Many organizations have developed self insurance plans to cover part or all of the loss exposure. This involves handling of the claim through establishing an internal claim department or by hiring third party administrator.
A Self Insurance Plan is an arrangement in which an organization pays for its losses with its own resources rather than purchase an insurance. However, organization might choose to purchase insurance for losses that exceed a certain limit.
Internal Claim Departments
If an organization is large enough, it might establish separate claims department who possess skills and experience to handle many different types of claims. However, for certain classes of insurance like Workmen Compensation, Product Liability, etc., such companies will resort to professionals.
Third Party Administrators
The growth of self insurance plans has created a need for third party administrators who agree to provide administrative services to other businesses that have self insurance plan in handling their claims. Large independent adjusting firms sometimes function as TPAs for self insured business in addition to providing independent claims handling services to the insurers.
Claim Handling Process
The claim handling procedures can vary widely depending on the type of claim involved. In case of liability claims it takes years to settle and in case of property claims it might take few months to settle despite the unique challenges and variations in case to case.
There are three steps that are involved in processing most claims: -
· Investigation
· Valuation
· Negotiation and Settlement.
CHAPTER: 6 CLAIMS