Integrated Approach to Claims Improves Service, Financial Results

Property/casualty insurers are benefiting from best practice metrics for claim management and the metrics used could be developed further and better integrated into claim operations, according to Towers Watson’s “Property & Casualty Claim Officer Survey." The survey examines best-practice fundamentals for claims, rebuilding performance metrics, and how improved technology and operational adjustments are helping carriers benefit from changes.

“A more integrated approach to claim management can help insurers simultaneously improve customer service and financial results, increasing both policyholder and investor satisfaction,” said Brian Stoll, director, P&C practice, Towers Watson. “Technology investments in this area help insurers better identify and respond to trends culled from data-driven analytics, and make it easier to implement predictive models and best practice enhancements that carriers are developing to improve claim performance.”

Best practices should be updated frequently, according to survey participants, and large insurers are most likely to rethink best practices (67 percent), while small companies are less likely (48 percent).

The benefits of best practice execution varied. Smaller and mid-sized carriers said operational improvement, such as improved efficiency and cycle time, is the top benefit, followed by improved customer service. Midsize carriers added more effective use of specialized/expert personnel to the list of benefits. Large carriers focused on financial results, and nearly two-thirds said improved claim payout discipline is the top benefit.

“In a competitive market, smaller and midsize insurers likely place more emphasis on customer service because it is a significant way to differentiate themselves, particularly in personal lines,” Stoll said. “Larger carriers’ interest in bottom-line performance is probably due to the fact that they already have better operational metrics and place more emphasis on aligning benefits with the cost of initiatives.”

Other survey findings include:

• Claim-handling workflow processes are most positively influenced by technology improvements

• Technology affects most aspects of claim operations and further investments are planned, said nearly two-thirds of respondents

• Investments most likely will be in technology tools that promote operational effectiveness, such as workflow and process improvements (49 percent); and measuring internal performance (45 percent)

• Vendor applications are more likely for recovery identification (35 percent), litigation management (34 percent) or predictive analytics (32 percent)

• 75 percent of large carriers and 58 percent of small and midsize carriers are beginning to use predictive analytics in claim operations. CCOs said analytics contribute to better fraud recognition and response, improved payout discipline and operational improvements

“Predictive modeling applications are growing in claims, with fraud the initial focus, followed by triage. Carriers making the investments are increasingly recognizing benefits,” Stoll said.

Respondents are using performance indicators to track claim performance across loss cost discipline, expense management and operational efficiency, and customer service.

CCOs also said medical bill review, cycle-time analysis and litigation rate are the top indicators used in tracking claim performance for injury claims, and more than 25 percent have introduced new injury operational metrics.

New operational metrics for property/auto physical damage also have been introduced by 20 percent of respondents and include benchmarking/oversight (42 percent), inventory management (29 percent) and triage/assessment mix management (29 percent). The long list of leading indicators for property/auto physical damage claims starts with cycle-time analysis (86 percent) and recoveries (71 percent).