Project Management Principles applied to the Claims Process

Transcription

1 Project Management Principles applied to the Claims Process

2 Overview Traditional claims approaches Discussion of factors leading to change in approach Outline of Project Management Principles Applying Project Management Principles to a claim Summary

3 Traditional approaches Loss occurs. Notification to Insurers Adjuster attends quickly likely with engineering experts Adjuster requests information to establish cause and value of initial claim estimate to provide an initial reserve to Insurers. Adjuster may attend during repair period to view progress Adjuster will often establish his own As-Built and Rebuild costs independently of the Insured. Repairs complete - Plant back running Adjuster may attend to view completed repairs and validate scope Final Claim submitted Coverage and cost issues negotiated and eventually claim is settled.

4 Common Issues Varying and ultimately unrealized expectations on both sides Planning Communication Poor documentation Uncertainty over what has been accepted by Adjuster Poor reconciliation between claimed costs and settlement proposals Extended Claims duration Difficulty in substantiating claim No appreciation for required detailed validation of the claim Many key parties involved in repair move on while claim process continues Adversarial relations Misunderstandings result in frustration

5 Why done this way? Every situation is unique Claim process is unpredictable Insurance is just done that way

6 Results Claims remain unpredictable People involved in claims have poor reputation Unnecessarily contentious Impacts across organization

7 Why change Recognition that the claim process impacts more than the RM/Insurance group A recognition of the value of project management principles within companies. Stricter governance need for management controls and accountability Leaner organizations means focus is on: Being right sized for day-to-day business Less ability to handle surge jobs Impact to public companies Impact on cash flow The need for a better mousetrap.

8 Fundamentals of Project Management If you fail to plan you are planning to fail. If project content is allowed to change freely, the rate of change will exceed the rate of progress. If you don t define the goalposts, how do you know when you score

9 Characteristics of Successful Projects Clear Objectives Good Project Plan Communication Controlled Scope Stakeholder Support

10 Project Planning Project Charter Project Execution Plan (PEP) Task definition Responsibility matrix Calendar of activities Budget Risk Management Strategy Execute Plan

11 Project Charter/PEP Project Charter Define the scope of the project May be defined by: corporate role (JV operator?) Size or type of loss Project Execution Plan Define how you want to reach your objectives Aggressive/cooperative Involvement/Control of legal counsel Use of consultants Speed or Amount of Settlement Basis of settlement

12 Define Tasks Detail the deliverables and the work required to get them Driven off scope of work but more detailed Answer Why is this a claim? What is affected? What aspects of work being done are insured/not insured? What was done about it? What did/will it cost? How does the money get recovered? Know what documentation is needed to support the answers

13 Responsibility Matrix Identify the resources required to fulfill the needs of the Tasks identified Multi-stream response Field (physical assets) Field/Corporate (production/sales impacts) Corporate (finance impacts) Establish Roles and Accountability matrix Lines of communication, reporting and responsibility Document Management Stewardship

14 Develop a timeline Take the tasks and develop a logical sequence Define cause Define scope of damage/repairs Identify and define duration for insured scope and uninsured scope. Calculate the anticipated time lag between repair being complete and progression of the claim process. Add in outside factors Interim payments what process and trigger points? Extended duration/deferred or non-essential work Claim closeout process Project a target closure date

15 Schedule Example 0 Incident Conduct Cause and Origin Cause and Origin (Prove Trigger) Develop Scope of Damage Scope of Damage Complete Develop repair plan Develop repair estimate Demolition Demolition Complete Construction Construction complete Start-up Begin collecting invoices Receive last invoice Collect proof of payment Submit invoices to adjuster Invoices in for review Negotiate payment Adjuster recommends Payment Process payment Payment received proof signed Develop model for business loss Track production impacts provide business model for review Review business model Agree BI loss Adjuster recommends Payment (BI) Process payment (BI) Payment received and proof signed Claim Closed

16 Risk Management Will not anticipate all problems Gives tool to bring in management help Manage expectations both internally and externally Manage resources internally and externally Requires revisiting plan often Revise as required

17 Execute Plan Execute the prepared plan in relation to the insurance claim scope Periodically revisit and revise as project proceeds Reporting progress Managing expectations Develop and manage relationships QA/QC Close out / lessons learned

18 Benefits of Project Management Approach Defined goalposts Defined completion Clear communication of expectations and accomplishments Internally and externally Reduced misunderstandings Less confrontational More efficient resolution Less time revisiting ideas and needs More rapid conclusion of claim Better auditability and justification of claim amounts

19 Thank you Lloyd Kortbeek, P.Eng, CIP Lloyd is the president and founder of E2I2 Consulting Inc, an engineering firm specialized in dealing with industrial claims. His firm provides investigation services related to cause and origin, claim support services related to the preparation and evaluation of claims, insurance claims in particular, and input and evaluation related to optimizing operation and maintenance methods. Mike Roper, CIP Mike is the president of Energy Insurance Consultants/EIC Claim Management. The company specializes in supporting clients in the management of their Property, Business Interruption, OEE, Liability and Pollution claims as well as pre-loss policy wording review and theoretical claim scenario analysis.