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Project Management Principles applied to the Claims Process

+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

+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.

+Common Issues

  Varying and ultimately unrealized expectations on both sides   Planning

  Communication

  Poor documentation   Difficulty in substantiating claim   No appreciation for required detailed validation of the claim

  Uncertainty over what has been accepted by Adjuster   Poor reconciliation between claimed costs and settlement proposals

  Extended Claims duration   Many key parties involved in repair move on while claim process continues

  Adversarial relations   Misunderstandings result in frustration

+Why done this way?

  Every situation is unique

  Claim process is unpredictable

  Insurance is just done that way

+Results

  Claims remain unpredictable

  People involved in claims have poor reputation

  Unnecessarily contentious

  Impacts across organization

+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.

+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

+Characteristics of Successful Projects

  Clear Objectives

  Good Project Plan

  Communication

  Controlled Scope

  Stakeholder Support

+Project Planning

 Project Charter

 Project Execution Plan (PEP)   Task definition

  Responsibility matrix

  Calendar of activities

  Budget

  Risk Management Strategy

 Execute Plan

+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

+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

+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

+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

+Schedule Example

0 50 100 150 200 250 300 350 400

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

+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

+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

+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

+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.