Proactive third-party claims handling is essential for a corporate body to protect its brand, to ensure customer retention and to reduce costs. The field of third-party motor claims is a prime example of where effective management of the risk portfolio by claims and risk management specialists cuts costs, minimises exposure and adds value for the corporate client.

For many corporate clients, especially those who are household names, every third-party member of the public is a potential customer. Therefore, if a lorry owned by a major supermarket runs into the back of a car, the way the third party is treated in the claims process will affect their opinion of the retailer and, ultimately, the value of the brand.

At Crawford, we ensure each third-party claimant is treated as if they were the first party. Retail organisations with a high profile cannot risk creating bad feeling in the sensitive circumstances of an insurance claim.

Another area where a risk management specialist can add value is in controlling the repair process. By bringing the repair of the third-party vehicle into your own repair network, you can control the scope of the work done.

Scope can become an issue when a third party seeks a quote from a repairer that includes areas of damage not caused by the client. Crawford's network is focused on identifying the areas of damage for which the client is responsible. Costs are also controlled within the network, as competitive rates covering parts, materials and labour have been agreed in advance. The network relies on a significant throughput of business from the third-party administrator, therefore the whole approach to business is based on fairness.

Keeping costs down
While the third party's vehicle is off the road, car hire is required. Credit hire companies often provide the highest specification car possible to the third party by controlling the scope of the vehicle provided and utilising competitive rental arrangements with national hire companies. This keeps hire costs to a minimum while ensuring the best vehicle for the customer.

Vehicle repairs through our network are treated as a matter of priority, which means work can be completed within days rather than weeks, resulting in significant savings.

Treating the third party as a first party brings savings in other ways.

We have seen a marked drop in the number of injury claims being made in relation to third-party motor incidents by using this proactive process. This is connected to the good treatment given to claimants.

And as claimants have no need to seek professional advice, the cost of third-party fees is dramatically reduced.

When the claim is handled fairly and honestly, the third party is less inclined to make an injury claim or to get solicitors involved in legal action.

In terms of VAT costs, savings can also be made. At Crawford, we instruct the repairer on behalf of the client, and the invoice is then presented to the client for whom the service has been provided.

In this way, VAT can be reclaimed as being incurred in the normal course of business, and not be deemed as a service provided to the third party.

Ultimately, claims handlers are the custodians of their clients' risk portfolio budgets, so must consider every possible way of managing the risk and reducing the impact of claims on the corporate fund.

  • Jim Jarrett is head of claims management for Crawford & Company.

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