This is the second in a three-part series about the art of influence in public entities, using Aristotle’s definition of the three ingredients necessary to influence others: ethos (trustworthiness), logos (logic), and pathos (empathy). In August’s issue, the article focused on ethos and how public risk managers can maximize their authority to drive influence across the enterprise. This second article will discuss how risk managers can apply logos when making decisions on self-insurance and unbundling claims management.

All sectors of the economy have felt the pressure of insurance market conditions since 2021. Rising costs and less capacity have increased insurance spending during the past two years. Given that every dollar a public entity spends is from a finite budget, there is an added level of pressure on public risk managers.

But there are economic solutions that public risk managers can employ to reduce their total cost of risk. A critical element of any risk management program is ensuring quality claim handling and effectively managing costs.

As public risk managers are charged with making valid and sound decisions about their risk and insurance programs, it’s important to apply Artistotle’s second ingredient to influence others: logic.

Logic, at its core, is the study of reasoning and arguments. It is a methodical way of analyzing and evaluating arguments to understand and distinguish between valid and invalid reasoning. Logic deals with concepts such as truth, validity, and soundness and is used to construct arguments and draw conclusions based on premises or assumptions. The goal of logic is to use a set of rules and principles to determine the logical coherence and consistency of arguments.

A deductive argument is a logical process in which a conclusion is formed from a collection of true premises. It is a type of argument designed to provide conclusive evidence for a particular claim or proposition by relying on logical connections between assumptions and the conclusion. In other words, a deductive argument begins with a general theory and then moves to a specific application or example to demonstrate the validity of the theory. The purpose of a deductive argument is to prove a conclusion with a high degree of certainty based on logical reasoning and empirical evidence.

In making decisions about their risk and insurance programs, public risk managers are able to leverage the logic of unbundling their risk management program to a third-party claims administrator (TPA), which can prove to be challenging in the current economic climate.

However, pursuing self-insurance and unbundling claims management to a TPA will further support public risk managers in their unwavering pursuit of protecting the public trust. Three key premises help form an argument in favor of increased self-insurance.

1. Self-insurance empowers public risk managers to develop customized solutions that best suit their programs. Taking on more risk through self-insured retention offers public risk managers more control and the ability to truly own their risk management program. Transitioning public entities from traditional bundled arrangements with insurance carriers to self-insured programs each year requires an understanding of each critical component of the implementation process and training to all key stakeholders.

No two risk management programs are alike, and there is no one-size-fits-all approach. By converting to a self-insured program, public risk managers can tailor service instructions for their claims teams to follow while handling each claim the entity experiences. The service instructions outline preferred points of contact, customized claims handling protocols, specialized claims reporting methods, and more.

2. Self-insurance grants public risk managers deeper insight into program performance. One of the keys to success in public entity programs is a strong partner to support their reporting needs and provide meaningful information—a partner who can help provide all the data inquiry and analytical tools required to successfully oversee and manage all aspects of a risk management program.

This could include standard reports, graphs, and dashboard templates that make it easy to create almost every type of tactical report for day-to-day plan administration, strategic reports to capture important trends, and forensic reports that open up the world of real cost drivers. Important for public risk managers to note is the ability to drill down reports into individual departments, locations, etc., to gain real insight into both holistic and partial program performance.

Also important is access to individual claim notes, transactions, financials, quality audit scores, and more to foster trust.

3. Self-insurance allows public risk managers the opportunity to establish long-term partnerships with their entrusted claims teams. When selecting a TPA, look for a partner that can work with you and your organization for an extended time and one that offers the flexibility to maintain its claims program despite carrier changes.

As public entities weather insurance market challenges, public risk managers must recognize the importance and logic behind keeping their claims teams consistent. The result is a steady, dependable claims team that understands the public entity, its program, and goals year after year. A reliable claims team serves as a compass for public entities and drives the delivery of superior outcomes and results.

MEGAN DOAH is an account executive within the National Public Sector Practice at Gallagher Bassett. She works exclusively with public sector clients, which offers her a unique perspective on influential industry trends. (Linkedin)

GREG MCKENNA holds a juris doctorate and has over 20 years of experience in claims management, litigation, governmental affairs, and public relations. Greg is a frequent industry speaker and content contributor and ICMA member. (LinkedIn  )