Insurance is an important component of modern economic life. The logical outcome of the millions of policies in force today is a proportional number of claims to pay for covered losses.From an operational cost and policyholder perspective, the claims handling process is the heart of property/casualty insurance. It's true that performing risk analysis, selling policies and retaining customers are important issues for carriers.
However, when it comes time to renew policies, homeowners and drivers form their opinions of a company based in large degree on their experience with an insurer's claims process. The ability for insurers to respond efficiently and effectively to a policyholder's claim of damage or loss may be the single most important aspect of their business.
The latest chapter in the evolution of insurance revolves around the prospect of improving the claims equation-from the carrier's perspective as well as from a claimant's. The advent of public data networks, such as the Internet, has provided one of the best means by which an insurance company can directly improve their claims handling performance.
In 2002, this new chapter is all about the prospect of moving beyond the hype of Internet and Web-based business functionality and getting back to the business of insurance. During the last two years, anyone looking beyond the Y2K situation realized the need to extract functionality from the expanding capabilities of the Internet and its associated technologies. And, although the sale of insurance was the focus of insurance e-business initially, it is electronic servicing of the claim that will provide the lasting value for consumers and insurers alike.
Claims handlers and adjusters typically receive new technologies before other staff members. For example, because the claims function has a significant fieldwork component, claims adjusters typically are the first staff members to get mobile devices. To date this has included laptop computers and cell phones as well as personal digital assistants and global positioning system devices.
A majority of the technology provided is focused on improving the ability of the field personnel to communicate with the home office, claims vendors and the claimant.
This is a distinct progression from the previous generations of automation within the insurance industry. The first generation of automation was the introduction of computerized data processing that impacted all operations areas from policy processing and underwriting to billing and claims.
Indeed, the introduction of computerized data processing prompted an attack on the hand processing performed by each area's clerical staff and provided more consistent reporting. The impact on field and remote workers was the advent of standardized forms for data entry and the delivery of the resulting reports. The primary means of communication with associated claims parties was surface mail, supported by telephone and facsimile if the agent or adjuster could receive a fax.
Balancing the Equation
From a carrier's perspective, one of the most important ways the IT department can empower the claims process is to invest in e-enabling infrastructure.
The rush to get something out on the Web is over; now is the time to execute strategic plans and follow architectural standards. In the worst case, a solid IT infrastructure must allow for core system enhancement or integration with new customer-facing solutions. This often means a significant middleware solution that provides near-term success, but can delay upgrades and rewrites needed to succeed in today's financial services market.
A more desirable situation would be to use object and component-based design to replace legacy applications and build flexibility and e-enabled mechanisms from the start.
To be successful in today's evolving financial services climate, insurers need to provide the best and most useful tools to their agents, adjusters and any other claims intermediaries. Internet browser-based claims applications (thin clients) enable claims professionals to access key systems without the need for heavy-duty processing power. Such thin client systems can be accessed via any Internet terminal, and now on Internet-enabled devices such as cell phones, personal digital assistants (PDAs) and pagers.
Expecting better communication
Policyholders expect better communication of claim events-from the first notice of loss, to status updates on the progress of a claim, to the payment of the claim. They recognize that the Web is turning out to be an enhanced means of communications and will increasingly use it as technical, cultural and business barriers fall. Policyholders need to have the flexibility to reach carriers by whatever means they choose, but should always get the same information regardless of the channel.
The concept of e-claims is all about connecting the technology of modern claims handling to the broad communications and information processing capabilities of the Internet. In other words, it is the concept of moving claims into the e-business world.
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