Claims Administration:
Reporting Liability and Property Claims

The everyday life of a public risk manager can be and usually is filled with unpredictability. However, there is one consistent thread of activity that most public risk managers encounter on a daily basis--claims administration. Public risk managers spend a great deal of time and resources each day disposing of many and varied claims filed against their public entities.

Most of the duties of a risk manager apply to proactive functions: risk identification, risk financing, and risk control. While the claims process can best be considered a reactive function, it has tremendous impact on several critical aspects of proactive efforts.

First, and most obvious, is the economic impact of the claims process. In addition to paying the bills in an accurate and efficient manner, the claims process has direct bearing on Maricopa's annual budgetary and planning efforts. The accuracy and credibility of our claims reserves depends entirely on the quality of our claims administration process.

Second, and perhaps even more critical than the economic impact, is the effect our claims handling has in the area of public relations. Although we do notalways acquiesce to the claim demands of our citizens, it is imperative that our claims process operates in a prompt, efficient, fair, and professional manner.

With respect to the claims administration for liability and property losses, the District risk manager is responsible for:

• Monitoring the financial risk to the colleges incurred in the day-to-day activities of doing business.
• Managing financial risk through a variety of methods including, but not limited to, the procurement of insurance.
• Receiving and processing claims for the District by resolving the claim internally, forwarding the claim to our third party claims administrator and our insurers.

Where does the money come from to pay for our claims? The District funds a self-insured retention (SIR) account that pays for claims under certain specified amounts. (For example, we pay the first $100,000 of each liability claim and the first $25,000 of each property claim, so we are "self-insured" for these claims.) We purchase insurance to pay for claims over those amounts.

There are certain claims reporting provisions that we must follow to pay our self-insured claims as well as those paid by our insurance companies.

Liability Claims

A person (claimant) who requests to recover monetary damages for bodily injury or personal property, (including automobile claims) allegedly caused by the District or its employees, officers, agents, or volunteers, must do so within 180 days after the date of the occurrence. District employees are neither to accept liability nor furnish information on incidents or accidents, and should refer the claimant to the risk manager immediately after knowledge of a potential or actual claim.

A.R.S. 12-821.01 defined the requirements for filing a claim against a public entity in the state of Arizona. The statute requires, in part, that a claim aginst a public entity or public employee:

• Be filed with the appropriate party within 180 days after the cause of action accrues. (The claimant must file their claim with the District General Counsel.)
• Contain sufficient facts to permit the public entity or public employee to understand the basis upon which liability is claimed.
• Contain a specific dollar amount for which the claim can be settled and the facts supporting that amount.

A claim not filed within 180 days after the cause of action accrues is barred and no action may be maintained thereon. In order to file a suit against a public entity or public employee, a valid notice of claim must be filed. A lawsuit must be filed within one year after the cause of action accrues.

Please note that failure to comply with this statute can prejudice the District's rights to accept or deny a claim. Therefore, it is imperative that anyone seeking monetary damages from the District submit a valid notice of claim. (Notice of Claim forms, which can help facilitate the claims reporting process for claimants, are available from the Legal Services Department.)

Once a valid claim is received, the risk manager will facilitate the investigation and final disposition (denial or settlement) of the claim.

Property Claims

Property claims result from loss of District property by theft, vandalism, fire, windstorm, hail, or other accidental loss. Procedures for property claims that are paid from our SIR account (those claims under $25,000) are currently being reviewed. However, for those claims over $25,000, we must submit our claim to our insurance carrier within 60 days after the loss. Failure to submit our claim to the insurance company within 60 days may result in denial of our claim. Therefore, it is imperative that you contact the risk manager immediately after a property loss that is anticipated to be $25,000 or more.

Upon receipt of a property claim, the risk manager will facilitate the investigation and adjustment of the claim with our claims administrator and insurance company.

Your cooperation in complying with the above claims reporting procedures is appreciated and is vital to the administration of our claims program. A comprehensive claims manual with detailed insurance information and claims reporting procedures is currently being drafted and will be finalized and distributed after input and comments from District employee groups. In the meantime, if you have any questions regarding claims procedures, do not hesitate to contact the risk manager.

Published in the Summer 2000 Edition of In Brief