In any disability claim organization, a large portion of open claims and their associated reserve dollars come from permanent and total disability claims. Also referred to as a Stable and Mature block, these claims, representing a large financial exposure for carriers, typically come up for review once per year at most. Once a claim is determined eligible for transition to a Stable and Mature unit, it is assumed that, in most cases, the claimant will reach the maximum duration of the plan or terminate due to mortality or morbidity reasons. Any claim that moves to this block must only do so once all relevant offsets are obtained or applied for, return to work efforts – if appropriate – are exhausted, and known liability exists according to the applicable plan definition of disability. Significant negative financial implications may result if these claims are transitioned erroneously or mismanaged once transferred to the Stable and Mature block.
Preparing claims to transition to Stable and Mature
Stable and Mature claims are typically managed by less experienced staff with larger caseloads, often receiving less attention from a risk management perspective than other claims. As a result, it is imperative that the correct decision is made when transitioning the claim. Each organization determines what claim criteria must be met before moving the claim to the Stable and Mature unit. The transition involves a considerable financial investment, so while each organization establishes its own rules, specific criteria should always be met, including:
- A well-documented stable functional capacity,
- Obtaining, or at least identifying for future follow-up, all other income benefit information; and
- A determination that returning to work is not feasible.
The risk of mismanagement
Claims residing in a Stable and Mature block will always have significant financial implications, so it is essential that only the right claims are transitioned. Designating nonviable claims as Stable and Mature places an unnecessary hold on dollars sitting in already overextended reserves.
Upon determining whether a claim meets the necessary screening criteria, the case manager will move the claim to the Stable and Mature unit. While it is not often an issue of a claim being transferred incorrectly – though it can happen – the true risk of mismanagement occurs upon transition. Unfortunately, caseloads at this stage tend to stand at 1,000 or more. Case managers in the Stable and Mature unit are often less skilled in risk management training than their coworkers in earlier long-term disability claims. Due to the perfect storm of a large caseload and less knowledge in complex claim management, information to assess ongoing functionality is often lacking; therefore, making decisions to manage the claim completely and effectively challenging.
Stable & Mature Reassessment Strategy
At Brown & Brown Absence Services Group, we have the experienced resources available to review stable and mature business blocks comprehensively. We help carriers identify areas of opportunity such as return to work, lump-sum settlements, offset identification, and often find claims that no longer meet the contractual definition of disability. A thorough review of stable and mature claim blocks can result in substantial cost savings on current and future reserves, freeing up a portion of the administrative costs needed to manage a Stable and Mature block.
Further information is available to learn more about Brown & Brown’s Stable & Mature Reassessment Strategy. Reach out to Brown & Brown today to discuss how these strategies can be deployed in your Stable and Mature block.