Freight claims management: 7 best practices for carriers

23 September 2022 | Posted by Melia Cothran

For many carriers, freight claims management is a business process ripe for improvement. At a time when the sheer number of claims as well as claims ratios seem to be rising, there's no time like the present to review processes in light of opportunities to increase client satisfaction, efficiency, visibility, and cost reduction. 

And while claim volumes are up, the resources who manage them are stretched, maybe to an extreme if labor shortages have become a factor. This team is struggling to do more with less.

If strong systems are not in place, it’s easy to miss deadlines and lose documents. It’s easy to be paying out claims but not have a clear understanding of causes, trends, and total costs. Unfortunately, shippers have been telling us for months that claims resolution is more difficult and taking longer than ever. It doesn’t have to be so hard. When it comes to managing freight claims, carriers can leverage the following seven best practices to improve processes, gain visibility, and better control costs.

7 Best Practices for Managing OS&D Claims

The following best practices will help you gain efficiencies, visibility, better cost management, and improved client satisfaction. Whether you process 100 claims a year or 10,000, you’ll benefit from these simple but powerful tips.

1. Begin with Prevention

Every carrier wants to reduce OS&D incidents, and to do that you need insights. Freight claims management processes should be designed so that recording predetermined data is part of the process. This gives the risk/prevention team actionable data to implement necessary changes and training, while also knowing the most advantageous prevention measures to enact first. Refresher training on load planning can be essential, but if your biggest problem—made apparent by the data—is improper palletization then training in this area might take precedent. Create a technology-supported process for capturing cause, equipment, location(s), driver, customer, product, how the product was packaged, how the truck was loaded, costs related to the claim, and whatever else is meaningful to you.

In collecting this information, you’re building a database that will increase in value over time. Having the ability to look backwards for trends related to shipper, lane, or driver, for example, will prove invaluable. And when you require that most of the data collected be chosen from a defined list of options, you eliminate the variability of data being recorded multiple ways. For example, providing a shipper list means it can’t be free formed. Standardized data capture is the key to consistency and useful reporting. Remember, data that only exists on a .pdf or in an email is not terribly useful.

BONUS TIP: Look for trends, outliers, and actionable information that will inform preventative steps, such as driver training, new procedures, or discussions with customers so they minimize the possibility of problems.

2. Invest in Software

If you just have a few claims a year, investing in freight claims management software may not be practical. For everyone else, software can improve efficiencies, consistency, visibility, and much more.

Many carriers today use some combination of home-grown solutions, spreadsheets, email, and network folders to manage claims. Given this is both a customer service function and high dollar expense, the lack of automation is especially problematic. Claims management and prevention support is a business function ripe for increased automation. Automating tasks and reporting is the most effective thing you can do to increase efficiency, data availability, and customer service.

The best software solutions will:

  • Store everything, including documents, communications, contact information, all cost and payment information, in one place. A good solution will ensure you don’t have to access multiple places to pull together a complete picture of one claim.
  • Create detailed, flexible reports that keep stakeholders informed and aid in preventing OS&D.
  • Provide workflow support so that routine tasks, such as sending acknowledge emails or payment approvals, are automated. Eliminating manual steps saves time, creates process consistency, and helps to keep the claim on schedule.
  • Improve customer touchpoints in a way that provides information and reduces frustration.


3. Optimize the Customer Experience

Claims are a customer service opportunity. Period. They give you the opportunity to make a negative situation worse or better. Making it hard for your customer to file a claim, get status updates, or get paid doesn’t help you or your relationship. Carriers who are slow to schedule an inspection, ask for documents repeatedly, or keep shippers in the dark risk losing business. If you are guilty of any of these, make formal changes to turn it around.

Implement processes and systems with the customer in mind. Use a reliable task scheduling system so dates don’t get missed and claims stay on schedule. If one claims analyst is out, make sure someone else can easily pick up the process. Make it easy for customers, keep them informed, and resolve claims quickly.

BONUS TIP: Meet with your shippers every 30 days to review outstanding claims and seek solutions to common problems together. They want to strive for improvement and eliminate problems, too.

4. But – Don’t Let Shippers Submit Partial Claims

Back and forth emails asking for more documentation are a time waster. Find mechanisms to get everything the first time to reduce or eliminate this. What are a few things you can do?

  • Post requirements on your website so clients are clear about filing requirements.
  • The minute you hear about an issue, send the customer your requirements checklist or a link to the website. Get ahead of it.
  • Provide a web form (here's an great example from The Custom Companies) that lets shippers submit claims online. Web forms can require certain information and documents, forcing the shipper or claimant to submit everything at once.

BONUS TIP: Here is an excellent example from ArcBest of a claims guide for shippers. It clearly explains how to file a claim, what documents are needed, what to expect after filing a claim, and more. Guides should also contain contact information so the shipper can call or email the right person or team.

5. Save and Document Everything

Save everything. Documents, conversations, emails, photographs, and more will help build the claim file proactively, and could also support your position in an OS&D claims dispute. Keep a written record of every communication with the shipper or claimant so that there’s no room for misunderstanding. Instructions and expectations should be clear. If you deny a claim and the shipper sues, you’ll need all the records and the reasoning behind your decision.

Note that when you also document data such as all costs related to a claim, you have additional reporting and insights that you can act on. Maybe the data will provide ideas for reducing inspection fees, for example.

BONUS TIP: Saving and documenting everything helps you build a database of historical events. What are the trends? What are the mistakes we make most often? What shipper/driver/location/equipment? Now you have facts to support training.

6. Keep Your Internal Stakeholders Informed

Do customer service and sales need to be informed on their customers? Does management need to understand exposure at any given time? People who want to be in the know should be. Provide reports to them without being asked. Can you send out automated, scheduled reports? Can you provide access to online reports or the details of any given claim? Putting information in their hands before they ask for it keeps them proactively informed and saves everyone from the waiting game of “can I get an update when you have time?” Of course, consider access levels, data integrity, and data security in the process.

BONUS TIP: Adopt a cloud-based freight claims solution that gives stakeholders real-time, anywhere access. A system that can email scheduled reports (for example, a weekly status report) to the appropriate folks can be extremely helpful.

7. Mediate or Arbitrate Rather Than Litigate

If you’re unfortunate enough to be named a defendant in a lawsuit, know your options for resolving the matter. You may be able to resolve your case out of court, saving substantial legal fees and a lot of time for both you and the shipper. Two alternatives to litigation—mediation and arbitration—tend to be far less costly and take far less time. In mediation, carrier and shipper (sometimes other or additional parties) negotiate an outcome with the assistance of an expert third party.

Note that during mediation, carriers often agree to pay more than they believe they "should" for three reasons:

  1. They would have spent more than this on legal fees,
  2. To salvage the relationship if possible, 
  3. To put the case behind them and move on.

Arbitration is an alternative whereby an arbitrator hears evidence and makes a decision that both parties are legally bound to. As long as the arbiters understand the intricacies of transportation law, the outcome is likely to be similar to a court decision.

BONUS TIP: The services of the Transportation Lawyers' Association Alternative Dispute Resolution (ADR) and the Transportation Arbitration Board (TAB) are both cost-effective and fair. Those organizations specialize in freight transportation and are less expensive than the American Arbitration Association.

Topics: Carrier Solutions, Carrier Freight Claims

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