Farmers Streamlines Auto Claims Processing

Farmers Insurance Group (Los Angeles, $12 billion in assets) took a major step in improving its claims process when it created the Farmers Circle of Dependability (COD) program in 1992. Though the preferred vendor program, which now encompasses more than 2,000 repair shops, helped standardize its claims handling, many of Farmers' processes remained manual and paper-based. Claims often traveled from department to department, and then from Farmers to body shops to customers, as faxes, phone calls and paper documents.

When writing an estimate, "someone had to look at it, approve it and mail it someplace. Those claims took days," says Bob Evoy, vice president, claims shared services, at Farmers. "We knew doing things manually was not the answer. We needed technology to help us."

Farmers aimed to shorten the time that customers would be without their vehicles. By improving the customer experience, the company hoped to increase customer loyalty.

Farmers evaluated several material-damage management solutions and ultimately chose ClaimsPort, from ProcessClaims (Manhattan Beach, Calif.). A big selling point was the fact that the software could be easily integrated with Farmers' claim processing system and the large variety of third-party estimating software packages used by body shops. More important, the Web-based solution that runs on a Microsoft (Redmond, Wash.) .NET framework also operated on an application service provider (ASP) model, making it faster and more cost-effective to deploy.

In late 2001, the solution was piloted in California. From there, funding was requested to expand deployment. For the past 18 months, ClaimsPort has been up and running across the country. Today, when a customer reports an accident, call center representatives retrieve customer information from Farmers' claims processing system, called the Customer Restoration Network (CRN), record the accident details, make a repair shop assignment in CRN and send information to ClaimsPort, which simultaneously notifies the repair facility.

The repair shop, which also accesses ClaimsPort through a Web browser, receives the assignment and is ready when the customer arrives at the shop. The shop can then upload all the details about the estimate, including photos, labor rates and parts costs, into an electronic file for approval by Farmers.

New Processes

Since automating its claims-resolution process, Farmers has been able to make several organizational and process improvements, according to Evoy. Previously, the company's COD claims processing business model was organized by geography. Now, claims are received centrally in its Oklahoma City office, where they are examined and rated using automated rules.

Before Farmers personnel even see an estimate, it is run through a customized set of business rules that flag irregularities and automatically route the claim to the appropriate company representative. Representatives in the Oklahoma City office handle small, routine claims electronically. They can review and approve minor repairs to shops without involving field adjusters, maximizing the use of those resources. Others are forwarded to specialized work groups.

"What impressed me is that you can take some fairly simple rules and really streamline a process," says Evoy. "It allows us to look at our results and look at the data differently to get new insight, which we could not have done prior to having this technology."

Now, rather than taking days, many claims can be approved and authorized in a matter of hours, Evoy says. "The biggest benefits have been that the process is faster, more seamless and customers see value in it," says Evoy. Surveys show that since implementing the new system and processes, 83 percent of customers rated their experience as a six or seven on a scale of one to seven.

Case Study Closeup

Company Name: Farmers Insurance Group (Los Angeles; $12 billion in assets).

Lines Of Business: Auto, home, business, life insurance and financial services.

Vendor/Technology: ProcessClaims (Manhattan Beach, Calif.) ClaimsPort solution on Microsoft .NET framework.

The Challenge: Automate auto claims processing.