Individuals who have experienced an auto accident or incurred damage to their vehicle often discover that the road to swift claims settlement is a bumpy, winding and volatile one.
Carriers often have failed to go the extra mile to improve claims servicing because manual processing of claims simply prevented it. The information shared between a carrier and the other affiliates in the claims value chain produced a significant amount of redundancy, which resulting in workflow bottlenecks.
But through the implementation of electronic open-architecture claims processing solutions, carriers have been able to accelerate these efforts.
By using a flexible data-exchange solution set that enables real-time communication among a number of disparate back-office systems, carriers have been able to reduce the time it takes to assign a claim from days to hours.
Streamlining efficiencies in the claims processing arena is vital. Insurance industry loss adjustment expenses (LAE) climbed from 12.1% of premiums in 1995 to 14.1% in 1999, according to Cambridge, Mass.-based Forrester Research Inc. The research and consulting firm also found that 48% of carriers surveyed said it took at least three weeks to process an insurance claim, and 46% said implementing technology offers the greatest potential to reduce loss costs.
And the "loss" transcends LAE. Carriers are losing customers due to poor claims servicing. Nearly 90% of property and casualty insurance customers who are satisfied with the speed in which their claims are handled are likely to stay with their existing carrier, according to Accenture, a Bermuda-based consulting firm. Moreover, the expediency of the claim has become a higher priority than the amount settled for the claim.
"Driving customer satisfaction in turn drives customer retention," says Chris Andrews, director of marketing for Mitchell International, a San Diego-based provider of auto claims solutions. "By introducing electronic workflow to eliminate redundant processes, carriers can manage the supply chain and manage it in real time. Browser-based end-to-end solutions-perhaps ones where the carrier has joint ownership-enables the client to activate all or a portion of the applications built within the suite based on their priorities."
These applications run the gamut of claims servicing. Tools are designed for managing the initial reporting of the claim under first notice of loss; assignment capabilities enabling insurers to route jobs to staff adjusters; claim status tracking, enabling insurers to measure, analyze and better control claim cycle time and rental costs; and online CSI (customer satisfaction indexing) reports, which help insurers maintain a pulse on customer satisfaction.
Carriers have changed their approach to claims processing to one that's now viewed as a continuum. Handing a claim off to an auto repair shop once meant that a carrier could wash its hands of downstream responsibility. Now, a carrier tracks the claim to closure.
The reason is that carriers realize that the work conducted downstream by an affiliate is a direct reflection of the carrier's claims-management abilities. Before repair work is even performed, auto insurers work to align their customers with top-rated service vendors that are compatible with a policyholder's individual needs. Executing this requires robust and flexible electronic capabilities.
high-quality referrals
The scenario is all too familiar: When policyholders call to report a loss, they often need assistance to locate services such as towing, car rental and auto body repair. Usually with little or no previous experience from which to draw, an insurer's customers eventually find vendors spread across spectrums of price and quality of service, says Will Fulton, president of Boston-based First Notice Systems Inc., a provider of claims reporting solutions.
But through implementation of a vendor referral program, carriers can control claims costs while at the same time provide customers with a more consistent level of service.
"Client savings can typically be in excess of $200 per claim, which is realized by our ability to rapidly mitigate high-severity losses and by managing costs through the use of vendors that subscribe to specific cost-containment practices," Fulton says. "Initially, our clients are attracted by the cost savings. But these savings are also accompanied by better service: the claimant is provided with high-quality, local referrals."
Often, the efficiencies that occur through Web-based claims processing are fueled by the implementation of claims hub platforms. "A hub allows a carrier to get much closer to the data on a real-time basis to see how the money is being spent at a repair shop that's in their preferred vendor network," says Todd Eyler, senior analyst for Forrester Research.
In 1999, Mayfield Village, Ohio-based Progressive Insurance Co. debuted an electronic claims processing solution that was provided my eMitchell.com, Mitchell's e-business claims processing platform.
One of the applications that Progressive introduced was TotalPro, a network that can be activated by both internal affiliates and Progressive policyholders.
"With our TotalPro Service, customers can get access to a network of carefully selected repair facilities that do high-quality work," says Brian Brylinski, manager of corporate claims for Progressive. "The repairs are scheduled by a Progressive claims representative, if that's what the customer prefers. The program also provides them with priority status in the repair shop, hassle-free vehicle rental, and updates from Progressive on repairs to their vehicle. There's a full review to ensure their satisfaction with the repairs, and a guaranteed agreement with the shop on vehicle repair costs."
Using the system, Progressive claims agents can communicate with other internal affiliates (see story on Pg. 18) on behalf of a claimant to arrange the most optimal claims experience for each individual.
A Balancing Act
Ultimately, the goal of every auto insurer that launches Web-based auto claims services is to ensure the highest level of customer satisfaction while at the same time keeping their loss costs under control. As a result, carriers are gauging customer satisfaction several ways.
One technique is via customer satisfaction indexing (CSI). One of the leading services of such measurement data is Mitchell's AutocheX survey, which provides CSI to the automotive collision repair industry. More than 2,500 collision repair shops and 40 insurance companies participate in the CSI program. AutocheX contacts up to 45,000 policyholder vehicle owners every month to measure post-repair satisfaction of the insurer and the repair facility.
"AutoCheX enables clients to assess the work being performed within the claims value chain," says Mitchell's Andrews. "This data then enables carriers to make modifications within its claims management network to further streamline the claims experience for the customer. It appears to be working because we've been able to enjoy a three-day reduction in claims turnaround time due to effective CSI."
At the front end of the claims cycle, meanwhile, it's critical for claims managers to determine the breadth and depth of involvement that an adjuster must assume on a particular case. Oftentimes, an adjuster is assigned to service what is later deemed to be a "low-touch" claim.
"The key is to get as much data into the hands of a claims adjuster as possible," says Michael Jackowski, partner and chief technology architect for Accenture's Claims Solution Group. "Ultimately, the generation of qualitative data can enable a carrier to keep their loss adjustment expenses flat since the efficiencies within the electronic system prevents overpaying amounts for auto claims."
