Beginning with the Frontline

Claim-file handlers are under constant pressure to close files, which often leads to shortcuts or oversights in loss fact development that is central to the overall outcome of the adjustment process. For example, when reviewing claim files for recorded statements, my experience has been that the overwhelming majority of files fail to contain documented basic fact information from the key or central parties to the loss (e.g., insureds, claimants, and witnesses), such as in claims involving bodily injury or potential fraud. In one instance, several thousands of dollars of personal property were alleged to have been stolen from the policyholder's parked vehicle while they were having lunch. The file did not contain a statement that detailed why the items were in the vehicle, who the owner was having lunch with, whether the restaurant provided valet parking, etc. There were insufficient facts documented within the claim file upon which to support payment.

When information is available, examination of the quality of the content often reveals that most of it, if not all, is fact deficient. In other words, there is not a whole lot there to help the adjuster understand who did what, where, or when. Questions are asked but not answered, and key questions are never asked in the first place. Whether it is first-party property, third-party bodily injury, or any other line of loss, the claim handler still must know certain basic information regarding the insured's background, financial, insurance, and medical situation.

Beyond dates of birth, what about employment history, including the exact nature of what it is he or she does? What about witnesses? Were there any and how did they happen to be there at the time of the occurrence? What specifically did they see? It is about being curious enough to drill down deep enough to gain an understanding of what exactly happened. Somewhere along the way to cost efficiency and management by fast-track benchmarking, the inquisitive nature of the claim professional seems to have been lost, or at minimum it has become significantly diluted.

Supervisors and a number of managers are focused on numbers in and numbers out, meetings, and an ever-increasing number of time demands. This all culminates to leave little time for evaluating the thoroughness of the claim handler's work, or the appropriateness of the settlement recommendation. Instead, the file winds up being passed along, headed towards payment, which as I stated earlier, can be costly.

Too often, the obvious is passed over or superficially addressed in the name of efficiency, which can lead to erroneous coverage decisions or potential over payments. Claim handlers need to stop and ask the pointed, crucial questions and doggedly pursue the answers. Supervisors should resist the urge to place a stamp of approval on claim files that lack factual details simply for the sake of expediency. They should wait until the necessary questions have been asked and answered to their satisfaction. Will this slow the process down and create a backlog? It very well may in the beginning. In the long run, however, it will develop a consistent, valuable core skill.

Environment of Boundless Curiosity

Pointing fingers at organizational weaknesses or taking cheap shots at management is not the goal. It is about identifying what used to be an important element of claim handling and calling attention to the need to revisit and promote curiosity as a way of doing business within today's claim organizations. While reviewing claim files, I am often left with the impression that claim handlers are apologetic for having to ask questions, or are uncomfortable enough with the procedure that they speed through the questions without really listening to the answers. There also is concern that the advancement of technology, lack of training (both initial and on-going), and an aging workforce will result in a claim profession of processors who do not recognize the value or importance of curiosity in the performance of their work.

Claim management needs to nurture active and creative minds. Distance and distinguish your organization from the competition by creating an environment of curiosity. Ask the tough questions and make sure you get factual answers that facilitate decision-making. Once you begin taking steps to emphasize consistent, fact-based decision-making facilitated by thorough questioning, you will see improvement in investigation, reserving, and case evaluation. This will lead to the development of settlement opportunities and help optimize payouts.

Remember, although curiosity killed the cat, satisfaction brought him back…to be killed eight more times, which sounds a lot like a claim department!

Paul Swank is president of Swank Consulting Services, a firm that provides claim solutions to the property/casualty industry. He may be reached at www.swankconsultingservices.com.