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Healing Workers' Comp
December 2006By early 2004, it was obvious to everyone at the New Mexico Mutual Casualty Co., also known as New Mexico Mutual Group, that the company's green-screen legacy claims system had outlived its usefulness. The company was bringing in a new Web-based policy administration system, and the contrast between it and the tottering claims system was glaring.
Navigational and functional problems with the legacy system had cut into claims department productivity at the Albuquerque, N.M.-based carrier. Only one user could work on a claim at a time.
"If an adjuster was working on a file, the supervisor had to wait until the adjuster was done to look at that claim," says Cecil Rudd, New Mexico Mutual's director of claims.
If underwriting was working on a claim, the supervisor and the adjuster had to wait until that area was available, says Rudd. If someone called Rudd with a question about a claim, he couldn't answer if anyone else was viewing the file.
"It was terrible," he recalls.
With no real reporting capability, all of the work had to be brought into Excel. The reserve worksheet lived in the HR system and wasn't connected with the claims system.
CARRIER'S HISTORY
The problems were occurring at a company that has been through some changes. New Mexico Mutual, a workers' comp insurer in Albuquerque, N.M., was formed by the state in 1991 as a source of guaranteed coverage for companies that operate in the state but were unable to find insurance through the voluntary market. It was funded at first with money raised through bond issues-though that was paid back a long time ago.
Today, New Mexico Mutual is a private-sector mutual company, though it retains a few loose ties to government. The governor appoints five of the insurer's directors, and the company reports periodically to the state legislative financial committee and the governor. "It's a formality more than anything else," Rudd says.
The company expects its written premiums to top $85 million in 2006, and it has 115 employees. That's small in the workers' compensation business, but "pretty good-sized for New Mexico," according to Rudd. New Mexico Mutual sells exclusively through 350 independent agents - although the bulk of its business comes from 40 agencies.
The search for a new claims management system took much of 2004, and by the time Rudd arrived at New Mexico Mutual in August of that year, the list of vendors was down to four. At Rudd's suggestion, a fifth - Guidewire's Web-based ClaimCenter, which he had helped set up at another company - was added to the pot. A team of 14 people, made up of claims personnel and IT staffers, compared the systems.
From five developers, the team narrowed the choices to two, San Mateo, Calif.-based Guidewire and another company. Team members asked both to make changes to their systems to reflect some specific New Mexico Mutual practices. Guidewire did the job in about an hour, Rudd recalls. The other company couldn't do it at all, and in December 2004 the insurer signed a deal with Guidewire.
The earlier policy administration system implementation could have gone more smoothly. The process was impeded, in part, by lack of an "internal champion," Rudd says.
"[Director of IT] Tim Thackaberry and I agreed this shouldn't have happened in claims, so we interviewed some of my claims managers for the position of business project manager," says Rudd. "We chose [claims manager] Dan Girlamo, and Dan drove the implementation from the business user's perspective."
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