Fleet expenses are among an operator’s highest costs. While vehicle damage is an unfortunate reality, uncollected damage can mean the difference between loss and profit. Fortunately, there are many options in claims recovery. Whether you choose to process claims in-house, seek an outside vendor, or choose partial outsourcing, it’s imperative to maximize recovery from all available sources.
In-house Claims Department
When handling claims in-house, you must ensure that your employees have the necessary qualifications and that the proper follow-up processes are in place to manage the results. Rarely, do we find the option to house a claims department the most efficient option for operators with less than 600 units.
To maximize recovery results, your staff must be familiar with all the applicable statutes and case law related to entitlement. Also necessary is an understanding of when to use this information throughout the claim negotiation.
In addition, a general understanding of state collection laws, as well as insurance policy verbiage, is required to ensure that the claims are handled properly and expeditiously. Remember, insurance adjusters want to settle the claim with the lowest payout possible and are not concerned with possible future losses that may occur from insufficient repairs. Also, establish three to four goals or metrics to guide your staff, and commit to consistent follow-up with them to ensure maximum performance.
Benefits of handling claims in-house include internal control of personal fleet and hands-on involvement in settlement decisions. Managing the process properly demands a great deal of involvement. You need to be aware of your state’s statutes regarding recoverable items. You also must establish targets and goals for your recovery performance. [PAGEBREAK]
Full-service claims recovery companies offer an array of products to enhance the operator’s efficiency and maximize the results of their loss recoveries. By choosing the right claims company, car rental operators can customize their product selection to fit their recovery needs. In many cases, this is the most valuable option since a wise selection in vendors can have a substantial financial impact on your operation.
Outside vendors provide a claims recovery option, with fees contingent upon recovery. Based on the individual vendor’s performance level, this option can be very lucrative in increasing overall collections as well as reducing direct expenses. The benefits of outsourcing subrogation include:
• A disconnection of the rental company from the “negative experience” of an accident or incident
• The operator can focus on the core rental business
• Vendors have expertise on damage recovery
• Reduced overhead and savings in internal personnel costs
• Less time spent on research and follow-up. What key questions should you ask a prospective vendor?
• What is the vendor’s internal measurement system to ensure that the delivery of the product is equal to, or exceeds, what was promised?
• How can the vendor ensure that damage recovery is maximized so the operator receives all entitled monies?
• How much damage qualifies a vehicle as a total loss?
• Is damage recovery limited to just the estimate amount?
• What can be done to mitigate damages and maximize recovery?
• How does the vendor ensure that the potential impact on customer service is positive?
Some vendors offer programs designed to purchase the claim and vehicle of units that have sustained moderate to extensive damages. This program enables the operator to dispose of units that may not traditionally qualify as a total loss, eliminating the potential loss at the time of disposal.
The operator receives the amount owed to a lender or a depreciated amount in exchange for the vehicle and the title. This product is ideal for operators that have experienced losses on previously damaged vehicles at the time of return or sale.
Remember, insurance carriers use state titling and branding laws to gauge whether a vehicle is economical to repair. In their decisions, they fail to consider hidden or supplemental damage, diminished value and manufacturer guidelines and requirements.
The benefits of purchase options include:
• Security and immediate settlement
• More cash flow
• Decrease in losses
• No potential rejects at time of vehicle return
• No loss at time of disposal.
Questions to ask current or potential vendors specializing in claim or vehicle purchase products include:
• What is the average time it takes to receive a purchase offer from the time a claim is submitted?
• How long does it take to issue payment from the offer date?
• How will your services improve my current performance levels?
Another available option is having an in-house claims administrator who handles a specific dollar value or incident/select claims and outsources the remainder for vehicle purchase review.
The benefits of partial outsourcing include:
• Revenue-generating position for small to mid-size claims
• Additional cash flow opportunities
• An internal liaison that understands the process and can manage all claims
• An administrator that can oversee the operation’s total recovery process
• The operator can take advantage of outsourced product services
• The operator can accept from various options to maximize results.
Whether an operator chooses to process claims in-house or outsource some or all, the end result should be the same — bottom-line improvement. The challenge in creating an internal claims department lies in developing the expertise and investing the time necessary for success. When used properly, the resources available to this industry will leave an impact and result in success.
When selecting an external claims company, it’s important to research the integrity, professionalism and expertise of the organization. In essence, you’re creating a partnership, and you should feel confident and comfortable with the organization you’ve selected to represent you.
Weigh the benefits of each option. Ask questions to ensure you collect all that you are entitled to. Taking these steps will protect you from falling victim to great sales tactics and weak results.
Marta Donato has worked in claims recovery for the past 10 years and is currently an operations manager at Khoury Claims Services. She may be reached at (407)379-0559 or via e-mail at [email protected] Mary Jane E. Wells is a director at the Khoury Group and a contributing writer for Auto Rental News. She may be reached at (407)718-7691 or via e-mail at [email protected]