Property and casualty insurers constantly are searching for any and all ways to gain better control over claims and their associated costs. When claim processes consume an average 80 to 85 percent of the operating ratio, it is no wonder that they are being put under the microscope of cost efficiency.

Historically, insurers looking for efficiency gains have treated claim operations — that interconnected sequence of processes taking a claim from the initial report through the adjusting phase and finally to settlement — as a single process. Consequently, they have tried to wrest cost reductions through sweeping changes. Recently, however, the industry has begun to treat claim operations as sums of distinct elements. By examining each claim process separately, carriers have uncovered and capitalized on a wide array of new savings.

A number of significant process improvements have come to light, along with the unsettling fact that current claim management systems frequently will not allow improvements. Insurers using claim systems designed years ago have begun to realize the limitations of their antiquated systems. Data is not available at crucial times, work flow is not streamlined, and effort is duplicated throughout the process. The result has been an increased focus on overhauling the way claims are handled, including formal evaluations of third-party claim management systems and an emphasis on the claim-reporting aspect of this process.