To lower loss costs and increase operational efficiencies, P&C insurers are looking to the lower labor costs associated with paper pushing and are increasing their workflow and document management capabilities and derive value from predictive analytics, according to “Property/Casualty Claims Systems: A Novarica Market Navigator Report.”
The claims experience is generally perceived as the moment of truth between insureds and insurers, and higher levels of service and technological access are expected by claimants, Novarica said. Satisfying those desires helps reduce customer churn and has the potential to lower loss costs and increase insurer profitability.
“However, doing all of this in a cost-effective manner — both keeping internal operating costs low and minimizing external loss costs such as attorney fees or expert witness fees — can prove difficult without solid support from technology,” Novarica said in the report. “When you add in the need to provide a high level of customer service as a differentiator to drive retention, the challenge becomes more taxing.”
Contemporary systems typically are browser-based, with service-oriented architectures and configuration tools for configuring workflows, pages, forms, tasks, roles and integration points. Well-developed claims system should integrate with policy administration and accounting systems, Novarica said, to support coverage verification and disbursements.
“Typically, business rules and logic are embedded in the code. Modifications require skilled developers. Older systems were usually rooted in managing the financial side of claims rather than service. This makes it difficult to deliver excellent service in anything other than a manual fashion,” Novarica said in the report.
The report includes an overview of claims systems for U.S. P&C insurers and profiles of 32 vendor solutions. It also lists the following as important components of a contemporary claims system:
- administrative functions, such as business rules and configurable workflows
- catastrophe management, such as the ability to define catastrophes by peril, geography, date or other criteria for multiple LOBs
- contact management
- disability management for insurers in that LOB
- disbursements for managing checks, drafts, including issuing, tracking and reconciling payments
- document management for correspondence, including forms library and storage for documents, images and other media
- first notice of loss, including web-based claim intake, scripting, scoring, business rules and integration with policy administration systems
- fraud detection, alerts, flags, analytics, routing
- litigation management
- medical case management for tracking details, such as diagnoses, medical records, treatment plans and links to ICD9/10 codes
- mobile/multichannel access, including secure browser-based self-service portal access for agents, policyholders, or claimants to submit notice of loss and access claims information. Some include a simplified series of interview questions or scripted steps that also validate data
- recoveries, to support subrogation and salvage
- reporting and analytics for standard and ad hoc reports, as well as integration with third-party business intelligence applications
- reserve management
Claims systems are typically old, maintenance costs are rising and the talent pool necessary to support them is shrinking. As a result, Novarica expects sales of 50 to 60 claims systems in 2013 and 45 to 55 will be selected in 2014.
