Settling Legacy Claims: What Every Company Should Know

Workers’ compensation legacy claims can sit on a company’s books for years, costing the company money, impacting their collateral, and taking up resources. A number of business imperatives can push companies to settle—large events in the company such as mergers and acquisitions, for example—in addition to the issues wrought by mounting claims. In Aon’s experience, around 35% of legacy claims are in a settlement posture, but do not have a settlement strategy in place—including a completed settlement evaluation. Yet it is important for businesses to push those legacy claims toward resolution.

Companies should first address some of the varying reasons behind legacy claims. The issue may be a result of the adjuster’s bandwidth, adjuster turnover, level of expertise, or an emphasis on compliance and tactical responsibilities over strategic resolutions. Of the 35% of claims that are in a settlement posture, most are missing opportunities when proposing a settlement to the claimant. And as claims add up, legacy claims fall out of focus as companies turn their attention to newer claims. Another challenge occurs as the claimant ages—requiring further medical care as issues related to the claim worsen with age, thereby adding to the increasing trajectory of costly legacy claims.

By bringing in the appropriate resources and thinking differently about legacy claims, companies can make better strategic decisions in pursuit of resolution. Here are three tactics every company should know:

Get the appropriate resources and assess the claim thoroughly. A thorough and comprehensive assessment of the claim helps identify exactly what’s driving costs and any outstanding issues—for instance, duplicate prescriptions, medical treatments the claimant has missed, or medical treatments that are being covered under the claim but shouldn’t be. Having all of the information on hand and the background knowledge and experience to analyze it will help companies determine their next steps. Some of the issues in the adjuster talent market, such as high turnover, make it even more important for companies to have the experience and knowledge to thoroughly assess the status of the claim and use that information most effectively. Understanding the reason the claim remains open is the first step in developing an appropriate strategy to resolve the claim.

Create an action plan for strategic resolution. While it may seem simple, it can be difficult for companies to develop a clear and effective action plan to resolve legacy claims. The action plan should define parameters for settlement, stakeholders, and what actually needs to happen for the claim to be settled. Companies can think strategically about a few different methods or tactics to settle claims, such as extending monetary offers as opposed to simply inquiring into a claimant’s settlement interest. To come to an effective resolution, companies will need to think strategically about where and when to invest and how to reduce costs during the claim settlement process.

Create accountability, and track data for legacy claims. Many companies don’t have an effective, data-driven process for tackling legacy claims. By building one out, with regular communication and accountability checkpoints, they’ll be less likely to let claims linger—and can then use the claims' data to put more preventive measures in place. It’s important that companies have a good data-tracking process to ensure adjusters aren’t overlooking opportunities to mitigate costs and resolve claims. Using data to measure claims against specific closure metrics or key performance indicators (KPIs) can help companies take action faster and concentrate their efforts on resolution opportunities that have a better likelihood of closing.

Legacy claims can be costly and weigh down a company’s portfolio—yet many companies are saddled with them. By taking a more proactive, data-driven approach companies can develop strategic resolution plans and help prevent increasing costs and deterioration.