Date: September 2018
The more quickly a member reports a loss to MCIT, the faster claims staff can begin to manage the claim. Historically, prompt reporting of any property, liability or work-related injury or illness results in a more expedited resolution of the claim. This can translate to faster payment of property losses, less expensive defense costs for liability claims and improved treatment with less lost time for work-related injuries. All of these outcomes have a positive effect on the member’s daily operation and financial decisions of MCIT regarding rates, dividends and service enhancements.
The MCIT Coverage Document speaks of the responsibilities and duties that come with MCIT membership. Each section of the MCIT Coverage Document addresses member responsibility or duty when it comes to reporting claims:
- For property losses, the member has the responsibility to “as soon as practicable, report to the Trust or its agent, in writing, if requested, every loss or damage which may become a claim under this Coverage Document.”
- For liability losses, the member has the duty to “see to it that [MCIT is] notified promptly of an occurrence or wrongful act which may result in a claim or suit.”
- For bond/employee dishonesty losses, the member’s responsibility is to “notify the Trust as soon as possible of any loss of the type covered by this Coverage Document.”
- For data compromise/cyber-security events, the member is required to report to MCIT “as soon as practicable, but in no event more than 60 days after the date the [data compromise, computer attack or cyber extortion threat] is first discovered.”
- For workers’ compensation losses, the members’ primary duty is to tell MCIT “at once if injury occurs that may be covered by the Coverage Document,” wherein MCIT would refer to the Minnesota Workers’ Compensation Law.
MCIT’s software system makes prompt reporting of claims efficient and consistent. All property, liability and workers’ compensation incidents are reported directly to MCIT via links on the MCIT website. All members have a designated primary contact for each type of coverage who is provided credentials to report incidents. A primary contact can also designate others to be credentialed to report incidents.
Documents such as photos, lawsuits, repair estimates and medical bills can be uploaded as electronic files directly to the Incident Notice at the time it is submitted. As an enhancement, the member receives an immediate e-mail confirmation that the incident has been successfully submitted, along with an incident/claim number.
Members should immediately submit an online incident notice to MCIT when:
- the member receives a summons and complaint, or charge of discrimination filed with the Department of Human Rights, Equal Employment Opportunity Commission or similar agency.
- the member’s property covered by MCIT is damaged or destroyed.
- an accident occurs in which third parties sustain bodily injuries and/or damage to their property.
- a liability claim is made against the member by a third party.
- a claim against the member by a third party has not yet been made but is highly probable.
- a data compromise, computer attack or cyber extortion threat is first suspected or discovered.
Similarly, members must submit an online First Report of Injury when an employee:
- is injured at work.
- dies or is killed at work.
- reports an occupational illness.
Follow-up communication to the MCIT workers’ compensation claims staff after the initial claim report is strongly recommended when:
- an employee has medical attention after the employer has reported the incident without reporting treatment information.
- a claim is initially reported as medical only and the employee later loses time at work for treatment of the injury or illness.
Risk Management Benefits of Prompt Claim Reporting
Because not all losses can be prevented, members need to consider strategies to decrease the severity of losses that occur. The first and most important step in achieving loss reduction is prompt claim reporting.
Prompt reporting allows MCIT property/casualty claims staff to contact claimants immediately and work to control claims.
This allows claims staff to obtain statements from claimants and witnesses while evidence and memories are fresh and allows for a more accurate determination of facts and issues regarding coverage and defense.
Likewise, prompt submission of a First Report of Injury allows the workers’ compensation claims staff time to investigate and determine compensability. Members have a statutory deadline of 10 days to report injuries, while the MCIT claims staff must investigate the claim, determine compensability, communicate its decision and pay injured employees by the 14th day after injury.
Penalties may be assessed by the Department of Labor and Industry for late reporting and failure to either pay the first benefit on time or deny the claim.
The benefits of prompt reporting are:
- Reduced direct claim costs—avoid penalties (workers’ compensation), reduced legal costs, less expensive settlements
- Protects MCIT assets, and safeguards potential for dividends and enhanced services
- Reduced indirect claim costs—less downtime for damaged vehicles, less overtime and/or time needed for temporary replacement staff, less time spent for investigations, less time spent for litigation, reduced stress dealing with upset claimants or employees
Research has consistently shown that claims reported late have significantly higher average settlement values, and that the longer the delay in reporting, the higher the settlement value.
Internal Claim Procedures
Prompt claim reporting, loss reduction and the resulting benefits can be achieved through the implementation of simple and efficient internal claim procedures.
Although procedures may vary, from a risk management perspective, it is important that members:
- establish prompt claim reporting procedures.
- communicate procedures to department heads and employees, and obtain signed acknowledgements. (Procedures could be included in an employee handbook and communicated during employee orientation.)
- follow procedures consistently.
- update procedures periodically.
- document thoroughly so it can be demonstrated that procedures are established, communicated, followed and updated.
MCIT encourages members to contact their MCIT risk management consultant toll-free at 1.866.547.6516 if they have questions regarding this topic. If a member representative is unaware of his or her organization’s primary contact for reporting claims, contact MCIT for the information.