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.
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?"
But are efficiency and effectiveness mutually exclusive? Though loathed to admit, insurers accept some level of leakage because you would have to slow the process down to a halt and risk alienating honest customers to detect all fraud. Will a more efficient claims department (one handling a greater number of cases with fewer adjusters) be inherently less effective? Light says that this need not be the case. "A well-managed claims department should be looking at both measures," he says.
This is not to say the same tools address both demands. Carriers looking to more effectively manage claims can opt for increasingly prevalent analytic options to help ferret out leakage and fraud, using sophisticated visual link analysis to aid in the identification of suspicious claims.
Analytics also can yield efficiencies by helping augment human decision-making, or make better use of human capital. For example, a carrier can profitably employ analytics in areas such as adjuster assignments by considering factors such as geography, complexity of the loss and an adjuster's area of expertise. Thus, an experienced adjuster could be assigned to an accident scene while remnants of the accident are still present, improving the odds of a correct outcome.
"The decision to assign a new claim to a given adjuster can be done manually or automatically," Light says. "If you are automating, you need a basis for the decision, and that basis comes from analytics."
On the efficiency side, the array of choices is even broader with enterprise content management, business process management, workflow solutions and best-of-breed claims systems, each helping carriers achieve greater efficiency. "When you look at what drives efficiency, it's workflow, rules and content management," adds Light.
THE BUY IN
Every bit as important as the system's technical merits is how well it fits in with existing processes and claims personnel. Bob Khosropur, chief claims officer for Pawtucket, R.I.-based Narragansett Bay Insurance, says the ability of newly hired adjusters to become quickly conversant with the new claims system was a factor in the company's selection of the Pipeline Claims product from Honolulu-based BlueWave Technology. "It's important that the system itself is not a burden-that it's intuitive," Khosropur says. "The ability to quickly customize the look and feel was very important to us."
FCCI's Crow says that any new system may come up against a natural reluctance to change on behalf of some employees, but notes that this hesitance is easily surmounted through education. "We have our business systems manager visit different regions and really go through the changes and why we are making them," he says. "The better our staff understands why we're making those changes, the better they understand where the system is leading them. The companies that are successful are the ones that use technology to enhance the human side of claims."
Eric Krantz, SVP, Non-Marine Property Claims for Warren, N.J.-based Chubb, says his company employs a similar approach to ensure employee buy-in when implementing new technology. "The hardest part is not the technology, but the approach you take to implementing it," he says.
During field tests, the company will choose advocates who can subsequently explain the benefits of a new technology on a peer-to-peer basis. "We've found that to be a very effective approach," he says. "You have to get the 'doers' on board that can share with the group their experiences on how things are improving. We've also re-tooled our training focus to not just show them how it works, but show them how it fits into their workflow and how it relates to the customer."
NEW TOOLS
This need to smoothly integrate new claims technology has been in high demand at Chubb, which has been steadily guiding an array of novel technologies into the hands of its adjusters.
"We've been implementing a variety of different tools," Krantz says. "We've really worked to integrate the process to make it easier for adjusters, and to make it more accurate and efficient from a customer's perspective. We keep our adjusters on the edge of technology, but also stress the behavioral component by giving them the appropriate level of authority. Our business model is to try to conduct as much activity as possible on site when we have the insured's attention. We call them 'first settlements.'"
To make this vision a reality, Chubb has invested in a variety of communications tools such as tablet computers. Chubb has been using tablets in the field for three to four years, and recently switched to estimating software that was designed for tablets," Krantz says. "Touch-screen gathering of information in the field enables a once-and-done approach. Before, it was clipboards and eventually entering file notes. The tablets enable them to capture information contemporaneously with their field inspection. They have become very efficient and less stressed because they don't have all that after-hours paperwork to do."
The ubiquity of mobile broadband, which affords field agents access to much more information than they had a few years ago, also has eased the claims process. By inputting zip codes into their tablets, adjusters can quickly get a valuation particular to their current locality. They also can verify coverage, share documents, request payment or check for new assignments in the area with newfound ease.
"We see a need to increase customer satisfaction, and with better, more timely communications with customers, there are quicker payments," he says. "With broadband cellular systems they can get into Chubb systems in real time at any time of the day."
In a similar vein, the company has integrated GPS into their system so that when assignments are received, agents can plot out the most efficient route to the site.
"This is especially helpful when they are away at catastrophes and are unfamiliar with the territory," Krantz says.
While GPS is a relatively low-cost addition to the adjuster's arsenal, one area where Krantz says cost stymies progress is with satellite data. "If we could access real-time satellite imagery pre- and post-loss, it would be huge," he says. "It's very expensive."
Other, more mundane tools also are paying dividends. Eschewing the time-honored tape measure, the company is issuing laser-measuring devices to outside adjusters that enable them to more accurately measure the interior and exterior of buildings. "Our estimates are more accurate than they have ever been," says Krantz.
Likewise, infrared cameras, which help adjusters identify water damage, may not be glamorous, but they are important. "It has made us more effective at rooting out water damage, which can be difficult to scope," he says. "We aim to give our adjusters a full array of tools they need to be successful."
CHALLENGES, OPPORTUNITIES
Yet, a few challenges remain back in the office. Krantz says eliminating silos and better integrating claim and underwriting data is essential. "One of things needing improvement is integrating the data that we have. We capture a lot of information on the front end, and it is not all shared."
Better communication and standardization with outside parties also may pay dividends. Krantz says the area of electronic payments is still tricky. A customer that electronically makes premium payments may be chagrined to find that the same option does not apply when the time comes for an insurer to pay a claim.
Such a customer-centric outlook may be the key to claims. FCCI's Crow also cautions against forgetting the personal aspect of the claims process.
"I've been in the business 23 years, and our products haven't changed all that much-we still do auto, liability and workers' comp," he says. "What an adjuster does also hasn't changed dramatically-they still have to contact a claimant, conduct an investigation and resolve that claim. It's how we do it and the tools we use that have changed the most."
