System for maintaining an escrow account for reimbursing administrators of payments

Abstract

A loss ledger system to process third party fund requests on a daily basis, track historical requests, process validation on each request, maintain suspense / escrow and loss ledgers, and provide reconciliation assistance for accounting and claims processing departments. Additionally, the loss ledger system provides management reports, interfaces, security, audit and control and data conversion to facilitate minimizing escrowed resources, fraudulent activity and clerical errors.

Description

CROSS-REFERENCE TO RELATED APPLICATION[0001]This application claims priority to U.S. Provisional Patent Application No. 60 / 693,272, filed Jun. 22, 2005, which is incorporated herein by reference in its entirety.BACKGROUND OF THE INVENTION[0002]1. Field of Invention[0003]The subject technology relates to managing claims payment transactions involving a third party administrator and a method for gathering, processing, disseminating, reconciling and controlling information relating to these payment transactions as utilized by a company such as a property and casualty insurance company.[0004]2. Background of the Related Art[0005]Most insurance companies pay some of their claims by utilizing outside third party adjusting or administration firms (individually, a “TPA” and collectively, “TPAs”). Typically, the insurance companies must give large escrow or suspense deposits to the TPAs, which are used for paying losses. Historically, TPAs make payment requests in one month and then the loss...

AI Technical Summary

Benefits of technology

[0007]In light of the problems described with the current method of paying claims through the use of TPAs, there is a need for an improved method of funding the escrow accounts and managing the data associated with this process. The subject technology provides an efficient and accurate method for reducing escrow accounts, verifying payment accuracy of the TPAs and assisting with balancing the ledger of said payments.

[0008]An embodiment of the subject invention enables the insurance company to reduce its loss fund escrow balances with TPAs to a fraction of what was necessary previously in the manual loss funding method. Preferably, the TPAs are funded on a daily basis as opposed to a monthly basis or longer time frame. The insurance company is also able to obtain real-time loss related data (i.e., claim, policy and check payment detail), which enables the insurance company to verify the accuracy of the payment request immediately. Also, the insurance company is able to create a paid loss database from which it is able to quickly and accurately input data into its general ledger in the months following the payments.

[0009]In addition to the return of escrow funds, which can then be used for investment or other purposes, the insurance company is able to handle large volumes of loss payment activity from multiple TPAs on a daily basis and quickly assess the accuracy of the funding requests. The subject technology has the ability to determine if a request includes payments previously made or if the request is invalid for any number of other reasons. The TPA is immediately notified of the error and is asked to resubmit the request without the errors. The process also enables the TPAs to always have sufficient funds on-hand with a quick turnaround of their funding requests. Preferably, large loss requests for such things as settlements are also handled and tracked on one of the many reports available to determine if the funds issued to the TPA were being withheld by the TPA for an unreasonable period of time, or if the TPA issued a check to a claimant that was still not cashed or deposited by the claimant.

[0010]Where the insurance company is part of a holding company system that has other subsidiary insurance companies, a preferred embodiment also allows such holding company system to identify the particular company that the payment is being made from through information contained in a daily request file received from the TPAs. While a TPA may be able to convey information relating to which particular company is being charged for a loss payment, it is a difficult and time consuming process where multiple companies are involved. The subject technology described herein enables each company to glean that information through the policy information supplied by the TPAs along with the other payment information detail.

[0011]Preferably, the subject technology allows for reconciliation between what the TPA requested in one month and what the TPA reported to the insurance company the following month. By analyzing the details of each payment transaction and quickly responding to the TPAs with any necessary changes, payment errors are greatly reduced, the recording of paid losses is more accurate and the opportunity for misappropriation is reduced. In a further aspect, the subject technology facilitates entering the paid loss data into the insurance company's general ledger system, and includes a number of reports that can be used for the reconciliation process, as well as for reporting in great detail the paid loss history of the insurance company in so far as the TPA claim activity is concerned.

Problems solved by technology

While a TPA may be able to convey information relating to which particular company is being charged for a loss payment, it is a difficult and time consuming process where multiple companies are involved.

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