By Michael J. Bemi
Most recently in our series on moving “beyond insurance,” we examined Risk Control. Now, we undertake the next step in our journey.
We previously identified that Risk Retention — as opposed to simply buying insurance — can provide a number of very substantial and significant benefits that ultimately can enhance the provision of our ministries.
However, it is axiomatic that these values of Risk Retention are diminished (and potentially destroyed) if an entity does not control and mitigate its losses. It is also axiomatic that in this imperfect world, you simply cannot prevent all losses and resultant claims. Our ministries will experience hurricanes, tornadoes, floods, fires and freezing pipes — and the interruption of ministerial income that follows; auto and bus accidents; claims of wrongful termination or discrimination; accidents on our premises that result in serious injury or even death; and so on.
Responding to that negative impact of losses and resultant claims that our Risk Control could not prevent, is the province of Claims Management. Properly performed, Claims Management can further mitigate the damage associated with losses of any variety, thus enhancing stewardship, while simultaneously allowing us to behave in the pastoral fashion we are called to and should demand of ourselves.
Claims Management can be performed entirely in-house by your own employed professionals, or outsourced to a third-party administrator (TPA) professional firm, or some combination of each.
Also, while Claims Management appears to be simply reactive in nature and operation, in fact, some aspects of it are proactive.
For example, you can reduce the number and extent of negatives associated with adjustment of any Property, Auto Physical Damage or Business Interruption loss, by creating, maintaining and regularly updating detailed inventories (including evolving valuations where applicable) of:
- Your leased and owned buildings and premises
- Your equipment, supplies, furniture and fixtures
- Your fleet vehicles
- Your employees and volunteers
- Your specific ministry-related services
- Your sources and amounts of ministry income and any regular cyclicality or variation in income (for example, as a function of an annual appeal done every September).
Liability claims inject a different and very special element to Claims Management — namely, the tension and occasional conflict between pastoral care and concern for victims that we have created and the pressure to maximally defend ourselves. We know that we should “do the right thing” and whatever we can to optimally restore and rehabilitate the people, property or business / service activities that we have damaged during the course of performing our ministries. Yet, our attorneys or excess insurers, or even our own “gut,” might be telling us that something is questionable regarding the nature or extent of alleged damages.
The good news is that you can manage a claim in a pastoral fashion, but still not “roll over and play dead” for some plaintiff counsel screaming at you. You do this via excellent investigation. What does the police report, the Department of Child and Family Services report, the medical records, the witness statements, the photos of the site where the incident occurred, the independent medical examination, the opinions of outside experts, etc., tell you about the validity of the claim or the accuracy of the alleged damages? All these things need to be considered to assess the nature and extent of loss.
Then, once you have this information in hand — and the knowledge it conveys — you can suggest mediation, arbitration or other alternative dispute resolution mechanisms to hopefully prevent the waste that accompanies trials. If you are confident a claim is invalid, you need to fight it if you want to be a good steward. Finally, your attorney(s) should abide by a Litigation Management and Defense Cost Guidelines protocol of your selection.
And always remember that while we highly value the advice and counsel of our great defense attorneys, they work for you – not vice versa. The ultimate decisions are yours!
Michael J. Bemi is president & CEO of The National Catholic Risk Retention Group, Inc. (Lisle, IL) — a recognized leader in risk management. To learn more about available coverage — and to get valuable tools, facts and statistics —