October Captives Blog

AP Captives: Teamwork for Claims Success

10/26/2023 Written by: AP Captives

Claims are a significant cost to any operation, and captives are no exception. However, an important benefit of captive membership is the control organizations can maintain over their claims-handling process. Let's explore this concept in more detail using a real-life example where captive membership made a difference.

"Captives are a risk management program that work optimally when claims and loss control work together," says Beth Waldeck, AIC, Manager of Claims and Risk Control Services at Murray, an AssuredPartners agency in Lancaster, PA. Some of the considerations and key components Waldeck deems necessary to build a successful claims-handling process in a captive include:

  • Analyzing existing data to understand the organization's claims history. This analysis reveals gaps in coverage and on-going safety issues and identifies other potential exposure areas.
  • Opening communication channels for all involved parties to prevent and minimize the impact when a claim occurs.
  • Continued data analysis to improve and update the risk management plan.

According to Waldeck, claims and safety experts working together can tailor a program using historical data that addresses what happened in the past and identifies what to be aware of for the future. This methodology helps to form a solid, customized, and up-to-date risk management prevention strategy.

Once the client and the captive team agree upon a plan, the expectations for everyone are communicated. This helps to promote interaction among all parties so that as an event unfolds, details can be shared as quickly as possible.

The process is not static; on-going "monitoring" means the prevention plan is subject to constant quality progression.

Let's look at how these key components work together when applied to an actual client scenario for workers' compensation, automobile, and general liability coverages.

Workers' Compensation

In the case of a large construction captive account, several concepts functioned together to help better maintain costs for their workers' compensation claims. Because the company maintains a large amount of the financial risk for their workers, they have more control over how the claims are handled:

They work with their dedicated adjuster to thoroughly investigate claims but can still maintain a good working relationship with their valued employees.

  • Long-term, skilled employees doing tough physical jobs are treated with respect and walked through the claims process with the help of advocates.
  • The organization can work with the attorney of their choice to coordinate the workers' compensation litigation process with their employment law exposure – another financial savings to the bottom line.

These practices allow the employer to control their claim costs and retain their employees, saving on additional hiring and training costs in a tough hiring market.

Automobile and General Liability

Another example of captive claim management using the same construction company means the client can take full advantage of economies of scale. Because the entire group in the captive has access to several risk control tools, they can prevent and manage claims at a much lower cost than if each company had to purchase the tools separately. Other services provided include educational webinars to mitigate trending loss exposures, safety management training, hazard assessment, and compliance recommendations.

Managing Risk Saves and Protects

Lori Harris, AAI, CPIA, AssuredPartners Captives Vertical Director, offers this advice, "Captive solutions are an effective way to manage risk, realize cost savings, but most importantly – protect a client's employees."

"Our claims and loss control consultants continuously work together to mitigate exposures by looking back at the historical data and using what's learned to move forward in a more educated and prepared way," she adds.

The bottom line is that captive membership provides the ability to set up a continuous improvement cycle with experts to educate and advocate along the way.

Contact Us

Claims handling is just one way members realize savings. Return of underwriting profit and other accounting considerations also help protect organizations' bottom line.

Our team is committed to assisting you in making the best choices for your company. If you would like more information regarding claims management and how it relates to the risk management financial structure of a P&C or EB Captive, contact us at captives@assuredpartners.com to talk to a team member about all your options. There is Power Through Partnership.

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