Liability Insurance claims from employees are becoming increasingly difficult for businesses to avoid. Ever-widening business liability, combined with the current legislative emphasis on thorough risk assessments has only heightened the issue.
Some firms have been plagued by a continuous stream of claims and know the direct impact that inefficient claims management can have on their business, both in terms of management time, but also the subsequent increases in Liability Insurance premiums.
To improve claims management processes and shrink overall claims exposure, many organisations rely on a powerful risk management tool: claims defensibility.
How Can Claims Defensibility Help?
The claims defensibility process identifies the most common claims brought against a business and provides that organisation with guidance to reduce the number and severity of future and ongoing claims.
Combined with other risk management strategies, claims defensibility helps firms to establish a robust process focused on eliminating or reducing claims before they happen rather than mitigating them after the fact.
Conducting a claims defensibility audit in your company will help to recognise:
- Incidents that can be defended, either completely or partially;
- Fraudulent claims;
- Exaggerated or exacerbated incidents; and
- Valid claims with controllable impact.
Ineffective claims management may overlook some incidents that lead to unnecessary or overstated claims, creating a problem cycle in which your company is unable to attack the root causes of claims and can only manage claims after they happen.
The Danger of Poor Claims Management
If you do not carefully investigate claims that your company receives, you may be unwittingly subjected to the same type of claim over and over again. This can result in higher payouts, increased legal costs or even potentially impacting your reputation.
Repeatedly dealing with the same type of claim can also result in mismanaged resources, since employees are busy fending off claims instead of using their time on business development.
Managing claims unsuccessfully can also create staffing issues, such as a higher employee turnover. Employees who process claims may feel discouraged by seeing the same type of claim being repeated, with no action being taken by the business to prevent it and may be more inclined to seek employment elsewhere.
If employees continuously report the same type of claim, they may also feel that management is not working to prevent incidents and quit for their own safety – this is a particular issue in construction or manufacturing firms. Such increases in employee turnover will cause training and recruitment costs to spiral, which puts further pressure on the bottom line.
Claims Defensibility Best Practice
The claims defensibility process provides a safety net by helping your business understand the most common claims brought against them, but it is a process rather than a cure. Claims defensibility by itself will not save your organisation—you should rely on structure strategies to combat claims and improve the efficacy of your claims defensibility. Some of these additional processes include the following:
#1 Risk Assessments
Documented risk assessments should be performed when a situation or task presents a probable risk of injury. Prioritising risks based on probability and impact will help workers prevent potential injuries.
Job-specific training and safe working systems should be established and effectively communicated to new and existing employees. Training can also be used to document the employees’ competence of safe workplace behaviours.
#3 Occupational Health
Managing occupational health effectively will help you keep track of your employees’ fitness for work. It can also help you identify any current work processes that could be causing physical strain to employees, making them susceptible to injury. This allows you to correct the processes before an injury occurs... and before your receive Employers Liability Insurance claims!
#4 Protective Equipment
Personal protective equipment (PPE) is used as a last line of defence when other controls cannot be used to prevent injury or illness (such as creating a new process to avoid a hazard). PPE can reduce liability claims at the source if its use is implemented and enforced properly. Having a record of PPE use in your workplace can also work in your favour when disputing a claim, as it proves you implement and enforce employee safety programmes.
#5 Claims Investigation
Clear and adequate post-incident investigation will allow you to gather the facts after an incident and understand exactly what happened. You should interview anyone who was involved as well as taking photographic evidence are two major factors of an investigation.
Clear and accurate documentation will support you when defending a claim and is crucial to the process. The supporting documentation you can use for a claim can include notes from the investigation, risk assessments, training records, PPE documentation and equipment maintenance logs.
What Are The Main Reasons for Employees Pursuing Claims?
Employees pursue claims against their employers for a variety of reasons. Investigating these reasons can help your business defend against claims and ensure a successful claims defensibility process. The most common reasons employees pursue claims against their employers include:
- Loss of employment, especially during times of redundancies or site closures.
- Employee grievances (wither individual or collectively)
- A businesses unwillingness to work effectively with any unions
- Desire to claim lost wages after a work-related absence
- Incorrect understanding of the firms’ exposures and risk, leading to a misguided claim.
Claims Are An Opportunity To Improve Risk
Liability Insurance claims should not be seen simply as an inconvenience, most successful organisations treat claims as an opportunity to improve; be it a change in process or an opportunity to invest in a new type of protective equipment (PPE). Claims defensibility can help you learn from any mistakes and ensure that you do not make the same ones again.
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