Claims Auditing Philosophy

RMS takes a diverse approach to claims audits because of its background and experience, and its belief that such an approach provides the most meaningful results for its clients.

In addition to reviewing files according to generally accepted audit standards for addressing file management, timely investigation, adequacy of reserves, liability and damage analysis, litigation management, compliance to excess requirements and timely settlement negotiations, RMS attempts to also focus on other areas that are both helpful to the client and, if applicable, the insuring entity. RMS is also familiar with CAJPA accreditation standards related to claims management and will address these issues in the audit.

Because of its “hands on” claims activities, risk and loss consulting efforts, and role as a primary/excess TPA, RMS brings some unique perspectives to a claims audit. We are sensitive to the client’s need to get more out of an audit than having someone upset their files for a few days. With that in mind, we examine, in the course of the audit, areas that can improve the client’s claims handling system, trends that arise risk management issues, areas of risk transfer as it pertains to contractors, effectiveness of the insured’s TPA or in-house claims unit, comparison of how the client’s settlements compare to similar entities, suggestions on experts that may provide benefit to the defense, and assistance with publicly sensitive situations.

In addition to hard copy audit, RMS tries to do more than the traditional exit interview with the client, providing insight into the claims handling as well as suggestions for improvement. As logistics will allow, we attempt to speak with the client prior to the audit to check on any unusual situations or problems, and to generally discover what the client would like to accomplish in the audit.

In determining the claims sample to be audited, RMS pays attention to the obvious indicators such as claim type, high reserves, high defense costs, etc. However, to get a feel for how claims are analyzed and handled, we also focus on recently filed claims, selected claims with no reserves, claims settling for low amounts in short period of time, claims with varied reserves involving similar allegations. This allows us to determine trends in the claims handling that may be a positive or adverse factor to our client all open files are reviewed utilizing the RMS Audit Review Form.

Overall, we approach audits with a constructive and friendly attitude and provide an individualized report on each entity, we do not utilize boilerplate reporting formats. Lastly, we fell a client should finish the process with a positive feeling, having obtained new knowledge that will assist in effective handling of the claims.

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