Contract Claims and Litigation Management

“A badly managed and long-delayed claim can cause serious problems for the risk and insurance manager. The CFO signs off on the annual insurance program on the basis that the risk manager knows what they are doing, has negotiated the best possible terms and conditions and, above all, that the coverage will respond rapidly and in full when called upon.

The risk manager really does not want to have to stand up in front of the CFO and rest of the board and explain that the payment has still not arrived because they (and a whole host of ‘experts’) have spent the last six months trying to agree whether some exclusion contained within the small print of a 500-page contract invalidates the claim or not.

The CFO simply wants to hear that the claim has been paid, how much will arrive and exactly when, so that the money can be booked. These are simple questions that far too often are difficult for the risk manager to answer with any degree of certainty.

If the claim takes two years to settle, then the value as a risk transfer tool is lost.”

Mr. Lars Henneberg, Head of Risk Management at AP Møller, the shipping company, has said that Maersk’s risk management team currently spends about 75% of its time on insurance and claims administration and 25% on risk management, which he said is “clearly the wrong way around”.

One way in which risk managers can focus more of their time and energy on what they do best, risk management, is to outsource their claims management to people with focused expertise in managing claims. RACSAP has the expertise to manage your claims efficiently and expeditiously, bringing value to your company.

Notwithstanding that most companies would have insurance brokers assisting with their claims, in a recent article in Commercial Risk Europe (an insurance governance firm in the UK) using discussions with about 450 UK companies of varying sizes over nearly four years, advised that in the UK 45% of large, more complex commercial claims are:

• Currently disputed by insurers;
• Take three years to resolve on average; and
• Settle at about 60% of initial estimated values.

There is no reason to believe that the statistics would be much different in Asia Pacific. You can increase your odds of outperforming the average insured company by employing RACSAP to assist you after you have suffered an insurance event.