Risk pools, excess coverage and the value of communication

For cities, counties, police departments and other public agencies, being a member of a risk pool can offer many insurance-related benefits. When it comes to excess coverage policies and support, it’s essential for human resources and risk management teams to understand the advantages of communicating. 

Reporting and recordkeeping 

For a public agency, reporting claims to their excess insurance carrier is critical. Excess coverage provides higher limits above self-insured retention or primary pool coverage. Members of risk pools should know what types of claims to report based on their policy. It’s also important to be able to easily locate the carrier’s contact information and claims management standards.

Sometimes maintaining old records may not seem useful, but some workers’ compensation claims can span decades, making it necessary to have access to excess coverage information and reporting requirements for past years. When turnover occurs, historical coverage details can get lost in the transition. It’s helpful to maintain these records and ensure the teams involved with claims know what the various coverages are, where to find them and how they impact the program.

Keeping carriers informed

Reporting claims activity to an excess carrier goes beyond notifying them about specific types of claims or those with a certain dollar value. Many reportable events are not related to individual claims. When moving to a new system, it’s important to inform the excess carrier so they can help transfer claims data and make sure all the fields match up with their existing information. Any changes in supervisors and other contacts should also be reported.

In addition, when a catastrophic event occurs, it’s beneficial for risk pool members to reach out to their excess carrier early. They can serve as a resource and help adjusters and risk managers at public agencies take steps to handle catastrophic events before they become worse.

Communication challenges

For members, common issues such as late or redundant claim reports, inaccurate notes and lack of file documentation can cause delays. Failure to understand the excess authority levels in the pooling world can also impact the claims process. If the claims manager, executive committee and board must provide approval for a settlement at a particular dollar value, the member agency may not be able to obtain all the approvals in a timely manner. It’s essential to understand the communication requirements and make sure files are being reported at the appropriate excess level.

For pools, key challenges include actuarial and underwriting inaccuracy. If claims aren’t reported, then carriers and third-party administrators don’t have good data. Typically, pools have an obligation to report claims timely to reinsurers, provide good data and meet the requirements of their policy. When agencies fail to keep their excess carriers informed, it can have serious financial implications. If we see that there’s claims activity happening, we can direct resources to the agency to support this process. For risk pools to work, all the members need to be on board and meeting the requirements. Those that aren’t may be putting their membership in jeopardy.

Accessing excess resources

Excess carriers generally have claims teams with experience managing larger claims and public agencies can benefit from their expertise. Members may also have access to risk control training, proposal support and service provider recommendations. In addition, some agencies may not have employees with experience dealing with the media or a fallout on social channels that can happen with a catastrophic claim and the excess carrier resources can provide support behind the scenes to help them work through these communications. 

Best practices

It’s beneficial for risk pool members to discuss claims with their excess carriers before they are reportable. Another key step is to become familiar with the excess carrier’s claims management standards. Knowing what not to do is also important. Don’t make the excess carrier ask for reports every month and when providing claims information, don’t use AI to create a data dump. Also, verify details instead of relying on notes from adjusters, agencies or risk managers. 

Expert support

At Sedgwick, our pooling team provides day-to-day claims oversight and program management for public entities, helping them effectively manage risk and control costs so they can focus on serving their communities. We work with more than 3,000 public entities, providing claims management, underwriting and risk control services tailored to their needs. Learn more at sedgwick.com.