When it comes to claims processing, insurers are being driven by the rules-business rules, that is. Using rules-based technology, insurance companies are automating routine tasks, streamlining claims workflow with consistent best practices, and automatically adjudicating low-risk claims."At this point, anybody who is not using rules-based technology is already behind the curve," says Michael Lucarini, partner in the insurance group at Bermuda-based Accenture. "There are certain processes and certain areas of low risk where insurance companies need to cut the costs out and streamline those processes. And that requires the ability to segment your claims and understand your claims experience."
Jefferson Pilot Financial Insurance Co. is one such company. The Omaha, Neb.-based insurer is using internally developed business rules technology to auto-adjudicate dental and short-term disability claims in its employee benefits division.
"We have a platform within our system that houses the business rules," says Thomas Charest, vice president of the employee care center at Jefferson Pilot. When a claim comes in the door, the system looks for certain attributes, and if those attributes are present, it automatically processes the claim.
Currently, Jefferson Pilot processes more than 52% of dental claims within 48 hours. And, on average, the insurer handles 90% of short-term disability claims within three business days and 10% of them within 24 hours.
"You're going to hear more about (auto-adjudication of claims)," Charest says. "Right now, we're working on the ability for an employer to submit a return-to-work date (for a short-term disability claim), and if it's within the duration guidelines, the claim will automatically adjudicate, and we'll pay up to that return-to-work date, without anybody touching it."
Streamlining claims processing is so important to Jefferson Pilot's employee benefit division that the insurer recently packaged auto-adjudication of dental and short-term disability claims under one service umbrella-called Jefferson Pilot Financial's Expedited Turnaround (JET) Claims Service.
Other JET services include one-call short-term disability submission for employees and employers, and simplified life claims processing that identifies life claims that can be paid within 24 hours of receipt of a death report.
One-call decisions
"Employers No. 1 feedback comment to us through surveys is ease of submission," says Charest. "With that in mind, we built JET."
Charest also decided to invest the time and money to employ benefits specialists on the phones, rather than intake specialists, so employers can receive a decision on short-term disability claims in one call.
"If I had intake specialists taking those calls, all they'd be doing is data entry-and then they'd refer the caller to someone else for a decision," says Charest.
"Instead, we put a higher level of people on the phone so we can offer that next level of service-and employers love it. They can't believe that within 15 minutes they have an answer."
American National Insurance Co. (ANICO), a Galveston, Texas-based life, health, annuities, and property/casualty insurer, is another insurer that is using rules-based technology to improve its claims handling processes.
Using business process management software in four major call centers, including one that handles claims for its health and group business, the company has reduced its abandon call rate and improved its overall customer service levels.
"Our goal in implementing the software was to free the call centers from having to navigate multiple systems," says Gary Kirkham, vice president and director of the planning and support division at ANICO.
Resolving health claims is a complex process, he says. "If you're really injured in an auto accident, or if you're really sick, you've got multiple providers and multiple billing points. And it can be really confusing to decipher the deductibles and the co-pays and what services are covered."
When customers call about health claims, the information a CSR needs to help them may reside on multiple systems, he notes. "People don't just call and say, 'I need to know about the claim.' They call and ask questions. And the process we've developed allows us to follow where the customer wants to go, rather pushing the customer down the pipe we want them to go down."
Specifically, ANICO is using business process management software from Pegasystems Inc., Cambridge, Mass., which has enabled the insurer to consolidate information from multiple applications and platforms so customer service representatives can provide a higher level of service-more quickly.
Pegasystems "is like a giant piece of middleware," says Kirkham. "It's a great tool to connect a workstation to a multiplicity of different systems and different architectures."
Before using Pegasystems, ANICO's CSRs had to determine which of two policy systems to query for customer data, Kirkham explains. "They'd ask a lot of questions, and they'd have to perform a lot of translation in their minds to determine coverage. Once they found the original record in the system, they'd often have to get out of that system and go into the claims system directly-or get out of that system and go somewhere else to verify the information."
Navigating up and down menus took a lot of time that the customer did not want to spend with the CSR, and CSRs found it difficult to concentrate when they were trying to recall the proper key strokes and pull-down menus to find information for the customer.
"The project was initiated because we were experiencing high abandon rates across the board in customer service," says Kirkham.
In 1999, before implementing Pegasystems, the average abandon rate in the health customer service center was 7.7%. Last year, it had dropped to 0.6%. Similarly, the average speed of answering calls in 1999 was 1 minute and 37 seconds. By 2003, calls were answered in 14 seconds.
All this was made possible by consolidating information for the CSRs, says Kirkham, who describes how the new process works: As soon as the CSR answers the call and enters the customer's name, Pegasystems immediately gathers the relevant data and populates a clipboard, he explains. Policies, coverage and medical terminology also are at the CSR's fingertips.
Prior to implementing Pegasystems, policy forms were kept in a file cabinet. If there was a question about coverage, the CSR had to put the caller on hold and actually go to a physical file cabinet to pull a document. "Now, all they do is click and a PDF document drops down that has all that information on it," says Kirkham.
"CSRs can really be effective with the tools they have in front of them now," he says. "At the end of the day, they're not fried and frustrated. They feel like they've really worked to service the customer because the system has done the heavy lifting of finding the data, finding the policy forms, and applying the business rules."
Upgrading architecture
Improving its claims operation through the use of a Web-based, rules-driven system was one reason why Hastings Mutual Co. decided to implement ClaimCenter from Guidewire Inc., San Mateo, Calif.
The other reason for investing in the new claims technology was to upgrade to a thin-client, Web-based architecture that was more easily distributed to remote adjusters and to outside vendors and other service providers, says Robert Eshelbrenner, vice president of information technology at the Hastings, Mich.-based regional property/casualty carrier.
"The old system that remote adjusters are using is basically bailing wire and a PC-anywhere process," he says. "It wasn't something we wanted to live with for another 10 years."
Hastings is scheduled to be in production with ClaimCenter next month. The company will be replacing its DOS-based system, which was installed in the early 1990s.
The new ClaimCenter technology will enable Hastings Mutual to segment and assign claims and continuously track and manage claims activities.
ClaimCenter also features real-time, multi-party collaboration between different claim handlers; streamlined navigation to external tools; real-time supervisory visibility into individual and aggregate workloads; and flexible exception flagging to act on important claims.
"Currently, claims adjusters are setting up their own claims files," says Ray Rose, manager of claims at Hastings Mutual. "They're doing a lot of preparation work that we want to eliminate."
The other issue, which ClaimCenter will address, is loss assignment. "Supervisors feel strongly about loss assignment. It takes up a lot of their time," Rose adds.
ClaimCenter will enable Hastings Mutual to offload some file set-up tasks from the adjusters to the home office, where losses will be set up and reserves established for adjusters.
"They'll get the assignment right away," says Rose. "Then, they'll do all the normal things a claims adjuster does-putting up notes about what they've done with a file and building activities that are required for a claim. We will eliminate a lot of set-up steps they had to do in the past. So they can focus on adjuster tasks rather than clerical ones," he says.
Behind the scenes
Hastings Mutual also will be able to establish default reserves and consistent workflows that are appropriate to specific claims and adjuster experience. "There are a lot of rules behind the scenes that will help us do a better job of serving our customers," Rose says.
Presenting policy information to adjusters in a more useable format will also make it easier for adjusters to work with customers-and it will reduce training time, according to Rose.
"Today, we train people on both the policy and the claims systems because they need to know all the various codes for limits and deductibles," he says. "It's very difficult to train people on both systems. When they leave after a week of training, they're pretty dizzy with all the information they've had to absorb."
But ClaimsCenter will be the source of policy information as well as claims information. "Part of this effort is to display policy information in a way that makes sense to the adjuster," he says.
Instead of claims handlers memorizing coverage codes, for example, policy information is converted into meaningful data labels-in English. As a result, training adjusters will take less than a day on the new system, he says.
Similarly, HB Group-a subsidiary of Co-operators, a group of Canadian insurance and financial services companies-has implemented technology that enables its claims service advisors to provide better customer service.
In 1999, the insurer established a "full contact center environment," which means call center reps can confirm coverage and provide facilitation services in one call, according to Dan Watchorn, vice president of operations and claims. "We do everything 'once-and-done'-at the time the client needs it," he says.
The next step for the Ontario-based company was to produce efficiencies through the use of business-to-business Internet technology, says Watchorn.
"From my strategic standpoint, if we can reduce the time our claims staff spends on the phone dispatching new assignments, giving extensions on rentals, validating additional auto repairs or extending authority on property losses, it frees up the phones to provide clients more access to our adjusters."
Online collaboration
To that end, HB Group is using an Internet-based application that connects adjusters and service providers online to more quickly resolve claims-from first notice of loss to approval of invoices.
Using the technology, from Toronto-based Castek Inc., claims adjusters can be proactive rather than reactive, according to Watchorn.
"We had already set up the call centers to provide speed and efficiency in meeting client needs at the time the client wanted it, and we reduced the duplication of several people having to touch the claim," he says. "But we still had the old issue of hanging up with the client, then calling the body shop, or calling the contractor and repeating the information to dispatch the assignment to them.
"We wanted to free up the phone lines for client access by reducing the amount of phone interaction and telephone tag that goes on between vendors and adjusters updating each other on the status of a claim," he says.
First introduced into HB Group's Ontario-based call center for auto claims in June 2001, the company has expanded the use of ClaimsPath to include field adjusters, salvage contractors and property contractors.
HB Group's Calgary claims center also is now using the application, and the company is translating it into French for implementation in its Quebec call center.
The results have been so positive that HB Group's parent company (Co-operators) is planning to use ClaimsPath in several other companies under its corporate umbrella.
Specifically, ClaimsPath enables the company to manage vendor and adjuster performance better than ever before, according to Watchorn. Like many insurers, HB Group has preferred vendor relationships. And ClaimsPath tracks individual adjuster performance to determine which adjusters are communicating the value of working with those vendors.
"It has given us a stronger capability internally to look at our staff to see who is doing an excellent job and pat them on the back and reward their performance, and focus on training for those who need more skills in selling the merits of the program," he says.
HB Group also has established specific requirements with certain vendors, which are built into the workflow automation. "For example, we have told one vendor that we expect them to respond to all assignments within 30 minutes after they're sent," says Watchorn. If the vendor has not opened an assignment within 30 minutes, the application automatically alerts the adjuster with a message.
ClaimsPath is providing hard-dollar savings as well, Watchorn adds. "We know there are cost savings associated with eliminating duplication and telephone tag. We also assumed there would be client satisfaction improvement. But those are tough to quantify."
Instead, HB Group looked for increases in referrals to its preferred vendors and lower indemnity costs. "Because we use staff appraisers on the majority of assignments, the impact on indemnity was not as significant as we expected-or as it might be for a company that doesn't have those controls in place," Watchorn admits.
But the company did uncover significant savings in turnaround time at its preferred shops, which translated into lower rental car costs.
"If you can see an average of two days' turnaround difference, and your average rental is $30 per day, there's a $60 savings per file," says Watchorn. "That's concrete evidence of direct-dollar savings. Plus, the client gets back in their vehicle more quickly, and the client is happier."
Indeed, with the evolution of technologies such as the Internet and Web services, technology is no longer an excuse for not working well with vendor partners, says Accenture's Lucarini.
Hard dollars saved
In fact, he proposes that insurers should not only rely on their vendors to help them in the procurement process, they should push work out to them as well. "Vendors have the core competency to procure goods and services. We should put that onus on them if they want to work with us," he says.
If an insurer is paying to replace a policyholder's television, for example, the insurer can submit a credit at a local or chain TV distributor, he explains. "Make it the policyholder's responsibility to go to that store and pick out a TV."
That way, the insurer only has to send a transaction in that person's name to that distributor. "No longer does the insurer have to understand what kind of TV the policyholder had and arrange to have it shipped to their home." The retailer and the claimant can handle that part of the process, he says.
Property Claims Adjusters Can Generate Revenue: MS/B
With 64% of homes undervalued by 27%, insurers are losing premium dollars and policyholders are not fully protected. That's according to Jonathan Kost, claims director at Marshall & Swift/Boeckh (MS/B), citing the results of the New Berlin, Wis.-based company's July 2003 ITV Quality Index.
Claims adjusters can help generate revenue, which can drop to the bottom line, by participating in an insurance-to-value (ITV) initiative, he says. "If you have your claims adjusters-while they're out at a loss location doing a physical inspection-actually perform ITV calculations and pass that information back to the underwriting department, the carrier can garner a more accurate premium and the consumer is fully insured."
In addition, carriers can use analytics to capture data as a claim file is being adjusted and effectively model and propagate best estimating practices throughout the field, says Kost. This ensures adjusters produce consistent, accurate estimates, which reduces indemnity as well as costly supplements filed at the end of the process.
"For insurers that have implemented best practices throughout their adjustment force, we've seen about a four-point improvement in their combined ratio," he says.
Integrated Claims System Provides a High Level of Automation for the "little guy"
With $110 million in written premium, Compensation Risk Managers LLC (CRM) is a relatively small third-party administrator of self-funded workers' compensation programs.
But an integrated claims management solution from Insurity Inc., a ChoicePoint company, is providing the Poughkeepsie, N.Y.-based TPA with a level of automation typical of larger insurers.
Insurity's Pyramid system is integrated with the medical bill repricing engine from Medata Inc., Newbury Park, Calif., and with a case management system that uses IHQ medical protocols from McKesson Health Solutions LLC, Marlborough, Mass.
The integration of these three typically separate systems has enabled CRM to form a subsidiary managed care business-called Eimar-that saves $30 to $35 for every dollar spent on bill review and PPO charges, according to Adam Strong, vice president of claims at CRM. That's well above the industry average of $8 to $9 in ROI, he says.
"A TPA of my size would typically latch onto a regional or national managed care company," says Strong. "But through Eimar, we have a staff of six bill reviewers, and every day, I know how many bills came in, how many were received, how many bills were paid, what the total inventory is, and the productivity of each person."
Eimar bill reviewers are using a different module of the same software that CRM uses for claims management. "They don't have to re-enter information such as the person's name, the doctor, the history," Strong explains. "They just pull up the claim that's already established in the system and review the bill."
In addition, Eimar staff uses the system to document efforts to schedule medical exams. "Adjusters don't need to be told an exam took place, because any time they look at the file, they're going to see it. It's right there in chronological order," Strong says.
As for telephonic case management, registered nurses also use the system. "And they are here on site," Strong adds. "That allows for more direct communication about what action is needed for a particular claim. It's not a referral that goes to the nurse who never sees the adjuster who has no idea who she is and isn't really accountable."
