Mike McLean May 8, 2024 6 min read

How Claims Work: April 2024 Embroker Newsletter

No one intentionally causes problems for their business. OK, maybe some do, but that’s a story for another day.

Problems do happen, and every business owner has worst-case scenarios that keep them up at night. You know, things like employee theft, cyberattacks, natural disasters, structure fires, an employee mistake that ends up with a lawsuit, and alleged discrimination. The list goes on and on. 

These things happen every day to countless businesses around the country, which is exactly why insurance is so important. Now, since you’re reading this, we’re betting you already knew that. But do you know what to do if something happens and you need to file a claim?

Insurance is a safety net we all cross our fingers and hope we’ll never need. But being prepared and knowing what to do if you need to submit a claim can make a world of difference to reduce stress and get your business back on track ASAP. 

This month, we’re diving into all things claims. It’s not about expecting the worst, but being ready so that if you ever need to use your insurance, you can do it like a pro. And hey, we won’t judge if you still keep your fingers crossed.

Let’s get into it.

  • What’s Going On?
  • The What, Why, and How of Insurance Claims
  • A Better Way Forward with Claims Processing
  • What’s New from Embroker

What’s Going On?

Claims handlers reveal pain pointsInsurance Business

As with almost everything, Artificial Intelligence (AI) is expected to revolutionize insurance claims processing, and the outlook is promising. A recent survey found that 95% of U.S. and U.K. claims handlers think technology will significantly impact claims processing in the next five years.

Why auto insurance costs are rising at the fastest rate in 47 yearsYahoo Finance

New data shows auto insurance costs last month were 22.2% higher than a year ago. The main reason? More severe and costly claims. As this article explains, drivers developed “bad habits” on the road during COVID lockdowns, which are contributing to the current situation.

Beyond the Claim: How Social Canvassing is Transforming Insurance Fraud DetectionClaims Journal

Fraudulent claims have long been a pain for insurance providers, impacting the trust and integrity of the claims process. With digital footprints being nearly impossible to avoid, claims professionals are increasingly using social media to uncover deceitful claims.

The What, Why, and How of Insurance Claims

A person is standing in front of a building, doing math in their head with equations swirling around them. They're trying to figure out how claims work.

When it comes to running a business, there’s a good chance that you’ll have to file an insurance claim at some point. And it may be for something that you have zero control over. No one but Mother Nature can claim responsibility for floods, tornadoes, and hurricanes. Just look at the Texas “Big Freeze” of February 2021, estimated to have caused economic losses of up to $150 billion

If you do need to file a claim, you’re not alone. In 2022, the total incurred losses (aka, the benefits paid to policyholders) in the U.S. under commercial insurance were $202.7 million a big jump from 2019, when the losses were $155 million.

So, what exactly is an insurance claim? An insurance claim is a formal request to have your insurance provider pay for something covered by your insurance policy. That can include sudden losses, damages, or injuries.

Let’s say you run a small software company that, despite taking precautions, falls victim to a cyberattack. As a result, your company has had some client personal data stolen, which is now being held for ransom and your company cannot perform day-to-day functions. Unfortunately, news about the incident has gotten out and been covered in the media.

In that scenario, you’d want to file a claim to get assistance with the ransom, notifying those impacted, PR fallout, and recouping financial losses. Plus, an insurance claim can help you pay for legal defense fees if you’re sued by customers, partners, and others as a result of the attack.

The first step is to take a deep breath and immediately contact your insurance provider. With cyberattacks, time is of the essence, which is why many carriers have a 24/7 hotline to report potential or known cyber incidents. It helps to have the following information handy when reporting the incident: 

  • Your policy number
  • The full name and contact info for the key person at your company who will be responsible for handling issues about the claim
  • A description of the events

But don’t waste time trying to get all the details if they’re not readily available. The best thing to do is file the claim as soon as you can. You can always provide more detail later on.

The good news is that in this faux scenario, your company has cyber insurance, which means once the claim is filed, your carrier can secure the necessary third parties to help resolve the incident. Your assigned Claim Professional will also guide you through the rest of the claim process, including ensuring compliance with federal and state regulations, notifying anyone whose data was compromised, and compensation for losses from business interruption. 

Remember that your insurance provider is there to help you when those worst-case scenarios pop up. Because when you buy insurance, you’re also buying peace of mind.

A Better Way Forward with Claims Processing

A person is working at a shoe store, telling a customer to "trust the process." Obviously they're talking about the process of how claims work.

There’s something else we need to touch on: How long will it take to get paid after filing a claim?

Anyone who has ever filed a claim has this question. And given that you need to get your business back on track, it’s a totally fair question. Waiting around for a payment and questioning whether your claim has gone into the digital abyss can be more than a little frustrating. 

At Embroker, we’re always looking for ways to improve our services, so we’re excited to launch a new claims process. We know that filing a claim can be stressful, so we’re streamlining the process by bringing our claims in-house, backed by a team of industry professionals and claims experts, and industry-leading experts in forensics and breach counsel all led by our Head of Claims, Corrie Hurm.

Here’s what Corrie has to say about our new process:

“Bringing our claims process in-house is a huge win for Embroker and our customers. Our claim counsel and insurance professionals are here to help guide businesses through the entire claims process, from submission through to resolution. I’m incredibly excited to deliver transparent, hands-on claims to Embroker customers of all industries and sizes, and help make another part of the insurance journey more manageable with Embroker.”

We know that how your claim is managed and responded to can greatly impact your business. While we don’t have a crystal ball to help predict when claims will be resolved, with this new claims process, our goal is to get issues resolved quickly and efficiently. Because we don’t want a claims process to get in the way of your business’ success.

It’s just another part of our commitment to making business insurance radically simple.

What’s New from Embroker?

Upcoming Events, Stories, and More

Safeguarding Against Cybercriminals

Cybercriminals are always finding ways to evolve their tactics and strategies. However, businesses are starting to up their defenses to protect against potential breaches and attacks. Embroker’s Cyber Risk Index was highlighted in a recent International Banker article, which explored trends, threats, and best practices. You can read the article here and check out our Cyber Risk Index Report for details on founders’ thoughts about cybersecurity.

The Biggest Cyber Threats to Law Firms

Law firms are prime targets for cybercriminals. And it’s no wonder, with the digital gold mine of sensitive information that law firms store. That’s why law firms need to stay informed and prepared. This recent blog article covers the biggest cyber threats facing law firms.

How is Blockchain Technology Impacting Insurance Processes? 

In March, The Fintech Times explored blockchain’s influence on insurance processes and its role in instilling trust in digital transactions. In this article, Embroker’s Chief Insurance Officer, David Derigiotis, highlights the potential of blockchain technology and how it can enhance transparency, efficiency, and security. 

Like What You’re Reading?

Check out the Embroker Blog for more.

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