Electronics Company Improves Balance Sheet Performance Through Focused Claim Inventory Workout
Published on: 26-Aug- 2011 | Comments: 0
A large electronics manufacturing company had an open inventory of workers’ compensation and auto liability claims. This company’s risk management team wanted to eliminate these claims as quickly as possible and understood that a team of consultants with jurisdictional knowledge of each workers’ compensation statute were the resources needed to expedite closure.
The MRC Solution
The company called upon MRC’s Claim Consulting Practice (CCP) to take over the day-to-day claim management of its legacy inventory and accelerate closure using its Claim Inventory Workout (CIW) solution.
CCP teamed with MBA—Marsh Business Analytics to determine the long-term financial aggregate impact of closing open claims to the value of the company’s inventory. MBA analyzed actuarial reports to determine the ultimate aggregate value of the company’s open claim inventory at the start date of the engagement. Twelve months after beginning the project, MBA calculated the savings between the claim inventory’s ultimate loss value at the start of the engagement and the aggregate value of the now closed claims. MBA also calculated ultimate loss savings on all claims including those still open.
To date, a team of 12 CCP consultants has closed 41 percent of this company’s entire open workers’ compensation and auto liability claims. Of the claim closures, 76 percent resulted in a reduction of total incurred values. The project currently has achieved savings of over $2.1 million (undeveloped) on closed claims and $6.8 million in ultimate savings. These success rates can be attributed to the CCP consultants’ experience with claims closure and the jurisdictional knowledge of team members with industry experience from across the United States.
As the project continues, it is expected that the company will experience additional direct savings as claims are closed. With these open files under control, the company has been focusing on preventing new claims and managing active files—actions that can also provide balance sheet relief.
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