Picture yourself in the early 1900s. You own a horse-drawn carriage but you're frustrated with the slow, bumpy ride. So you invest in the latest wheels and bearings for less rolling resistance. You buy modern suspension to cushion the potholes, and you say goodbye to old Nellie and get a friskier steed. Now you're going a little faster, with fewer bumps. You're feeling good until a "horseless carriage" whizzes by, leaving you in the dust. You realize your expensive improvements haven't helped you much.The insurance industry finds itself in a similar situation with claims. Insurance companies have re-engineered claims processes, replaced legacy systems, installed imaging systems, and implemented business process management tools and workflow systems. Despite the millions spent, those efforts have rarely delivered significant improvements in productivity or slashed claims costs.

When it comes to insurance claims technology, the industry is still trying to reengineer a horse-drawn carriage rather than transform claims processing into a high performance automobile. No wonder insurance executives feel so frustrated with their claims initiatives.

It takes an entirely new perspective to change the "claim game." When refining the claims process, for example, faster might be better. But the ideal state is not just fast.

The ideal state also has consistency in claims handling and offers a high-quality customer experience.

The common flaw in past efforts may arise with the traditional approach: Focusing on technology first rather than starting with an analysis of what customers and employees actually do and should do. The "technology first" approach is akin to putting the cart before the horse.

Technology helps companies do things faster, but the opportunity to do things better is often overlooked. When insurers view the process from the people perspective, rather than through the technology lens, challenges and opportunities come into sharp focus, uncovering competitive and productivity advantages hiding in plain sight.

* Efficiency: Large numbers of people performing complex tasks breeds inefficiency. That's what confronts every claims organization. The challenge is to handle claims efficiently where inefficiency abounds because of a lack of centralization as well as jurisdictional idiosyncrasies, employee turnover and ever-changing corporate strategies. Inefficiency results in financial leakage-wasted time and higher costs. That keeps an organization at a competitive disadvantage. Typical solutions have included attention to specific KPIs (Key Performance Indicators), but KPIs have failed to solve the underlying efficiency challenges presented by large and complex claims organizations.

* Consistency: "Pay what we owe, nothing more, nothing less." That's the great claims rallying cry. It's just another way of saying an insurance company wants every claim to be handled in a consistent way. Any insurer CEO, CFO or claims executive will admit that what keeps one up at night is whether a claim was mishandled in a way that could lead to a multi-million dollar error. Inconsistencies in claims handling could have a 2- to 3-point impact on a company's overall combined ratio.

* Quality: While it's important to be efficient and consistent, insurers must deliver quality service. The claims department delivers on the promise that the insurance company has made to its customers. It's an opportunity to win a customer for life (or risk losing one). Insurers must provide a claims experience that delivers on the promise of every insurance contract-to restore an insured's life to order in both a cost- and time-effective manner.


Every claims organization has a small group of outstanding employees who work more accurately and faster than the rest. Those employees figure out "work-arounds" and other unofficial procedures that enable them to stand out. They know how to get information immediately and use it effectively. Often, they are long-standing employees who are experts at navigating complex systems and processes.

Rather than dreaming about having an office full of those people, claims managers should observe and understand why the super-employees' methods work so well. What's the secret of their efficiency? Using technology to replicate those best practices and shortcuts, as well as consistently guiding all employees through the process, can transform every employee into an insurer's best employee.

Only when a company understands best practices and views them as the norm, rather than the exception, can management leverage technology to full potential for a new and improved process that delivers efficiency, consistency and quality. The secret to claims process improvement and technology implementation is in starting with customers and employees first, taking a fresh view-rather than thinking in terms of "how we've always done it"-and only then looking to paradigm-breaking technology to make the leap.

Brian Cohen is president and chief executive officer of Clear Technology.

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