Many local authorities and police and fire services carry large self insured deductibles and in the majority of cases, they employ a third party to handle their claims. This may be the insurer, a third party administrator or a loss adjuster. Considering that these third parties are spending your money, it is not unreasonable that from time to time you will want to audit these claims handling arrangements.
The key reasons why you might like to audit your claims handlers are:
The first decision you will need to make is – who is going to undertake the audit? Some claims handlers take issue with their competitors being asked to audit them so you will need to ensure that if you are appointing someone to do this for you, that this is approved by the claims handler.
If you are auditing yourselves you should try to ensure that someone with a knowledge of claims is involved. You should consider the following:
On the day of the audit, when you arrive at the claims handlers, ensure that you are aware of whether there are any planned fire drills etc on the day in question and ensure that you know where your nearest fire exit is. Check to ensure that all files you asked for are present and if there are any missing, request these early in the day to enable them to be tracked down.
It is important that feedback from any audit is provided as soon as possible after the audit. You should make sure that you highlight both the good points and areas of concern that you have.
Raise any queries you have and ensure that these are properly dealt with.
If there are any actions required following the audit, ensure that these are documented in a report, letter or e-mail after the audit, and make sure that everyone involved knows who is responsible for the action, and the timescales for completion. This should be followed up as necessary.
Most audits are carried out to show that the claims handler is complying with standards and that the self insurance fund is protected. As such a formal report is usually required after the audit has taken place.
It is common practice to produce a draft report which is sent to the claims handler for comment and input. You should put a timescale on the return of the report following which you should produce the final report (incorporating any changes agreed with the claims handler) and provide a copy of this to them.
Set a date for the next audit if necessary.