12 Aug Fleet Response built a customized claims management program traditional TPAs couldn’t offer
A national chain of auto service shops needed help managing its self-insured garagekeepers liability claims.
Unable to handle the high-volume of low-cost claims, its TPA went the extra mile to find a partner that could.
If you run an auto repair business and drop a wrench on the hood of a customer’s car, the damage is covered by a specialty line of insurance called Garagekeepers Liability coverage.
WOULD YOUR VENDORS DO THIS?
- – A nationwide chain of auto service shops self-insured its garagekeepers liability.
- – The high volume of low-cost claims doesn’t fit the service model of traditional third-party administrators.
- – The company’s own TPA went the extra mile, finding a specialized provider to build a customized program and manage the claims.
- – Unpredictable volume made it difficult for the company’s staff to manage these claims while maintaining customer service standards.
With more than 1,000 locations nationwide, Kevin Lindell’s client self-insured against this liability. And why not? Most of the claims were for incidental damage – grease on upholstery, dinks or scratches from mishandled tools, that sort of thing.
But there were several thousand claims a year; headquarters might receive 50 one week and 250 the next. In some cases, there was question whether the shop where the claim originated was really at fault. The small team that handled this work was swamped.
“The workload was unpredictable and they needed outside help to handle it,” says Lindell, Vice President-Senior Claims Consultant at Lockton Companies, a global insurance broker and risk management firm.
This isn’t the kind of work that typical third-party administrators (TPAs) do; they focus on complex, longer-term claims like workers’ compensation. [Related article: Rethinking Risk: Why you should choose a specialized TPA]
The payout on a garagekeepers liability claim might be only a few hundred dollars – sometimes less than the fee a TPA would charge to manage it.
“Generally, clients have claims like this covered as part of their general insurance program,” Lindell says. “If you’re self-insured, programs like this don’t fit in with the other types of business that risk management companies are brought in to handle.”
Lindell didn’t know of any claims management company that was likely to help his client. But, he adds, “Lockton does much more for our clients than simply place insurance; everyone can do that. What differentiates us from other brokers is our ability to solve problems.”
So Lindell reached out to Fleet Response. He had never worked with the company and didn’t assume that it would be able to help. But he’d heard of its reputation for being flexible and creative in managing claims for privately insured fleets and other niches.
“I had to tell them this is not a traditional portfolio of physical damage claims that will cost several thousand dollars at a body shop. Most of these were well under a thousand dollars,” Lindell says. “I asked, how would you handle this? I wouldn’t have been entirely surprised if they’d hung up on me.”
Jeff Fender, Vice President of Sales & Marketing at Fleet Response, agreed it was new territory for the company. But Fleet Response already had the infrastructure to manage a high volume of claims. It also had a department of adjusters to oversee repairs; a national network of body shops to do the work; and industry-leading technology that allowed it to customize claims management programs for specific customer needs.
“As it turned out, the client’s biggest concern is our strength,” Fender says. “They’re so customer centric they worried that turning over these claims to a TPA would weaken the customer experience. They want repeat customers; they want customers to tell friends. The last thing they want is a situation where claims handling is a negative factor in the business relationship. It was important to them to find a vendor/partner who shares that culture. I’m not just bragging when I say that’s us.”
Lindell, Fleet Response and the client’s claims team worked together to establish pricing, procedures and expectations. A test was conducted with a specific set of claims – those where the dollar amounts were low and liability wasn’t contested. With Fleet Response contacting customers directly on behalf of the client, it demonstrated an ability to not only maintain customer satisfaction but increase it.
“Fleet Response came up with a process that made sense to the client to fast-track these claims, process them and take a lot of the volume pressure off the corporate claims department,” Lindell says. “And it coincided with the service levels the client provided to customers.”
Fleet Response’s repair network also provided confidence that repair costs were well-managed.
Based on results of the pilot, Fleet Response began receiving a larger number of claims. After 18 months, Lindell audited the program and concluded Fleet Response’s performance was at par or better in all three critical factors: speed, cost and customer satisfaction.
While the program continues to focus on claims with uncontested liability, the client is now turning over some of the more complicated cases to Fleet Response – and finding those are being handled just as effectively.
Fender is quick to note that Lockton Companies doesn’t receive any direct financial return from the partnership.
“They did this because they went the extra mile for the client,” he says. “I don’t know of any traditional TPA that’s going to make money by handling this kind of claim, but they were determined to find a solution. I’m glad they found us.”
Lindell responds: “I tell my peer group at Lockton, if we want to make an impression with our clients, we need to bring in service providers that are going to reflect well on us as the consultant and deliver on the promises they make. Fleet Response is head of the class.”
To discuss your organization’s unique claims management challenges, contact Jodie Varner, Vice President of Client Engagement at Fleet Response, firstname.lastname@example.org.