James Jorgensen
Principal & Executive Vice President, Business Insurance
As businesses sharpen their focus on Total Cost of Risk (TCOR), many are rethinking what claims management means. Rather than focusing solely on resolving incidents, organizations increasingly view each claim as an opportunity to uncover risks, improve outcomes, and guide more informed decisions. Studying the details of historical claims is especially important so you can learn from mistakes, apply what you’ve learned, and avoid repeated claims.
A strategic claims management process helps reduce future losses, protect employees, and operations and build stronger relationships with insurance carriers. When done right, it becomes a key tool in lowering TCOR, boosting long-term sustainable insurance programs, and mitigating volatile pricing swings.
At the same time, the stakes continue to rise. As inflation drives up medical and repair costs, efficient claims resolution has never been more important. According to a 2025 Insurance Journal survey, 53% of insurers reported higher claim severity in 2024, with many paying out between $1 million and $4.9 million, and some well beyond that range.
The ability to contain and control claim costs at the ground level can significantly influence both short- and long-term financial outcomes.
From incident to impact: How claims influence TCOR
Every claim carries more weight than it may seem. Beyond the immediate costs, claim outcomes directly impact insurance renewals, deductible levels, and how carriers view your risk profile.
When claims are mismanaged—whether through delayed reporting, poor follow-up, or missing documentation—costs can escalate quickly. Businesses may face increased premiums, tighter underwriting requirements or legal disputes. Claims mismanagement can also affect morale, especially when injured employees face delays in returning to work or confusion. This can also impact vendors and clients if your claims affect your operations and services to these partners.
The employee and partner experiences are critical parts of the process. Slow or unclear claims handling can be frustrating because it often affects employees and third-party partners, negatively impacting the business. On the other hand, prompt and thoughtful support and communication can reinforce company values, build trust, and increase retention among employees and partners.
On the flip side, companies with a clean claims history, strong internal processes, and a true risk management philosophy generally expect better results with their insurance procurement. Insurers are more likely to offer favorable terms when they see that risks are being addressed and loss patterns are improving. This gives the insurer confidence that the business is equally invested, especially when there’s a material deductible or retention. A clear, consistent claims process also helps ensure regulatory compliance and creates a defensible paper trail when disputes arise.
To further strengthen carrier relationships and enhance risk planning, some organizations are turning to loss estimate studies to proactively quantify potential exposures. These assessments provide a clearer understanding of the financial impact of likely loss scenarios, which can help shape smarter coverage decisions and align insurance strategies with real-world risks.
When paired with strong claims management, proactive exposure modeling improves stakeholder transparency and builds a foundation for long-term resilience.
Core components of effective claims management
To achieve better results, businesses must move beyond reactive claims handling. Key elements of an effective process include:
- Timely reporting: Fast and detailed reporting supports quicker resolution and ensures that evidence is captured early.
- Structured return-to-work plans: Helping employees get back on the job safely can reduce claims costs and promote compliance.
- Use of technology: Tools like telematics track vehicle use and driver behavior in real time, helping companies spot risks and act before an incident occurs.
- Consistent oversight: A dedicated point of contact and coordination with brokers or third-party administrators keeps claims moving forward and helps avoid delays.
Closing the loop: How claims data drives better business decisions.
In addition to these best practices, data-driven claims reviews and predictive analytics are imperative for identifying and managing high-risk cases more efficiently. These tools can support the early detection of complex claims, manage expectations of potential reserve amounts, define clear timelines for resolution steps and improve communication across all stakeholders. This is quickly becoming standard practice among brokerage partners—or should be—as claims can usually be one of the largest components and drivers of a company’s TCOR.
Claims data offers valuable insights for identifying trends that signal potential hazards. A rise in similar injuries across a department may highlight the need for equipment upgrades or training programs. Patterns in vehicle-related incidents may reveal broader operational risks tied to driver behavior, route planning, or maintenance schedules.
This insight can then drive targeted adjustments, whether that involves refining onboarding practices, revising safety protocols, or investing in maintenance to address recurring issues.
Claims trends also serve as powerful justification when evaluating deductibles or exploring alternative risk financing options. A business that has reduced claims frequency and severity over time may be in a strong position to assume more risk through higher deductibles, self-insured retentions, or captive programs. Conversely, a spike in claims severity might indicate a need to reevaluate those structures before renewal season. Insurers look at these things when evaluating program structure and pricing, which have significant cost implications for businesses.
Closing the loop involves turning claims data into actionable insights that enhance operations, guide insurance decisions, and support a more resilient, cost-effective business model.
Marsh McLennan Agency offers a comprehensive range of claims management, business insurance, employee health and benefits, retirement, and private client insurance solutions.
Connect with a Marsh McLennan Agency representative to explore how we can help your business.
