When Do You Need Runoff Management

Runoff claims management services are among the most overlooked ways of cost-saving in the insurance industry. Many insurance and reinsurance companies try to manage their runoff liability themselves, but increasingly this is becoming a costly strategy. By definition, runoff policies are lines that are no longer profitable – or perhaps never were in the first place. And the insurance business is a rapidly changing industry, which makes obsolete policy lines even harder to process. This means that claims can go from simply unprofitable to enormously costly in a hurry. Outsourcing those lines can help prevent that from happening.

To understand why claims management services are crucial, it’s important to look at the underlying costs of continuing to process run-off policies in-house. Legacy lines are inherently different from other insurance lines because they are no longer writing new business and thus it’s painful to budget large amounts of money – in the form of dedicated staff time – to continue to manage them. This is especially true as the nature of an insurer’s core business continues to evolve and change. Often, handling legacy claims effectively requires types of knowledge and expertise that your main staff doesn’t have, and doesn’t even need.

The problem is compounded by the appearance of unexpected costs. The longer a policy line is in legacy, the more the balance of remaining policies shifts to include only the oldest or most problematic policies. All others have already run off. This means that toward the end of a legacy line’s runoff, when the least staff resources and expertise are available to address it, the costs often burgeon.

Obviously, it doesn’t make sense to retain a staff of specialists in outdated policy types, and trying to shift these claims onto other staff can result in slow, inefficient and often uncertain handling. This is why outside claims management services are so attractive – they make fiscal sense.

You don’t need to bloat your costs to oversee a handful of legacy lines. With outside claims management services you can shift your most costly old business to skilled experts who have the resources you need, when you need them.

Jacob P Walker has taken classes on accounting and has written several write ups which help individuals seeking a forensic accounting. He currently blogs about finding a certified Business Valuation and a Divorce Accountant that holds the necessary certifications, qualifications, and designations in the accounting field.

Related Articles – Forensic, Accountant, Certifications,

Email this Article to a Friend!

Receive Articles like this one direct to your email box!
Subscribe for free today!

http://www.amazines.com/business/article_detail.cfm/5391730?articleid=5391730