Virtual Roundtable

I&T: What are the primary challenges insurers must overcome in claims management?

A: Adrian Brown, CIO, Canal Insurance: Process deficiencies are the biggest challenge for claims management and the one challenge that can be best addressed by technology. Leakage is the big word nowadays in the claims department. Leakage means that we are losing money and time by not fully processing a claim in a timely manner. With all of the steps and documents that are part of every claim, there are too many chances to miss something or to not resolve something at a critical time that ultimately will end up costing more money and potentially open the door for bad-faith claims and ill will. Claims need to be addressed quickly and processed according to the standards and policies set down by corporate management.

A: Ron Dudley, vice president, ACORD: There are various challenges in the area of claims management due to the high number of processes - initial reporting, coverage verification, claim number and adjuster assignment, claims adjusting and settlement - that are involved in handling claims. Many of these processes are paper-driven, which adds significant delays to the overall cycle time as well as the potential for introducing errors. Even when some level of automation is deployed, there still exist numerous steps in the process where information is entered into one system, then printed, then re-keyed into another system, either within the same company or by a trading partner. Processing delays and error handling directly contribute to customer dissatisfaction and increases in overall processing costs. Additionally, those companies using paper-based systems will have a real challenge to implement changes to ensure protection of insureds' private information to conform to recent federal privacy legislation.

A: Bryan Murphy, chief claims officer and senior vice president, Farmers Insurance: Internally, the constant challenges are speed, ease of doing business, fairness, accuracy and consistency. These matter most to us. Externally, there are more frequent institutional attacks on insurance companies, and the whole industry is more subject to attacks today. The trick in the insurance business is to do two things: The first is to pay the right amount on a claim - including timeliness, accuracy and efficiency. And the second is to give the customer an experience that, under the circumstances, is as good as it can be. Most claims departments do one or another. Some are very good at efficiency and paying quickly and accurately, but don't have the customer experience piece at the right level. Others are good at the customer experience piece but need to charge more on the underwriting side because they tend to overpay their claims. The trick is to do both.

I&T: Where are the opportunities for improvement in claims processing? What is technology's role in achieving these improvements?

A: Gary Givler, assistant vice president, headquarters claims, The Cincinnati Insurance Companies: Because we have built expertise in responding to claims promptly and personally, distributed operation offers great opportunities for time savings and teamwork. It requires the ability to change to a totally virtual file. The standardized claim file returns are significant when considering the master data control, operational visibility, purchasing savings, disaster recovery benefits, auditing standards compliance and financial processing improvements that can be realized. This change to a virtual claim department would not have been possible three years ago but can be realized now thanks to recent development.

A: Brown, Canal Insurance: The biggest opportunities for improvement are in speed and accuracy. Service is improved by improving both of these. Technology allows us to monitor all of the steps of a process and measure them against the standards specified for that type of loss. Ensuring that the claimant is contacted within a set amount of time and escalating that task to a supervisor or a special team can be accomplished through workflow and decision-support systems. Making sure that documents are complete and logically consistent is another area that technology can accomplish. Giving the adjustor and his or her supervisor the tools to accomplish the jobs is technology's task.

A: Dudley, ACORD: There are several opportunities to improve claims processing to eliminate delays and errors due to re-keying of data. Data must be entered only once, then passed electronically from system to system, be it internally or externally. This straight-through processing will have a positive impact on processing time as well as elimination of data errors and, through the use of encryption technology, provide the required level of protection for private information. The use of industry standards to move data along the insurance value chain - from brokers to carriers to reinsurers - will ensure data quality and timely processing. Additional benefits can be obtained through the use of document management technology that provides simultaneous access to documents that will enhance the claims adjusting process.

I&T: What are the key claims management-related technologies for insurers?

A: Givler, The Cincinnati Insurance Companies: While some may not consider flexible project management as technology in the purest sense, it is for us the cornerstone of technological change. The technological building materials of the new claims-handling environment then become imaging and document management; high-speed access; information integrity and security; mobile/wireless computing; fraud analysis; bureau reporting automation tools; digital media; relationship management; and business intelligence/data warehousing.

A: Brown, Canal Insurance: The key claims management technologies are workflow, decision support and imaging. Workflow to make sure that the requisite tasks are completed accurately and on time; decision support so that as information comes in, the correct action is taken; and imaging so that everything the claims person needs is at his or her fingertips when needed.

A: Murphy, Farmers Insurance: The key claims management-related technologies insurers should consider include advanced rules engines - those with hundreds of rules that can work together at the same time. They can go a long way with respect to service, speed and accuracy. What management always needs is information, and if technology can bring that in real time, that's huge.

I&T: What issues might impact claims management in the future? How will technology help insurers respond to these issues?

A: Givler, The Cincinnati Insurance Companies: September 11, 2001, taught Americans that we are vulnerable to disruption of U.S. Mail-based benefit delivery systems and that we must develop new ways to survive the crisis in confidence that follows such events. EFT (electronic funds transfer) transactions offer us a practical alternative. System-based claims processing can help business continuation by preserving and distributing knowledge. New requirements set by the Sarbanes-Oxley Act are given credit for collapsing financial processing time frames, but there was a need for speed long before recent legal decisions. Technology offers a means to protect operations, provide time-sensitive communications, enable mobile workers, automate responses, manage service providers, process real-time financials and provide more direct access to services.

A: Dudley, ACORD: Claimants want their claims to be fairly settled in a timely manner. Claims processing involves many participants with the need for timely access to claims documents and data technologies (e.g., document repositories, data standards) to provide widespread access to authorized trading partners for information sharing - these things are just beginning to be deployed. The use of mobile computing via tablet PCs and other personal computing devices will also be deployed to provide on-location information to expedite the data gathering process. Adoption of these new technologies will fundamentally change the way claims are processed and the entire end-to-end processing will be streamlined to ensure information is available when it is needed. The end result will be faster processing and satisfied customers.

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This Month's Experts

Adrian Brown, Chief Information Officer
Canal Insurance, Greenville, S.C

Ron Dudley, Vice President
ACORD, Pearl River, N.Y.

Gary Givler, Assistant Vice President, Headquarters Claims
The Cincinnati Insurance Companies, Cincinnati, Ohio

Bryan Murphy, Chief Claims Officer, Senior Vice President
Farmers Insurance, Los Angeles, Calif.