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Project Management
Principles applied to the
Claims Process
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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
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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.

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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
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Why done this way?

  Every situation is unique

  Claim process is unpredictable

  Insurance is just done that way

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Results

  Claims remain unpredictable

  People involved in claims have poor reputation

  Unnecessarily contentious

  Impacts across organization

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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.

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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
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Characteristics of Successful Projects

  Clear Objectives

  Good Project Plan

  Communication

  Controlled Scope

  Stakeholder Support
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Project Planning

  Project Charter

  Project Execution Plan (PEP)

  Task definition
  Responsibility matrix
  Calendar of activities
  Budget
  Risk Management Strategy

  Execute Plan
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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
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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

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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
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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

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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
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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
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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

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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
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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.