As businesses expand into multiple countries around the world, claims management becomes globalized as well. Knowing claims will occur is one thing, but dealing with them when they do is quite another. In reality, U.S. claims managers are frequently unfamiliar with foreign practices and do not have a standard operating procedure for claim incidents abroad. Almost everything is different, from the regulatory environment to the claim payment structure. Even in countries that work under systems similar to the U.S. model, multinationals and claimants have distinctly different needs and expectations. For this reason, most companies with exposures in multiple countries need specialized claim servicing options.

Past Options
For multinational companies facing increases in the number and complexity of claims, past choices for claims service providers were few and without much differentiation—a traditional loss-adjusting model was, and still is, the norm. Local providers in many countries handled a claim where it occurred and on a case-by-case basis. Claims were settled in a manner that complied with local laws and was acceptable to the company, and the provider charged for time and expenses rather than a flat per claim fee. This approach has historically worked for small foreign operations, but larger entities now demand a different method of adjusting and processing—one that saves money in the aggregate and enables them to budget the actual costs of the claims program. This is the basis of third party administration (TPA) of claims.

For example, ABC Manufacturing Company opened a small operation in a foreign country a decade ago. Historically, they experienced a handful of claims each year. Demand for the company’s product rises suddenly and the operation grows dramatically, as does the number of claims. With little reaction time, the use of TPA allows companies like ABC to focus on their growth and leave the intricacies of global claims handling to the experts.

Today’s Basics
Smart executives regularly examine their claims programs and whether or not they are meeting their company’s customer service objectives. For some organizations, this has led to fundamental changes in the way they manage their global claims and the use of TPAs. Unlike traditional loss adjusting that takes each claim as it comes, TPAs apply standards that are transferable across borders and address the specifics of each claim in every locale. Following are some of the basic elements to look for in a TPA.

Centralized and Consistent Standards and Servicing
Every country is different, but there are certain fundamentals that every claim adjuster knows and every risk manager expects. There should be a streamlined intake where critical information is gathered and all parties are fully engaged in the process. A good TPA will provide centralized claims oversight, setting standards for processes so that claims managers don’t have to reinvent the wheel with each claim or in each location.