For Royal & SunAlliance, processing auto claims went from being a royal pain to a royal gain-thanks to an outsourced solution that's firing on all cylinders.Insurers that strive hard to improve their claims processing abilities within auto insurance lines sometimes watch the entire effort come crashing down due to one crucial deficiency: poor auto repair experiences.
Auto policyholders who give low marks to the repair facility that "fixed" their car in essence pass these marks along to the insurer. This is particularly true if the shop was selected from the carrier's own preferred network.
London-based Royal & SunAlliance, a global provider of personal and commercial insurance, wasn't about to sit idly by and watch a poor auto repair experience get between itself and its policyholders.
If poor quality auto repair were the root of the problem, the solution was simple: eliminate the poor performing shops from the network and fill the pipeline with a more reputable network of affiliates.
Royal & Sun did just that when it implemented a Web-based claims processing solution developed by Oldsmar, Fla.-based eAutoclaims.com Inc. (EACC), a provider of both application service provider (ASP) and integrated outsourcing claims solutions to the insurance industry.
Royal & Sun's effort is among a growing number of auto insurers that are working to align their customers with top-rated service vendors compatible with an individual's needs. Executing this properly requires robust and flexible electronic capabilities.
"Whether it be an electronic hub or a claims processing system built on a single platform, the end result is that a carrier can get much closer to claims data on a real-time basis to see how the money is being spent at a repair shop," says Todd Eyler, senior analyst for Cambridge, Mass.-based Forrester Research Inc.
With eAutoclaims.com, Royal & Sun officials knew they had a distinctive program at their disposal for several key reasons. One of them: EACC has a network of more than 3,300 repair-shop affiliates. However, the company regularly rejects shops from its network because they fail to meet EACC's high standards of quality.
Getting in Gear
Royal & Sun's journey to more optimally perform auto claims processing began in 1999 when it merged with Orion Capital Corp. The merger created one of the 25 largest property and casualty insurers in the United States.
On the heels of the merger, Royal & Sun faced a challenge that normally confronts carriers with multiple legac yinformation systems. "After the transaction, we had six platforms on which claims were processed," says Rick Morgan, vice president, first party property and material damage claims, at R&SA.
"Not only was this slow and tedious, but it also robbed us of the most important by-product of claim processing: the ability to analyze data in real-time and hone everything from pricing to customer service protocols," says Morgan. "This is a risky way to operate a business, especially one where a claims operation can often be the lone point of contact with the customer."
Royal & Sun knew the answer was to unify its claims activities onto one master system-a system driven by Internet technology rather than inflexible mainframe computers.
eAutoclaims and R&SA began the project during the first quarter of 2000, and launched the new system in May 2001. By the end of 2001, the solution had been completely implemented in all R&SA claims offices.
"Our strength is in the leverage we create through our vendor network, combined with our ability to manage a huge back-office data system," says Eric Seidel, president and CEO of eAutoclaims. "When a claim is initiated, we can audit every line of every auto estimate. For instance, do we want to use aftermarket auto parts or not?"
eAutoClaims charges a per-claim handling fee to Royal & Sun, a fee that ranges from $10 to $50 per file. In the past, Royal & Sun might have spent an average of $85 per claim. The company processes 175,000 auto claims in 2001.
Carriers that implement the program incur no set-up fees or development costs-requiring only Internet access to participate. In return, EACC provides what Seidel believes are four major benefits: lower paid losses through contracted buying power and professionally audited estimates; lower loss adjustment e4xpense (LAE); real-time reporting on all claims handled; and migrating the claims office online-without any charge for the customized Webware.
"The key with eAutoclaims is real-time auditing," Forrester's Eyler says. "EACC intervenes early with repair shops, so there's no haggling over a repair estimate, and there are no new costs that occur on the back end."
EACC's Ejuster Claims Center is the solution that drives the program. The Ejuster platform enables Royal & Sun claims representatives to operate the network from their computer desktops. They can make a claim assignment and receive the claim back via Ejuster.
As claims reps move through the process, they can electronically locate and assign claims to a customer's preferred shop, one of EACC's network shops, or one of the carrier's appraisal services.
If customers choose to have the work performed at an EACC facility, they receive priority treatment and a limited lifetime warranty on all repairs. If they choose a different route, one click assigns the file to a nearby independent adjuster or field appraiser.
If they do opt for the EACC network, they're assured of quality work at a fair price, Seidel comments.
That's because EACC leverages the combined buying power of the insurance claims industry and the corporate fleet industry to receive contracted repair discounts and preferred terms.
EACC's technology is also built on logic, prioritizing repair shops to match individual needs. EACC doesn't prioritize repair shops based on proximity to an insured's home, but on the shops best tailored to perform the repair work on that auto.
Throughout the process, eAuto-claims provides support via its 24-hour call center in Columbia, S.C., where Royal & Sun's claims professionals can interact with EACC representatives throughout the claims cycle. Extensible Markup Language (XML) streams facilitate the exchange of data between Royal & Sun's claims reps and EACC's call center reps.
When Royal & Sun first launched the Ejuster platform, it did so under its own branded CarPort program.
"Royal & SunAlliance was actively involved in the development of the program," says Seidel. "They had the fundamentals in place, and we brought our expertise."
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