Client: Fortune-ranked Telecommunications Company with 40,000 employees
The client had placed their LTD program with the current carrier on the strength of their relationship for other lines of coverage. However, over time, the carrier did not meet their commitments. Particularly at fault was carrier’s claims handling as demonstrated by missed performance guarantees, claimant complaints and increased claims closing ratio compared to past history. After two years of issues, the client agreed with Pacific Resources’ recommendation to release an RFP.
Our challenge was to place the client with a carrier that was capable of managing their claims effectively.
Pacific Resources dug deep into the client’s past LTD experience, predating the current carrier. We assumed that the incumbent carrier’s experience data did not accurately reflect the client’s actual experience due to deficiencies in the carrier’s claims management. By pulling together the client’s experience for the four years prior to incumbent carrier’s involvement, and with a current run date, we were able to create a combined experience exhibit for bidding carriers.
Bidders were able to see how the actual experience would have performed in the past with more aggressive claims management. This helped them determine how the plan would run under their claims administration.
At the same time, we showed termination rates for the closed claims from the prior carrier, which were up to 10% higher for claims with less than one year duration when they closed and about 10% higher for those with a duration of one to two years.
This detailed claims comparison between prior and current carriers allowed us to have a dialogue with bidders, giving less weight to the most recent two plan years when case management was poor.
As a result, the client was able to: