Insurers Improve Claims Process Through IT Alliance
New Playbook
Gaining that mastery has proven elusive for many carriers because traditional quick-hit approaches to improving claims operations are not adequate for creating durable competitive advantage, according to Michael Costonis, the Philadelphia-based executive director of Accenture's global claims practice. "We have seen changes around the fringes, through process-reengineering and tactical automation," he says. "But the traditional playbook is not going to answer the bell -- you can't quick-hit yourself to greatness in this function."
Costonis argues that carriers aspiring to long-term competitive distinction need to thoroughly reevaluate their claims operations and achieve excellence in four key areas: information access, claims segmentation, organizational flexibility and human performance.
By information access, Costonis refers not only to doing a better job of capturing information but also leveraging it across claim files and subjecting it to analysis. "That capability extends outside of the claims function itself, back into risk selection, pricing and underwriting," he notes. Micro-segmentation of claims enables insurers to drive differentiated service, loss costs and expense results, Costonis adds.
Organizational flexibility refers to reenvisioning the claims operating model in a more open and extended fashion. "It's a matter of asking, 'Where am I located? Am I taking advantage of scale where I need it? Do I have the ability to push non-value-added work into work centers that give me the right unit cost per claim?'" Costonis explains.
Perhaps the most fundamental challenge that carriers face with regard to Costonis' vision is that of maximizing the performance of claims professionals. One aspect of the problem is the blunt demographic reality of an aging insurance workforce. That is compounded by the inability of insurers to attract new blood. As Costonis puts it, "There is a talent time bomb within the claims workforce."
The metaphor is intended to instill a sense of urgency, but it should not make insurers despair. On the contrary, it indicates how an apparent obstacle conceals an opportunity, in Costonis' view. The future generation of professionals will be oriented to real-time communications, transparent processes and social networking technology. By adopting this orientation to the design of the future claim professional's job, insurers will simultaneously attract new talent and achieve a claims service level that meets contemporary consumer expectations, Costonis says.
In addition to recasting the claims professional as more advisory than administrative in approach, this also means equipping those professionals to work in a better way. "It means taking low-value-added activities to a lower-cost center or automating them," Costonis elaborates. "It means providing [claims professionals] with the ability to be direct with the customer, sharing information on a real-time basis and being able to solve problems at the point of need."
Some carriers have begun to excel in one or another of the four areas, according to Costonis. But, he says, Accenture is yet to come across a carrier who has mastered all four. Still, Costonis notes, "Whether in purely financial terms or from a service perspective, there's not a whole lot of discussion that needs to be had about the value that claims can deliver -- the bottom-line impact is undeniable."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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