With the insurance industry, one moment of impact-whether it's two vans, two workers or two ships-can initiate a lengthy reporting trail weighed down by paper handling and delays. The first notice of loss, which carriers receive from agents by phone, fax, or Internet, starts the trail.
The St. Paul Cos., with 2001 revenues of nearly $9 billion, recognized the efficiencies that automating the receipt of first notice of loss could bring. The company writes commercial coverage for property and liability insurance and non-life reinsurance globally.
Depending solely on independent agents for sales, St. Paul will be the first carrier to implement first notice of loss in real-time working with IVANS and Applied Systems Inc. Having an insurer of The St. Paul's breadth collaborate on this project broadens the scope of the program, and lays the groundwork for widespread industry implementation.
The St. Paul is participating in the pilot program because executives see the potential for business opportunity in a technological solution. The St. Paul wants automated first notice of loss processing in real-time to regulate workflow, improve data quality and make doing business with the company easier for independent agents.
As things stand, too many agents are batching and faxing loss notices to The St. Paul in the late afternoon or evening, making it difficult to staff effectively and causing unnecessary backlogs and delays.
In addition, data re-entry and manual handling increases the potential for data error and costs for the company. For the agents, this can result in service delays or errors in dealing with insureds.
Today, The St. Paul receives about an equal amount of loss reports by phone and by fax, although Internet reporting is increasing significantly. Average loss report times range from eight to 15 minutes, depending upon the complexity of the loss reported. Workers compensation is the most complex.
The St. Paul believes it can reduce the cost of each first notice of loss transaction by as much as 50% and reduce the number of touches and hand-offs in the claim assignment process.
This will result in a much more streamlined and efficient workflow, save time, decrease errors, eliminate the need for corrections and reduce costs for the carrier. And, there will be cost savings for agencies, with improved customer service and the reduction in time required working with the carriers on inquiries, error corrections and clarifications.
IVANS' Transformation Station is pivotal to fully automating first notice of loss processing in real-time. With it, agents can enter claims data into their agency management systems and send the data to carriers in real-time-they never have to leave their own systems.
Transformation Station will ensure that The St. Paul receives the exact data the agent entered. Therefore, agents will be able to enter data one time, and feel confident that crucial street addresses, for instance, won't have their numbers misread or accidentally transposed at the company.
Agent submissions-free from additional errors brought about by multiple entries and handling-pass through Transformation Station, where they are "transformed" into ACORD XML standards.
Systems at The St. Paul and other carriers read the XML data and quickly translate the transformed data into the company's proprietary claims system.
The St. Paul can then distribute the data electronically inside the company, whether to a supervisor or an adjuster. Additionally, the system automatically produces and sends the agent vital information, such as the company's acknowledgement or claim number.
Carriers have the flexibility through Transformation Station to return additional comments, such as the adjuster name, if that can be assigned and produced in real time.
A handful of independent agents have been selected to participate initially. In order to participate, agents have to be using Version 6.3 of Applied Systems' agency management system, with all patches.
The ability to streamline the first notice of loss process and realize savings will not stop with Applied agents. IVANS will assist St. Paul and other carriers in rolling out the program to agents using other agency management systems, such as AMS or DORIS, as real-time first notice of loss processing is integrated into those agency systems.
One advantage of Transformation Station is that it will be transparent to carriers that data is coming from agencies with different agency management systems.
Transformation Station will convert the transaction into a common ACORD XML data stream regardless of the originator. This alone produces a savings for carriers and agency system vendors-one project versus a one-off project with each carrier and vendor system.
Bringing it together
Integration is an IT concern that all carriers share. For The St. Paul, the big challenge was data mapping. Its ClaimWorks first notice of loss system is extremely specialized and highly tuned to a commercial carrier's unique data capture needs.
It was especially important to St. Paul that the data entered into the agent's system would flow into the appropriate data fields in the ClaimWorks system exactly as it had been entered. There will always be "exceptions" that might not translate, and these will be detected during the testing phase so that agents can be trained to report "exception" data in the comments section, ensuring that vital information will not be lost in the transmission process.
IVANS estimates that the program could shrink insurers' first notice of loss processing time by as much as 50%, and the reduced manual handling would bring similar cost reductions.
With approximately 250,000 loss notices submitted to The St. Paul each year, the benefits of a program that minimizes manual handling, streamlines workflow, improves customer service and cuts costs promises to be dramatic.
The St. Paul plans to evaluate the initial rollout extensively, analyzing gains in internal efficiencies, time spent today versus improvements with the new program, and customer satisfaction from their agents.
Agency reaction to implementing first notice of loss, and other transactions such as quoting and inquiry, in real-time with Transformation Station has been phenomenal.
By using ACORD XML and IVANS Transformation Station for real-time electronic transactions, The St. Paul and Transformation Station is at the forefront of technology in the insurance industry. As industry leaders implementing current standards today, they will realize the benefits of the technology and lay the groundwork for others to follow.
Janice Sheffield is divisional vice president at IVANS Inc. Terrie Morrison is director of organizational effectiveness at The St. Paul Cos.
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