Claims to Tame

Q: What are the biggest challenges insurers currently face in the area of claims management?

A: Steve Wallace, Florida Farm Bureau Casualty Insurance: The biggest problem occurs after catastrophic events, which predominately are located in a fairly compact area, but the claims don't come in all at one time. The adjusters' drive time to get to the sites of all the claims eats up a tremendous amount of time. What's needed is a BlackBerry-type system for delivering claims, which would notify an adjuster as he or she is finishing up a claim that someone nearby has just turned in another claim. This could be done with the assistance of GIS [geographic information systems] and GPS [global positioning systems] so we can assign the claim to the adjuster who is closest to that particular event.

A: Adam Karol, AutoOne Insurance: Fraud, document management and the litigious nature of our society are among the largest issues facing insurers. Fraud has increased, and gathering the intelligence and data to properly tackle investigations has become much more difficult. Incoming bills and correspondence have grown, but our response time cannot. Insurance litigation has increased, especially in no-fault states.

A: Craig Bedell, MapInfo: The challenge insurers face is to provide higher levels of service to insureds to help differentiate themselves from competitors. With disaster situations, it is important to act quickly and smartly, looking for potential fraud and inaccuracies in claims information. For instance, rules engine technologies and modeling help reveal patterns and fraud indicators, allowing claims personnel to focus on claims that have potential for fraud or inaccuracies. These types of tools isolate questionable claims. Insurers also are challenged with claims response management issues in the wake of disasters. Insurance carriers need to be as proactive as possible in the claims process, anticipating and modeling the likely impact of catastrophic events on a near real-time basis and mobilizing claims adjustor networks accordingly.

A: Michael Costonis, Accenture: Claims operations are struggling with the need to balance loss cost, expense and service results, and achieve performance that is durable across market cycles. This challenge is not new, but the environment in which insurance carriers are operating is making this increasingly difficult. Service demands by consumers increasingly are being shaped outside of insurance—people expect full transparency, immediate results and personalized service. On the expense and loss side, claims continue to operate in a chaotic world marked by new claims exposures, variable volume, and changing legal and regulatory pressures.

Q: How are insurers improving claims processing efficiency and providing better service to claimants? What technologies and systems are helping them in these efforts?

A: Karol, AutoOne Insurance: Automation and data analysis can provide a wealth of information on workflow efficiencies, on structure in a claims organization and in accurate reserving practices. Performance management tools that track tasks by product and line, by the time it takes to actually complete these tasks, in calculating workload distribution, workflow effectiveness, and in individual, team and departmental effectiveness facilitate proactive claims management. Imaging and workflow management tools are critical to process and structure flexibility and the execution of expense management goals. Manual, paper-intensive environments lead to inefficient distribution of work. The process of completing cost-benefit analyses and structured workflows are key to running an efficient and cost-effective department. The use of a data warehouse and the creation of reporting dashboards are central to the coordination of data.

Q: What process and criteria should an insurer use to evaluate and select a new claims administration solution?

A: Karol, AutoOne Insurance: In our case, a full evaluation of our current workflows was critical in providing a road map for our claims administration and workflow management system. An outside vendor assisted us in creating a workflow mapping that identified areas of opportunity in the procedures and the structure that automation can address. But a company should be prepared to drive the process, clearly setting expectations for the vendor, which should be responsible for data gathering sessions, programming and the implementation of a system that satisfies your needs.

There are four key functionality points for a good claims administration system: data availability and system flexibility to capture data, evaluate structure, and, if need be, change workflows and philosophy; database solutions to provide the flexibility needed to allow for user-friendly reporting and analysis; flexible internal and external workflow rules ensuring proper routing to the correct associate along with system flexibility for interfacing with other key administration platforms, such as fee-scheduling engines, claim correspondence tools and medical cost containment vendor systems; and imaging and document management systems that are either one integrated system, or, at the very least, interface in real time with one another.

A: Costonis, Accenture: Both the product and the desired outcome should be considered in tandem. Prospective buyers should consult the standard industry analysts—Gartner, Celent, Forrester, for instance—in order to develop their short lists, but should also seek out the customers and service providers to get a complete perspective. We also recommend both hands-on time and on-site customer visits.

Q: How does business intelligence affect claims handling?

A: Karol, AutoOne Insurance: Claims and business intelligence (BI) are strongly linked. Insurers increasingly rely on data and industry intelligence to properly trend and analyze approaches to customer service. As claims organizations evolve, the process of tapping this intelligence through the use of numerous resources will be essential to their survival.

A: Wallace, Florida Farm Bureau Casualty Insurance: Every time there is claim on an automobile policy, it almost always gets coded to the policy by its garaged location. This is inadequate if you're trying to find out information on where accidents actually happen. Perhaps you have many insureds getting hurt in accidents in one terrible intersection in Tampa. If your claims adjuster could stand at the point of that claim with a GPS device and send coordinates to the claims database, you could start aggregating claims information by where the accidents take place. This could dramatically change the loss distributions for territories.

A: Bedell, MapInfo: BI is enabling insurance companies and claims managers to collect and federate claims and customer information in greater degrees than ever before. Analytics, including location intelligence, pattern analysis and rules technology, allow insurance companies to use this information to perform model analysis and make improved decisions. Business intelligence and the ability to analyze critical information to make better decisions is becoming a large part of all insurance processes—from claims management to underwriting to customer service.

A: Costonis, Accenture: There is significant data overlap among claims and underwriting/pricing/risk selection/product development, but systems are typically siloed, which impairs the insurance company's ability to take advantage of the data that it captures. Specific to claims, BI is a key component to refine claims practices and profiles in order to achieve the right kind of results on each claim. This requires detailed data capture, the ability to spin through that data and understand both the patterns that arise and their impact on outcomes, and then a utility whereby claims processes can be refined on the fly.

Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio