10 Tips For Getting Claims Paid

Originally published in Metropolitan Corporate Counsel (May 20, 2014)

Insurance is a strange business. The less promised product insurance companies deliver, and the more slowly they deliver it, the more money they make. The "product" in question is not insurance policies, but payouts on claims.

An insurance company's goal is to obtain the largest premium for the least amount of risk. An insurance company profits primarily by investing those premiums for a return. Ergo, the longer it holds onto the premiums and avoids paying claims, the more profits it will earn. The two primary metrics are the loss ratio – the ratio of premiums to claims payouts – and the "float" – the time lag between collecting premiums and paying claims. That time is money for the insurance company.