and it’s easy to become paranoid about cyber threats. But that’s not the best way to manage the risk.

When I began my talk, I set the stage for all the outside influences and pressures around the cyber threats. Then, I said, “With all the uproar about cyber attacks, it’s easy to become a little irrational. [This is the transition to my personal story.] For example, my wife is a bit of a bug freak. She hates bugs and goes crazy when there’s a bug in the house. It’s not that she is afraid of them, but she doesn’t want them in our house, and, if there’s one inside, she will stop at nothing to kill it. [The set-up.] One day, my kids were playing with Legos on the dining room table. When it was time for bed, we told them to clean up the Legos. My five-year-old son, Chase, helped for a few seconds and then disappeared, leaving my eight-year-old daughter, Melina, to clean up the bulk of them. When Melina cleared the table, she stood up and then looked at the floor. She screamed in terror. ‘There’s a thousand Legos on the floor.” I was nearby and saw the mess and knelt beside her to help. [The climax.]) A few seconds later, my wife came running in from behind us with a shoe cocked and ready to strike. She demanded, ‘Where is it?’ Confused and startled, we asked, ‘Where’s what?’ She said, ‘The thousand-legger!” [The twist.]

The tie-in: When you are too uptight about anything – whether it’s cyber bugs or real bugs – everything starts sounding like a threat.

The lesson: It’s far better to keep the risk in perspective.

See also: Innovation Pivots: 10 Lessons Learned  

There was a wave of laughter, and then the point set in. From there, I continued with my presentation, but, I can tell you, I had their attention. I then presented my Cyber Exposure Wheel, a framework to help risk management quantify a company’s exposures while putting cyber risks into perspective. At the end, I concluded, “If you focus from the inside out, you won’t need to chase any thousand-leggers. You’ll be prepared for whatever threat comes your way.” [The callback.]

My story was true. It was funny, and I told friends the story for a laugh. All I had to do was draw the simile of the threat of bugs to the threat of cyber to make it work. I have lots of stories like this one and can use any of them to make various points. The good news is that you have lots of stories, too.

Using stories in your presentations makes them more interesting for the audience and more fun for you as the presenter. The next time you have a presentation to give, whether it’s at RIMS or at a company meeting, add in a story of your own to help make your point. You’ll be amazed at the feedback you get. And you’ll be thrilled down the road when someone mentions your story. I know it sounds odd, but I’m proud to be the “thousand-legger” guy!

Why Independence Matters for Claims

Policyholders insure against business risks to protect their financial integrity. When these risks become a reality, claim recovery is the return on investment. Unfortunately, it’s not quite that easy. Claim recovery is a process that requires expertise to secure a fair settlement. As you know, your carrier has experts assigned to adjust and audit your claim, so, in turn, you should have experts to help you quantify your losses and prepare a well-documented claim. But expertise is not enough. If you want the best chance to be made whole, independence matters.

Many companies promote themselves as focused on client needs, but, in claim preparation, it has to be more than a slogan. When it comes to preparing claims, true independence isn’t as common as you might think.

Is your loss accountant independent? The most common claim preparers are forensic accountants. Let’s take a look at where they exist in the insurance industry:

  • Insurance company forensic accountants
  • Insurance broker forensic accountants
  • Consulting firms with forensic accounting service offering
  • Accounting firms with forensic accounting service offering
  • Independent loss accounting firms

It should go without saying that the firms that are hired by the insurance companies cannot provide independent and unbiased service to policyholders, but many still do rely on the insurers’ accountants to measure their losses. If asked, the insurers’ accountants would likely recommend the insured retain an independent firm to assist them, yet there are those who don’t know and don’t ask. For the policyholders in this category, I hope you see the light after reading this article.

Broker-owned accounting firms have their own set of potential conflicts, starting with the strategic relationship they have with insurance companies. As a former broker, I can tell you these relationships are sacred. The carrier’s profitability is directly related to claims paid, and the carrier will reward brokers for profitable accounts with a bonus commission, aka contingent commissions. If you are on a fixed-fee arrangement, it does not mean there’s no contingent commission in play. Your broker wants to serve your needs and will work hard for you, but, when you have a loss, the broker has a conflict of interest.

It’s also important to remember that your claim can last longer than your broker agreement. It’s hard enough to end a relationship with your broker, but if the broker is preparing an outstanding claim it will prolong your dealings with the broker. If you change carriers and your broker at the same time, the situation can be harder to resolve. If you are using your broker for claim preparation, consider an independent option that only serves one master, you.

The large accounting firms with consulting practices will scale back their consulting activities when faced with financial debacles that cause regulators to scrutinize their independence. The inherent conflict of an auditing firm preparing a claim for a client should be obvious. The audit firm will have a direct impact on creating an asset or revenue stream, which the firm would then audit as part of the financial results. Those two activities need to remain separate to maintain independence.

Also consider what it means if your claim preparation firm is also the auditor for your insurer. As you can see, there are potential conflicts on both sides. Why not avoid potential conflicts and work with an independent specialist?

Hiring consulting firms presents similar conflicts to consider. Is it a provider of another service to your company? Does it also serve your carrier in some capacity? Making this determination can be time-consuming, and conflicts can be easily missed. Any firm you consider should be clear about possible conflicts, but it’s your recovery at stake, so it’s best to do the proper vetting.

In the insurance industry, it’s the policyholders’ right and obligation to value their own losses for submission to their insurer. Your insurer may be more than willing to help, but is that’s what is best for your business? Claim recovery is the reason policyholders invest in insurance, so be sure to hire a firm that knows how to prepare a claim and is working on your behalf. Loss accounting is a specialized craft that comes as a result of experience and expertise with insurance claims. Seeking an independent, third-party valuation of your losses is not only smart business but may be a fiduciary responsibility, especially with a large property and business interruption claim.

5 Keys to Successful Claims

When I started as director of marketing at RWH Myers, I asked a lot of questions of the partners. With the firm specializing in loss accounting, I wanted to understand the most important attributes in a successful claim. What I learned seemed too obvious at first, but I soon discovered why each component was essential.

The five keys to successful claims are not rooted in complex business interruption equations or piles of documentation. They are critical fundamentals. Fundamentals in any endeavor are easily missed and hard to execute without practice. But if you master the fundamentals, you’ll be on your way to a positive outcome. Get them wrong, and you’ll struggle to recover what you deserve.

When millions of dollars are on the line, risk management cannot afford to come up short on recovery. Our firm exists to help policyholders in their attempt to be made whole after a loss, so we thought it would be valuable to share what we found to be most important.

Here are the five keys to successful claims:

  1. Define the Claim‘s Priorities

When you have a loss, it is important for everyone to understand what is important to the organization at that time. Is it the recovery amount? Is it the speed of settlement? Is it a smooth process? Is it cash flow? Is it resource relief? It may be all of these and more.

Risk managers should discuss the priorities with executives and other key personnel to ensure all considerations are accounted for. When cash flow is critical, the claim preparation strategy should incorporate interim claim filings. If the primary need is to get the loss off the books before financial reporting, the strategy may focus on speed of settlement.

Knowing the priorities of the organization will enable a claim strategy that can meet those needs. As the old saying goes, “If you don’t know where you are going, any road will take you there.” With a property and business interruption claim, everyone involved needs to know where to go.

  1. Have the Right Team in Place

If you’ve been through a significant property claim, you know that your insurer(s) will have a team of experts whose job it is to adjust and audit your claim filings. Their goal is not to pay out the claim amount. It is to minimize the exposure to the underwriter to preserve profitability. Insurance companies are for-profit enterprises, and they take their profits seriously.

Knowing what their priorities are should reinforce the need to have a skilled team representing you. You will undoubtedly need to involve internal personnel to assist you, but know that they do not have the experience to match the insurers team’s acumen.

It is in your best interest to assemble your own team of experts ahead of a loss. Savvy policyholders may specify certain adjusters to be written into the policy in an effort to minimize potential claim issues. No matter what, you should avoid relying on the insurer’s forensic accountants’ calculations as the measure of your losses. An independent loss accounting firm can not only provide you with an accurate loss valuation but will be instrumental in guiding the claim to meet your goals.

Experience matters greatly, and you will need it to ensure success. Professional fees coverage is available for this service. It is there to pay for the experts you’ll need. Take advantage of it. Having your team in place in advance will make a big difference.

  1. Develop a Claim Strategy

The claim process involves many activities that could be daunting and burdensome to everyone in your organization, but the demand to achieve your priorities is relentless. It is critical to develop an effective strategy to get the best results from your claim. Engaging experts can help develop your strategy as they will know the obstacles you will face and can plan for them. The strategy should incorporate your priorities and the steps to achieve them. It should involve analyzing possible adjustments and ways to overcome them.

To keep the claim moving, create a timetable that maps each milestone. It should include request for information (RFI) responses and feedback, interim claim filings and audit results, periodic meetings and requested settlement date.

Don’t rely on hope or faith that your carrier will do the right thing. The carrier will do what’s right for it, not for you. Engage your experts immediately after a loss so that they can be involved in the design and execution of your strategy from the onset. If you are looking to recover millions of dollars, you better have a solid plan to do so.

  1. Give the Claim Appropriate Attention

At the beginning, claims get a lot of attention, but, as time passes, other items will distract from your claim. Managing an insurance claim is not a normal part of the job for anyone involved unless that is their job. For the insurer’s team, managing the claim is their job. It’s what they do everyday.

If you engage a loss accounting firm that specializes in preparing claims for policyholders, the firm will help to ensure your claim gets the appropriate attention. Not only will the firm keep your attention on the claim, but the firm will hold the insurer’s team accountable to the timetable.

Claims take time. You must be patient, but persistent. You can ill afford to lose attention. Don’t let your claim get lost amid all your other duties.

  1. Prepare a Logical Claim

When I worked for one of the largest brokers in the world, I often wondered what exactly our claims group did to help clients with claims. I was surprised to learn that the onus was on the client to actually put the claim together — all the financials, the calculations, all the invoices, the claim report, everything.

This documentation is the basis of the claim. It’s what’s reviewed, audited and adjusted. As the broker, I thought our claims group did it. I came to realize it’s not our responsibility, nor should it be. After all, we’re the broker, not the policyholder.

For the clients that used a loss accounting firm, the claims went much more smoothly and were resolved faster. I didn’t understand why until I joined RWH Myers. Putting the claim together is only half the battle. There is a technique to it that makes the difference from start to finish. As the claim progresses, there are always gray areas. Sure, you’ll recover some of your claim regardless of your approach, but that gray area may represent 20% or more of your losses. If recovery is important, that 20% matters greatly.

When claiming time element as business interruption, you are claiming earnings that you would have earned had the loss not occurred. There is an art to the model used to calculate these losses and a science to showcasing the logic behind it. A simple, logical and easy-to-understand claim will meet less resistance and recover more than a complicated, confusing and overbearing claim. Unfortunately, there isn’t a cookie cutter formula. You can’t just teach it. Experience is the only way to ensure this “key” will lead to a successful claim.

The bottom line is that claims have lives of their own. There are two opposing sides with opposing agendas. Claims ultimately come down to a negotiation. The amount remaining at the negotiation table tells the tale of how well the claim was prepared, including all the fundamentals — the priorities, the teams, the strategy, the attention and the claim report. It all matters to recovering your losses efficiently and effectively.