To be successful, claim organizations must ensure that each claim is handled by exactly the right number of touch points to minimize loss adjusting expenses (LAE) while not adversely impacting indemnity costs. In some cases, this may result in no touch points at all. For others, there may be the need for many different handling points. The challenge is to be able to decide on proper claim handling at the earliest stage possible. It is imperative to identify claims that may look very similar but require dramatically different handling because of subtle differences.

For property and material damage claims, the most sophisticated of these systems incorporate analytical intelligence to route claims to the correct resources with mobile capabilities such as GPS and high-speed wireless connections to a mobile workforce that is able to operate in a more streamlined manner. Real-time assignment and dispatching can create a truly dynamic and efficient daily routine. The mobile claim professional is not only better able to service a claim, but is also always ready for the next claim. In addition, the capability to communicate work results in real-time results in quicker claim processing and diminished cycle time. An added bonus of this approach is that with increasing fuel costs, optimized routing is becoming a desired functionality.

More sophisticated assignment routing creates the ability to process claims in a semi-automated manner. Rules and a workflow engine can be applied to ensure that the appropriate claim resource handles the claim at the right time. For certain types of claims, this can ultimately lead to no-touch processing. In the past, the no-touch or straight-through processing (STP) workflow model was reserved for simple claims, such as those involving glass damage or towing. However, this model also can apply to other, more complex types of medical, disability, and commercial claims.

Going Paperless

Another area where claim organizations are achieving significant value is by incorporating robust imaging systems. These systems enable a claim organization to truly become paperless. The benefits of these types of systems include a reduction in paper and postage costs, reduced cycle times, and more efficient claim processing. An additional benefit that cannot be overlooked is the capability to retrieve claim documents with relative ease. This makes the distribution of documents for auditing or counsel review both straightforward and timely. In many circumstances, being able to reproduce an original document was otherwise impossible because of annotations made during the normal course of events. With an imaging system, however, the capability to annotate directly on the electronic version of the document enables one to view the original intact.

Involve the Customer

The last major area of opportunity for achieving a positive ROI is customer self-service. Given the reliance on the Internet in everyone's daily lives, customers are becoming more adept at managing their accounts online. This extends to the claim process. From reporting a loss online to interacting with claim adjusters throughout the process, to checking on treatment options, medical bill payments, or vehicle repairs, the customer expects to be an active participant in the claim process.

A great deal of this interactivity is to make basic information more readily available. For instance, claim organizations can make information available online to the customer who traditionally has received this data over the phone or via regular mail. By doing something as basic as providing claim status in more granular terms than “open” or “closed,” insurers are teaching their customers to be better educated consumers and understand what is going on with their claims. This approach can also reduce the time involvement of the agent or broker in claim handling, especially for small- and medium-sized business accounts.

It is important to note that in order to provide the greatest value, information to educate the consumer must be presented alongside the claim information. This is because most customers do not file a claim very often. As such, there is an educational need that must be addressed for each and every claim. The Internet is a perfect medium for this.

Customer self-service extends beyond the loss participants. The extended enterprise — made up of business partners and service providers — is becoming increasingly proficient in technological solutions. This, coupled with better standards for communication, enable claim organizations to leverage the customer self-service infrastructure and incorporate the extended enterprise into the mix. By doing this, claim organizations can streamline administrative tasks — such as invoicing and payment processing — by shifting the onus to the vendor to manage those items.

If the policy customer service group provides self-service, then it is important that this same infrastructure should support claim self-service. For instance, a customer should be able to not only manage his policy, but also gain access to the claim self-service area with the same user ID and password. Anything short of this will not be a seamless experience for the customer and can thus end up doing more harm than good.

Expect Challenges

Once the decision has been made to invest in new claim technology, the greatest challenge is effectively managing the sheer magnitude of such an endeavor. A key to successful implementation is rigorous project management governance, adequate resourcing — both from the technology and business functions — and developing a clear communication strategy.

Many times, these implementations have failed because the human side of change is overlooked. The failure is not so much a result of an inadequate system, but rather underestimating the impact to the organization. Experienced staff members who have been operating one way for many years are suddenly expected to learn not only new systems but new processes, as well. This can be a daunting task. Without the right level of staff buy-in and support, it can lead to problems down the road.

Finding the ROI

It should be noted that the ROI associated with implementing any of the aforementioned systems can be significant. Saving just one point in LAE or indemnity costs generally exceeds the required investment in the new technology by a considerable margin. Because the development costs can be significant, obtaining funding can be difficult without a well-documented business case and strong commitment to change on behalf of claim management.

For claim processing systems that are full-featured, such as those providing a paperless environment, no-touch processing capabilities, customer self-service, and so on, favorable ROIs can be achieved from the related reduction in head count as well as the cost savings attributed to a paperless environment.

ROI is also captured by the infusion of expert knowledge into these sophisticated systems. This not only enables the systems to perform better, but also provides a hedge against the industry-wide issue of losing staff knowledge as the workforce turns over. By having much of this knowledge within the systems, the claim organization can bring new staff on-board more quickly. An added benefit is that newer employees will be more interested in working at an organization that has robust, cutting-edge systems to support their work versus a company with antiquated processes and systems.

In addition, the increase in customer satisfaction attributable to a more streamlined and efficient organization manifests itself in increased customer retention. Similarly, third-party claimants who have had a pleasant claim experience are more prone to switch to the carrier the next time they are shopping for insurance. Beyond this, in this day and age, experiences are published on blogs and message boards. Just as bad service can have a detrimental effect, great service can have a very positive effect.

So, where does a company start? Unfortunately, that is not an easy question to answer. It is best for an organization to first assess its technology maturity across all areas of the business — and not just in the claim realm — to set an overarching strategy. In doing this, a company can identify both short-term and long-term goals based on a detailed cost-benefit analysis of new technology options. In addition, identifying key success criteria will ensure that progress is being monitored.

Depending on the maturity of the technology within your claim organization, you may have already begun initiatives to leverage the latest technological advancements. The bottom line is that smart investments in technology can lead to significant long-term payoffs. Claim organizations that recognize and exploit the potential of these new technologies will establish the necessary foundation for a competitive advantage and long-term success.

Mark Poisson, PMP, is director of the southeast region for TNC Management Group, a management consulting and project management firm that works extensively with insurance companies. He may be reached at 888-821-1115, [email protected], www.tncmanagement.com.