The Best Defense Against Catastrophic Claims is Preparation

February 8, 2023

By Lisa Vanore

For some organizations, preparing for a catastrophe is embedded into business operations and always top of mind. For others, it might not even be on their radar. The truth is damaging incidents can happen anytime, anywhere. Catastrophic claims can arise regardless of the industry or size of a company and have the potential to bankrupt an organization if not protected.

The value of a claim is not always directly correlated to whether a claim is defined as catastrophic. While some types of claims are immediately identified as catastrophic, others are not easily identifiable and may develop over time. Catastrophic claims can include fatalities, serious injuries, incidents that involve multiple claimants or class actions, and events that threaten an organization’s reputation.

Catastrophic events are often unexpected but having mitigation tools in place can lessen the blow and help organizations quickly respond to and manage an incident. Partnering with brokers with a thorough understanding of the steps to take when a catastrophe occurs is key to ensuring your business is in the best possible position.

Mitigating Loss When Disaster Strikes

When a catastrophe occurs, the way in which an organization responds can change the nature of a catastrophic claim and affect the ultimate outcome. Here are the key steps organizations should take following a catastrophe:

1. Respond quickly – The top priority should be protecting people, making sure all employees and those involved are safe and receive proper care. Report the incident promptly to the insurance carrier, as delays can negatively impact the complexity of the claim and the cost. A broker should be brought in as soon as possible to help manage reporting timelines and push the process along if carriers are slow to assign an adjuster to investigate the claim.
2. Manage the loss – Secure any and all evidence from the incident. A thorough investigation should be conducted and, if applicable, defense counsel should be brought in. Depending on the type of incident, other resources, such as experts, may also be needed.
3. Determine claim strategy – Work with claim management partners to determine a strategy that ensures the least impact on the bottom line, whether that’s early settlement, litigation, or otherwise. At this stage, organizations should strategize how to find a resolution that makes sense for all parties involved.

Preparing for the Unexpected

Having the appropriate mitigation practices in place before an incident occurs is also fundamental to improving outcomes. Without them, organizations can end up with increased costs and losses. To ensure prompt and effective response, the following preventative measures must be in place:

• Loss prevention and training procedures – Organizations should have processes and procedures in place that are designed to prevent losses and minimize the impact of catastrophic events before they occur. All employees should be trained on these processes and procedures so that they can act quickly during an incident and prevent further loss from occurring.
• Crisis management and emergency response planning – Crisis management and emergency response plans should be in place and should outline procedures and actions that need to occur following an incident. An insurance broker can help organizations conduct risk assessments to determine potential crisis scenarios and identify what needs to be included in response plans to be best protected.
• Incident reporting and investigation procedures – Create and implement incident reporting and investigation procedures that clearly define what types of incidents are reportable to key stakeholders and who within the organization is responsible for reporting such incidents. Without a process for alerting various internal and external stakeholders of incidents, critical actions may be missed, ultimately adding to the complexity of the claim. When these procedures are in place and executed successfully, organizations can identify incidents early and triage effectively in an effort to prevent the incident from turning into a catastrophic claim.
• Claims management process – Organizations also need to establish a claims management process that outlines reporting procedures and names strategic partners, including carriers, expert advisors, and defense counsel. Having key partners in place prior to an incident will ease coordination efforts and reduce friction between parties when it comes to determining a claim strategy.

Taking Control of the Outcome

Insurance carriers are paying billions of dollars each year for covered catastrophic losses. Rising litigation costs, plaintiff-friendly legal decisions and larger jury awards as a result of social inflation are leading to increased payouts, losses, and coverage costs.

In this environment, it is increasingly important for businesses to prepare for catastrophic events and have the right partners in place to help. An insurance broker can be an invaluable resource when an incident arises, providing advice, consult, and guidance throughout the claims process.

At Conner Strong & Buckelew, our insurance brokers lead the industry in catastrophic claims guidance and have strong relationships with carriers to ensure coordination and the best possible outcomes for clients. Our robust team of claims consultants and safety experts work side by side with our clients to deliver a holistic approach to managing and preventing catastrophic claims, with expertise in managing claims and implementing safety and risk control programs.

To review your current coverage and make sure you are protected when catastrophe strikes, contact a Conner Strong & Buckelew representative.