Archive for July, 2013

Driving claims results by focusing less on vendor pricing and more on quality of outcomes

ImagePrice is often a primary consideration in many of our buying decisions, but can it get in the way of doing the right thing?  When buying a home, is it worth skimping on price if it means bad schools for your  children or a high crime rate?  When buying a car would one forsake safety for a low price?  These same considerations should play out when making crucial business decisions, in particular in claim departments where outcomes have far bigger ramifications than simple cost savings. 

Having spent the better part of my career overseeing claims operations I am keenly aware of the push to always drive down price points.   I am also aware of the resulting unintended consequences that can adversely impact productivity, indemnities, expenses and policyholder retention. 

Despite this, there is an undercurrent throughout the claims industry that often overemphasizes price.  While price is important, there are several other factors in key purchasing decisions that are arguably far more important.  

Again, consider the purchasing decisions that we make in our personal lives and the impact of price.   In my own situation, I could arguably purchase a home identical to mine in a different zip code for roughly half the price.   I would then have costs associated with private schools, elaborate security measures and a much lower rate of home value appreciation.   When making key business purchasing decisions overseeing claims procurement processes, similar situations often played out with vendors providing much lower “up front” pricing, with many costs only to surface for what I really wanted.   In many instances the higher cost vendor was actually cheaper in the long run.  

The challenge in many claims organizations is that vendor related services are often considered a commodity, much like airfares.   But, does it make sense to always buy the cheapest plane tickets?  What if a particular airline has a lower fare but has a track record of running late or losing luggage?  

When it comes to claims handling, the mantra is often the lowest ultimate cost.   Sometimes paying a little bit more on a claim can save a lot of money in terms of reduced life cycle and litigation.   The same holds true in the world of vendor services.   Consider subrogation where contingency fees continue to get ratcheted down.  Then consider the financial implications of violating the Fair Debt Collection Practices Act.  In order to lower fees, service providers need to hire less experienced personnel who may not fully understand the implications of the FDCPA and the millions of dollars paid out annually as the result of violations.   Beyond subrogation, consider the implications of HIPAA or Hi-Tech violations when dealing with medical related claims.  

The truth is, we are becoming a more regulated and complex society with soaring litigation rates.   Arguably now more than ever, claims handling experience and expertise should be the first consideration when looking for a business partner.   Certainly price should be a consideration, but only to point rather than a fault.   But here is a list of five considerations that are even more important than price.

1)      Claims Knowledge- As discussed in Re-Adjusted: 20 Essential Rules To Take Your Claims Organization from Ordinary to Extraordinary, claims is not for everyone.  Fundamental understanding and execution of best practices takes a specific skill set and an insatiable curiosity that is far from ubiquitious.   Business partners that have not only an understanding of claims, but experience can relate to the challenges of claims executives and serve as an integral part of organizational success. 

2)      Execution – The framework for success lies in the proper leveraging of people, processes and technology.   Certainly anyone can introduce a product and offer a low price, but can they execute?   To drive organizational results there must be the proper balance of people using effective processes in conjunction with innovation which serves to drive productivity and results. 

3)      Vision- It has been said that leadership is the ability to translate vision into reality.  It is fine to have a vision, but is there a demonstrated history of turning that vision into a product that can drive claims outcomes and organizational results.   During my tenure overseeing vendor management, it was not uncommon to see potential suitors with grandiose visions that were going to transform the insurance industry.   The key to success is partnering with those who have actually succeeded into turning the vision into the venture. 

4)      Results Orientation – Getting a contract with a claims organization is a small part of the challenge with the far greater the ability to deliver results.   While up front pricing may be enticing, it is critical to ask questions as to how the organization can provide such savings over the competition.  Is there an onshore versus offshore component?  Is there a skillset differential?  Is there a lack of institutional knowledge that can result in compliance deficiencies and litigation risk?  What percentage of the claims industry does the potential business partner currently service?  

5)      Price –Yes, price does matter.   But it should never be the driving force unless there is an apples to apples commodity.   In the grocery store, buying the banana with less bruises for the same price as the clean banana doesn’t make sense.   The reality is that in the claims industry there aren’t a lot of apples to apples comparisons to be made, as key differentiators are usually present when there is effective due diligence.   Certainly competitive bidding and offshoring can be beneficial, but it can also result in unintended consequences that can more than offset any realized savings.  

Like many aspects of claims, the key to success is investigation.   Just as we wouldn’t cut a check to a claimant without first asking key questions, we should take the same precautions when seeking out business partners.   By identifying business partners who understand our challenges and can collaborate to drive results, carriers take significant steps towards gaining a competitive advantage in the marketplace over those whose main motivation is driven by price. 

Christopher Tidball is an executive claims consultant and author of multiple books including Re-Adjusted: 20 Essential Rules To Take Your Claims Organization from Ordinary to Extraordinary and Blocking & Tackling:  The Playbook for the Winning Claims Organization.   He is a claims veteran with more than 20 years of adjusting, management, procurement and leadership experience.  To learn more, please visit



July 25, 2013 at 8:32 am Leave a comment

The importance of chain of custody and preservation of evidence in claims handling

evidenceWith spoliation of evidence claims on the rise, insurers need to be increasingly aware of steps that must be taken to preserve damaged property. To better understand this, it is important to first recognize and understand the chain of custody.

The inception of the chain of custody is the point in time at which evidence is collected and the chain must be maintained until the evidence is disposed of. Evidence comes in all shapes and sizes, and depending upon the nature of your claim must be cared for in a variety of different ways. This chain ensures continuity in the accountability and is essential as any break in the chain may invalidate admissibility in court.

The chain of custody is a chronological written record of those individuals who have had custody of the evidence from its initial acquisition until its final disposition. These persons in the chain of custody must be identified and any person coming in contact with the evidence must be documented.

Ideally there will be an evidence custodian. It is incumbent upon the custodian to be a steward of the evidence while documenting everything that happens through the lifecycle of the evidence process. Even more critical is an understanding of the various state laws pertaining to evidence and spoliation thereof, which can leave the custodian liable for damages.

It is often advisable to utilize an independent Evidence Custodian as this will minimize charges of tampering with evidence. By securing evidence in an independent location, all parties associated with the claim will have access to the evidence.

Another key part of the process involves the utilization of Evidence Receipts. Evidence receipts are provided to those who deposit evidence. The Evidence Custodian will always retain the original, a second goes to the person depositing the evidence and a third goes to a case file. Having the ability to electronically retain this documentation and back up in an offsite, secured location is ideal.

The original chain of custody form becomes a voucher and is given a voucher number when it is presented to the evidence custodian. Number evidence vouchers consecutively from inception to the current date. This original voucher should not leave the custodian with the exception of submission to a court of law as evidence.

An Evidence Sub voucher should be utilized to document any changes in the chain of custody that occur when the evidence leaves the evidence room. Consider a situation in which a mold sample leaves the evidence room with the plaintiff attorney and is turned over to a toxicology expert for analysis, in which case a sub voucher would be utilized. The number of the sub voucher should reflect the number of the original.

Disposition of Evidence occurs when the materials in custody are no longer needed at which time the property should be turned over to the proper owner or if unknown to an applicable insurer, state or federal agency.


Christopher Tidball is an executive claims consultant and the author of multiple books including Blocking & Tackling: The Playbook for the Winning Claims Organization and Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary to Extraordinary. He has over twenty years of experience in claims management and leadership in the property and casualty industry. His tips for success have been featured on MSNBC, CBS Market Watch, ABC, Yahoo Finance, The Wall Street Journal and Kiplinger’s. To learn more about optimizing your organizational results, please visit or e-mail

July 9, 2013 at 6:51 am Leave a comment

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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at

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