How to Read a Claims-Loss Statement
When Ivor Bamberger, chief financial officer of Beber, Silverstein & Partners, a Miami advertising agency, got his insurance quote for 1992, he was shocked. The cost for his company's health-and life-insurance coverage was to jump 41%. Determined to get those costs under control, Bamberger negotiated better, cheaper coverage by making the most effective use of his claims-loss statements -- those computerized printouts that detail the size and frequency of every employee's insurance claims during the course of a year. Here's Bamberger's advice:
* Consult your insurer. Get an in-depth explanation of every line and category that appears on the statement.
* Check the names of all employees listed for claims. Bamberger says he looks for everything from blatant mistakes on names to claims from employees who left the company and were no longer entitled to coverage. "I found a $51,000 life-insurance benefit that was paid out to the family of someone who had died soon after leaving the company -- but we don't provide life insurance for former employees." Bamberger notified the insurer immediately. "Either our former employee's estate should return the money to the insurer, or the insurer should absorb the loss," he says.
* Investigate all large-scale claims. "Those are the ones that push your insurance fees up, so it makes sense to take some time to verify that they're all legitimate," advises Bamberger. He decided to personally check out all claims of more than $10,000, the level he considered "large enough to make a material impact on our rates."
* Look for ways last year's numbers could support rate reductions. "Our claims-loss statement included 93 employees who had left the company during the year and another 60 who had opted to buy their own continued coverage under federal COBRA guidelines," reports Bamberger. "I was able to put together a memorandum for our insurer arguing that not only would 1992's pool of employees be smaller, but it also would include a larger percentage of small filers."
Bamberger expects to eventually wind up paying 7% or so less than the original price quote he received for 1992. "If insurance rates rose by just a couple of points each year, this whole process wouldn't be worth it. But in today's insurance economy, it certainly is."
-- Jill Andresky Fraser* * *