Cycle time reduction is the name of the claims handling game and Ohio Casualty Group is tapping into innovative applications of wireless technology to create a winning business strategy.Each day the Fairfield, Ohio-based property/casualty group of insurance companies eliminates from its auto claims processing timeline, it reaps savings of between $80 and $100 per vehicle per day in so-called soft costs.
"The quicker we can take action (to conclude) the claims processing cycle the less we have to pay for towing, storage and car rental expenses," says Phil Horst, nationwide manager of auto physical damage for Ohio Casualty Group.
Ohio Casualty receives some 40,000 to 50,000 auto claims each year ranging from fender benders to totaled vehicles. Industrywide, about one-third of auto claims typically involve heavily damaged or totally wrecked vehicles. This is precisely the area where Ohio Casualty has focused the thrust of two wireless software applications to reduce turnaround or cycle time.
The Web-based information technology helps the insurance group speed the claims process-from loss reporting to estimate completion- by fostering faster real-time communications between field appraisers and the home office.
"Previously, we'd hand write or type a claims sheet and fax the information to the appraiser. He would have to go home at night to get his assignment," explains Horst. "Then he'd have to call the policyholder to find out the location of the damaged vehicle, go to the location, take pictures and get them developed at a photo shop," says the senior auto claims executive.
"The appraiser would get the paper-based pictures back and put all the claim information into an envelope and mail it into (the home office). We're talking a process that took a week to 10 days," adds Horst, a 41-year veteran of the business.
For Ohio Casualty the old system was expensive, especially racking up storage and rental car fees for seven or more days. "The whole system drove costs," points out Horst.
With the new wireless information technology in place, the insurance group today can literally complete the claim's cycle in a few hours. "If it's a 'totaled' vehicle, we can look at a car so fast that we may only need a rental for a day or two. The customer satisfaction is markedly improved because they get (into) a car more quickly," explains Horst. The old system took 10 days to two weeks just to figure out if a vehicle was beyond repair. "With the wireless information technology, we can (quickly) tell the customer it's a 'total,' get yourself another car, and we'll get the money to you as soon as possible," explains Horst.
Ohio Casualty Group is using two software applications jointly developed by its IT department in conjunction with Mitchell International Inc. of San Diego, a provider of information technology to the insurance and collision repair industry.
Mitchell approached the insurance group when the software products were still under development, according to Horst. Called eClaim Manger and eMitchell respectively, the applications used modems-instead of wireless technology-for field-to-home-office communication purposes.
"The piece we really jumped into was the wireless piece," says Horst, who acknowledges a fascination with computer technology. I came up with this brainstorm to make the IT system wireless. I asked Mitchell 'Why can't we do claims from the scene and use wireless technology to do it. That way we can communicate the location of a damaged vehicle immediately to an appraiser and not wait until the appraiser goes home," says an excited Horst.
Ohio Casualty and Mitchell jointly developed the Web-based auto claims workflow process and the corresponding technology. Then Ohio Casualty's IT department worked with Mitchell's staff to get the programming compatible with the wireless solution.
The wireless features of the two software products, eClaim Manager and e-Mitchell, have ended the days of the insurer using the telephone, fax or snail mail to communicate with field appraisers at home. The new system uses high-speed wireless and Digital Subscriber Lines (DSL) and dialup to speed the data and information flow between the home office and field appraisers. Today, a computer file with 10 digital pictures of a wrecked vehicle can be uploaded in less than a minute with the wireless technology versus the photo shop route of the past.
The eMitchell Web-based application is a real-time data networking solution. It increases productivity and reduces turnaround time by streamlining the workflow process. The wireless application enables 90 to 100 Ohio Casualty adjusters, who speak directly with policyholders, to dispatch, receive and process collision repair claims electronically via an eMitchell portal.
Adjusters go to the eMitchell site and plug in the customer's name, address, telephone number and policy number. The software directs them to an appraiser who is close to the scene and who is free to handle the claim.
The system electronically sends a message to the appraiser's cell phone along with a text message. The message tells the appraiser that there is a damaged vehicle to inspect.
The field appraisers get their work assignments through a second application called eClaim Manager that sits on their laptops. eClaim Manager downloads the claim file from the eMitchell portal and populates a claim form so the appraiser doesn't need to rekey any policyholder information.
"From the scene the appraiser evaluates the vehicle, attaches photos taken with a digital camera, and writes up an estimate. He then puts this information into an digital folder that uses eClaim Manager to send it to the home office for review," says Horst. The application "talks" to the appraiser, helping him or her download or upload claims information.
eClaim Manager is purely a communications tool that only transmits data; it doesn't store any data or management information. All of the pictures, the damage estimates, and all of the attachments created by the IT system are stored at the eMitchell portal where they are accessed by Ohio Casualty home office personnel.
The old-world process "took a day or two just to get the assignments to the field appraiser by fax," says Horst.
"The wireless technology gives us the ability to communicate with our 120 SOHO (small office, home office) appraisers much faster than faxes or phone calls and get them to the scene much quicker," says Horst. "With eClaim, they can literally get the assignment within minutes and can turnaround an estimate in a matter of hours," he adds.
It's not unusual for appraisers to drive 40 to 50 to 60 miles or more just to view a wrecked vehicle. The wireless technology can also alert appraisers to look at a wrecked vehicle that may be nearby without having to go home and receive a fax. "It can save them a trip sometimes to the same or a nearby salvage yard. This way we can start the process and not wait," relates Horst.
The two applications must be used together in order to achieve the efficiencies. "If you just use the eMitchell application and then communicate with appraisers using the fax or the U.S. Postal system, there is no advantage," says Horst. "The advantage comes from being able to transmit the data to the appraiser via the eClaim Manager application immediately using the wireless feature.
Cycle Time Reduction
Turnaround time-the interval between loss reporting and receiving the finished damage estimate back in the home office-has undergone a significant reduction.
"Our average cycle time (turnaround time) is now
1.7 days on average...which is phenomenal," declares Horst. "Now estimates can be completed in a half day instead of the five-to-six days (or longer) that it took in the past," he adds.
When Ohio Casualty Group first installed the two applications a year ago, the manager of auto physical damage offices nationwide hoped for a 50% reduction in cycle time.
"It has done even better than that and it's still improving," says Horst. "When we get people really familiar with the system and get more people computer literate so they aren't afraid of the applications-those cycle time numbers will shrink even more."
So far the return on investment amounts to "several" million dollars in net return each year. The cost savings from using the wireless IT system flow directly to the bottom line because they are costs that the insurance group would have incurred had the claims cycle not been shortened, according to Horst. For Ohio Casualty this means saving up to $100 per vehicle per day times the thousands of heavily or totally wrecked vehicle claims each year. "This translates into millions of dollars annually," says Horst.
After Ohio Casualty Group and its partner Mitchell International Inc. perfected the wireless applications, the insurer put the IT system through a rigorous pilot program in the Lexington, Ky. region in 2002.
"We trained 10-15 people in how to use the wireless versions of eMitchell and eClaim Manager," says Horst. "We looked at how well the system was working, the response of the appraisers and made sure the programs were fully functional.
The insurance group began rolling out the applications to the enterprise in March 2003, a process that took about nine months. The last training class was completed in December 2003.
Today, the IT system is used by 90 to 100 adjusters, 120 home-based appraisers, 20 full-time appraisers and one home office desk reviewer for a total of 240 people.
"It's so mind boggling that some people have a hard time grasping that information can travel through the air," says Horst. "During one training class we had an appraiser who skeptically observed, 'I don't think this process is gonna work.' At the time he had 19 estimates sitting on his laptop and he promptly uploaded them to the home office. Within three minutes, my cell phone was ringing. It was a home office adjuster who just received 19 estimates at one time asking 'what's going on.' I knew it had to be somebody in that training class so I asked 'who's the wise guy'.
A gentleman in the back meekly raised his hand and exclaimed, 'I guess it does work,'" laughs Horst.
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