Liability Overview and Best Practices 1.13

Liability Claims Management Services

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Constructing a total claims management program

n the liability claims arena, we start with Gallagher Bassett’s unique blueprint for success. We begin by building your liability program on the strength of our experience. We also design your program as a total system that welds all the elements needed to ensure cost savings and full control of all claims activities.

As part of our total system approach, we review your organization’s concept of liability claims management, assist in system definition, and suggest procedures and techniques for ongoing program management within the proper framework.

Maximizing program control and coordination

Your program should offer greater control in reducing the costs of liabilityrelated losses. With direct involvement, Gallagher Bassett can successfully integrate your program goals and expectations with our claims handling abilities. These goals can be achieved only if all parties involved understand the program, including its objectives and operations.

We will work with your organization to promote this understanding, orienting all members of your staff who are directly or indirectly involved in the processing of incidents and claims. Or, if you prefer, we will provide advice and assistance that will help you structure and conduct effective meetings and training sessions with department heads, supervisors, and other employee groups.

Aligning your procedures and practices

Your liability claims management procedures and practices must be compatible with your general policies, as well as your corporate claims handling philosophy. We will consult with your key personnel on procedures, practices, and coordination, and, if you wish, assist in getting them up to speed on recent changes. So everyone is on the same page, you may find it desirable to prepare a procedures manual for all units that explains what to do step by step and instructs in the proper use of forms. If you want, we can help you develop this manual.

Ensuring effective forms management

We will provide all the forms necessary for documenting and reporting liability losses, claims administration, program coordination, and internal corporate fiscal information. We can help develop and design any special internal forms you may require for your liability claims processing.

Allowing room for flexibility in your program

The ability to adapt to change is critical. At Gallagher Bassett, we review operations, policies, and objectives constantly to see if changes are needed. And, to make sure they are easily incorporated, we build flexibility into your program from the start.

Our representatives will meet with your staff periodically to review the program’s progress and to identify anything new that needs to be addressed.

Mastering the skills of reserve management

We recognize the need for skillful reserve management. There is mastery required in setting aside only those funds that will be needed to resolve a claim. We don’t leave things to chance or estimation. The dollar reserve we recommend setting aside to cover your potential exposure on any given claim is determined using sophisticated Gallagher Bassett tools and techniques. The exact amount of the reserve is based on the severity of the damages adjusted by the legal liability. Expressed mathematically, our liability reserving formula looks like this:

Total Maximum Value of Claim
x Percent of Legal Liability
+ Expense Factor
= Reserve

We consider all elements of the claim investigation and notify you as soon as possible of your potential exposure on a given claim. Step reserving or making frequent changes in the reserve, up or down, is not acceptable. Because we are dealing with your money, reserves are constantly reviewed and scrutinized.

Expense reserving is another area we closely monitor. An expense reserve will only be set up when the payment of an actual expense is anticipated.

Controlling costs through litigation management

Escalating legal expenses are an industry problem. Fortunately, legal costs can be successfully controlled through proven Gallagher Bassett litigation management techniques.

First, we make a conscious effort to keep claims that should not be litigated out of suit. Second, we properly manage those cases that do go to suit. The key to success in both areas is using the best legal counsel available. This is why—with your direction and approval—we will:

 Recommend a choice of attorneys for the defense of litigated claims, and direct and monitor counsel from the early stages of discovery through the conclusion of a case. We will either provide you with a selection of carrier-approved counsel or work with counsel you select.

 Keep you informed of ongoing developments in litigated cases. We manage every case, direct defense attorney activities toward your desired result, and make sure that vital information is reported in a timely manner to all parties concerned.

 Help you select independent counsel when matters require special investigation. We will recommend qualified firms and explain their capabilities.

 Monitor all cases for potential subrogation recoveries, prepare correspondence to spur collection, and assist counsel where litigation is required to accomplish recovery.

 Manage legal costs. We will authorize only legal activities that are necessary and maximize control by staying current regarding legal activities and costs incurred to date.

Procedures for keeping a tight rein on claim files

For every liability claim, we establish a claim file at one of our local offices. For more serious claims, we establish a controlled loss file based on pre-established criteria. A controlled loss file is typically developed on each case with a total experience figure in excess of 50 percent of the self-insured retention, an agreed-upon figure, or with any case that meets “severity criteria.”

File Identifiers. Lists the claim number and the insured’s name, claimant’s name, and date of loss.

Insured. Lists names of the insured and all persons or firms covered under the policy, and the insured’s connection to the incident (individual, partnership, or corporation).

Coverage. Verifies coverage.

Reserve. Provides loss and expense reserves with comments on adequacy for each suffix.

Other Insurance. Lists the names of the owner or occupant of the premises, or any part of the premises that is covered by liability insurance. Identifies the carrier(s), advising if coverages are primary, excess or concurrent.

Ownership and Control. Identifies the owner of the premises, if not the insured. Lists pertinent provisions of the lease and advises of any hold-harmless agreements. Determines who has control of the premises. Lists the owner’s policy number, insurance company or carrier, and claim representative.

Accident. Lists date and time the accident occurred. States the facts and, if there is a dispute as to the facts, identifies the source. Limits the description of the accident to pertinent details. In cases alleging employee negligence, identifies the employee, determines the nature of employment, and whether the employee was acting in the course of his or her employment.

Inspection of Premises. Describes the exact spot at which the claimant was injured. Describes the lighting, floor conditions, defects, etc. Includes diagrams and photographs, if pertinent.

Claimant. Lists name, occupation, age, address, social security number, family, and other identification. Briefly details the facts of the accident. Summarizes any statements. Covers the special damages (e.g., wages, medical). Determines whether the claimant was working. Identifies the employer, compensation carrier, and what compensation has been paid. Determines if there have been any other accidents or injuries. Determines the claimant’s status on the premises (e.g., licensee, business invitee, trespasser). Advises if the claimant is represented by counsel.

Injuries. States the injuries and source of information.

Witnesses. Identifies each witness by name, age, occupation, address, and indicates where he or she can be located. Summarizes the witnesses’ versions of the loss, as well as their credibility in relation to the incident.

Claim Adjuster’s Opinion. Based on the investigation to date, specifically advises who is responsible for the loss. States the reasons supporting this opinion. If a comparative negligence state is involved, details the percentage of negligence believed to be chargeable to the various implicated parties.

Negotiations. Summarizes the negotiations with the individual claimants or their representatives. If the case is to be denied, states the form of denial (e.g., letter or telephone). If the case will be settled, states the high/low range for each claimant.

Subrogation. Determines third-party liability and identifies the parties responsible. Lists all addresses. Advises if the third-party has been placed on notice.

Action Plan. Itemizes each step that will be needed if further investigation is required and indicates dates for completion of each step.

In the case of an automobile liability claim, the file will cover all of the information listed above and the following:

Title, Identification, Use. States if the car was owned and driven by the insured. If not, identifies the owner of the vehicle, the operator, and his or her relationship to the insured. States whether the vehicle was used for personal or business purposes and who authorized its use.

Location of Accident. Identifies the place of the accident by briefly describing the general area (e.g., residential, business district, industrial). Describes the weather conditions, road conditions, number of lanes, whether the street was one-way or two-way, and general traffic conditions. If the accident occurred at an intersection, describes the type of traffic control, placement of stop signs, etc. Diagrams and photographs are encouraged.

Property Damage. Describes the damage to the claimant’s car. Documents the repair estimates and source of estimates. Lists the claimant’s collision carrier and deductible.

Description of Accident. States how the accident occurred. If there is a discrepancy between the claimant’s version and the insured’s version of the accident, indicates which story has validity in the opinion of the adjuster.

Police Report. Indicates the existence of a police report and any charges. Details how the parties pled to the charges and the ultimate disposition of the case.

Our carrier reporting keeps all parties connected

To help forge success, we carefully nurture good working relationships between you, your brokers, fronted carriers, and excess carriers (if applicable). Strong relationships protect you and help reduce costs by eliminating possibilities for error and by ensuring the smooth functioning of the claims process.

We provide excess reporting…

… whenever a claim demonstrates the potential to involve excess layers of coverage or meets other criteria listed in the next section.

We plug in first dollar reporting…

…contacting fronted carriers directly whenever a claim meets one of the reporting guidelines, reaches a specific dollar amount that you’ve previously indicated, or meets the criteria listed below.

•Any occurrence with total experience (paid plus pending reserves) equal to or greater than 50 percent of your self-insured retention.

•Any occurrence with a total experience equal to or greater than an amount formally agreed to by Gallagher Bassett and the carrier.

•Fatalities.

•Brain damage.

•Dismemberment.

•Spinal cord injuries that result in paralysis.

•Severe scarring or burns.

•Loss of sight or hearing.

•Amputations.

•Multiple fractures.

•Environmental impairment or toxic tort (controlled loss file is sent to home office).

•Sexual abuse or misconduct (controlled loss file is sent to home office).

Because we are sensitive to your needs and the needs of your carriers, we follow specific procedures designed to enhance carrier reporting/communication. Our corporate policy, for example, requires coverage verification for each occurrence. In order to keep coverage information current, we make special notation in your client-specific Service Instructions and strictly adhere to those guidelines. This ensures quick communication of information in a clear, concise format.

For large or unusual claims, we have the Detailed Status Report

To keep you aware of developments with regard to significant liability losses, Gallagher Bassett has designed the automated Detailed Status Report (DSR)—a tool we use to notify you about large or unusual claims and any change in the status of these claims. This multi-page report provides information about the claim under various captions and is completed by the adjuster. It is created when a claim reaches a dollar amount that you’ve defined or involves a specific kind of serious injury. As part of our service, a DSR will also be provided when any claim meets the controlled loss criteria.

Detailed Status Reports are sent when:

•The initial total experience is set at or above the agreed amount.

•A total experience increase is made after the total experience is at or above the agreed amount.

•The loss is of a serious nature.

A few concluding claims management thoughts

At Gallagher Bassett, we apply proven strengths in many areas to create a complete risk management program that stands the test of your immediate risk management needs and the test of time.

With vision focused on results and a constant client satisfaction, we offer a value-added approach that never loses sight of our shared objective—providing a measurable return on your risk management investment.

Be sure to visit us at our website:

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Liability Corporate Best Practices

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More than the unembellished facts

allagher Bassett has grown into a national claimsmanagement organization through a dedication to service and a commitment to quality. As our client base has expanded over the years, we have continually recognized our responsibility to meet the ever-changing needs and expectations of our clients. Competition, customer sophistication and our own expansion have always challenged us in our efforts to provide a product of consistently high quality.

Our Liability Corporate Best Practices have been designed to assist us in achieving our corporate goal of providing quality service to a satisfied client. These standards define the level of performance against which we measure the quality of the claims management we provide to our clients. Adherence to the guidance and instructions outlined in these Best Practices assures us of our continued success as the premier claims management service provider in the industry.

Explaining basic liability claim procedures

New claims

We set high standards for ourselves and the responsiveness of our service. Upon receipt of a first notice of claim by a branch office, claims will be reviewed, reserved and coded into RISX-FACS®, our proprietary risk management information system.

Coverage verification

Verification of coverage, based on current information in the Client Service Instructions is documented in Claim Notebook. Supervisory review takes place to ensure coverage documentation is sufficient.

Maintaining the files

Files are maintained with strict rules to ensure that all pertinent information is filed properly and in chronological order. Multiple files will be numbered, damaged jackets replaced, duplicate file material discarded and descriptions will accompany photos or digital images. File jackets will be stamped or marked to indicate status, such as carrier report, suit, subro, lien filed, file cross-reference, etc.

Incoming mail

We date-stamp all incoming mail and review it within 24 hours. Faxed documents must reflect the date and time received.

Use of diary management

All claims are entered into a RISX-FACS® diary and dated. Comments appear in our Claim Notebook. Initial diary reviews are at 30 days, with controlled loss claims and claims with coverage issues reviewed more frequently.

Use of our index system

All bodily injury (BI) claims reserved over $500 will be automatically indexed via RISX-FACS® and reindexed 6months later. Additional filings can be initiated by the claim handler as warranted.

Contact—keeping communication flowing between parties

Client contact

You will always hear from us. Where any important communication is concerned, you will be contacted within 1 business day.

Claimant contact

All BI/PI injury claimants will be contacted within 1 business day of receipt of a claim. If initial contact cannot be made, a second attempt will be made the following day prior to sending a letter. (We believe in personal contact.) Property damage (PD) claimants must also be contacted within1business day, but contact can be made by phone or mail. Exceptions must be documented in Claim Notebook.

Attorney contact

Claimant attorney contact will be made by telephone within 2 business days of receipt of a letter of representation or notice of claim. Written acknowledgment must follow within 5 business days. Exceptions must be documented in Claim Notebook.

Witness contact

Witnesses will be contacted on a timely basis on all (carrier reportable) controlled loss claims or cases involving questionable liability or damages. Exceptions must be documented in Claim Notebook.

Procedures for claim investigations

Taking statements

Statements must be taken from all BI/PI injury claimants. Statements from any witnesses should also be taken, especially where witnesses could affect assessments of liability or damages. Recorded statements are preferred, filed for reference, and summarized in Claim Notebook. If there is a reason for not securing a statement, it must be documented.