Claims Management: A Balancing Act
If they take into account underlying business challenges and the needs of staff, carriers can leverage a bevy of new technologies to manage claims more efficiently and more effectively.
Insurance Networking News, 04/01/2010
As the most involved of insuranceprocesses, claims can both benefit from and resist technological innovation.
With claim costs making up the vast bulk of disbursements, and legacy claims technology showing its age, the need for carriers to seek out new solutions to improve their management of claims is acute. In short, to compete, carriers have to get a handle on claims costs while keeping various partners in the process happy and keeping an emphasis on customer service.
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Yet, bringing any new technology to the claims process, be it a new mobility device for the field adjuster or implementing an entirely new claims system, is fraught with challenges. Especially when deploying a state-the-of art claims system, carriers need to bear in mind that it is a business problem they are looking to solve and not a technology one.
Garth Crow, VP of claims at Sarasota, Fla.-based FCCI Insurance Group, says his company sought a modern claims system to supplant a menagerie of legacy systems. In 2008, the company opted for the ClaimCenter product from San Mateo, Calif.-based Guidewire Software Inc., and has been implementing it by line of business. "We had four or five claims systems that all did different things, and our goal was to get them into one system," he says. "In order to figure out what product to buy, we took a look at our workflow and process."
MODERN SYSTEMS
So what should carriers expect in a modern claims system? At the minimum, a solution should offer increased visibility into the process throughout the claim lifecycle from first notice of loss to settlement, experts say. They also agree that a system should streamline integration with external systems and departments, such as special investigative units and in-house legal. Well-designed systems should also consistently enforce best practices across the enterprise and over disparate locations. Efficiency gains such as handling more claims or work with a smaller staff, is not an unreasonable expectation.
The modern claims system also should engender greater efficiency by giving the adjuster the tools and information to focus on the task at hand, and not clerical or support functions, notes Donald Light, senior analyst at Boston-based Celent. "Faster cycle times should be the norm as tasks formerly done sequentially are now done in parallel," he says. "For example, subrogation could be performed while somebody else is adjusting damages."
Crow says that document management is also a prime consideration. With claims being one of the more heavily regulated parts of the insurance industry, a modern claims system should also have a strong document management component, automatically generating correspondence for customer service representatives and adjusters alike. "One of the biggest things we see in the industry is all the rules and compliance," Crow says. "For example, our form letters and correspondence documents now live in ClaimCenter, and we have controls on them. Forms can't go out without managers' approval because that requirement is built into the system."
One improvement readily apparent with the new system is speed, Crow says. It offers ways to keep the adjuster focused on a single screen, and speed relevant data to the next part of the operation merely by pushing a button, instead of having to back out to send a separate e-mail. "When they fill out a document now, they don't have to start from scratch because the system pre-fills and lets them edit those documents. It enables them to get it out the door quicker," he says.
Light says carriers are increasingly covetous of the litigation management technology contained in some modern systems. "They help control legal expenses, monitor the duration of negotiations and possibly get better outcomes; those certainly contribute to efficiency," he says.
Given the natural volatility of claims payments, agility is another desirous attribute, Light says.
"Because of the changes year to year in frequency and severity, there's a need for claims operations to be able to adjust quickly, even quarter to quarter."
EFFICIENCY AND EFFECTIVENESS
When selecting a claim system, carriers also need to be cognizant of the specific process they seek to improve. Light says the distinction between handling claims efficiently versus handling them effectively is an important one. "In claims, efficiency is ratio of inputs to outputs: How many claims can one adjuster do? Whereas, effectiveness is how well it is being done: Is there leakage?"
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