Source: CEA Statistics: The European Motor Insurance Market, 2007

To elevate the promise of claim transformation, carriers must extract and exploit value from claim information across three levels:

? The claim adjuster level: First, using claim information to master the core claim process and enable adjusters to operate efficiently. The combination of governance rules and adjuster expertise, focused on indemnity expenditures, drives greater effectiveness.

The claim operation level: Second, using claim information to drive greater operational efficiency gains and total indemnity expenditure management. This requires harnessing intelligence from a great deal of market volume information to make decisions, as well as implementing changes more quickly in the claim environment, including the extended claim supply chain. By leveraging real-time data, carriers can make drastic improvements in salvage/subrogation, litigation management, vendor management,and fraud management.They can also begin to unlock value through sustainable and reliable optimization of indemnity expenditures.

The enterprise level: Third, using claim information to facilitate improved front and mid-office capabilities, and as a pervasive enterprise asset that supports predictive analytics, operational decision-making, and enterprise financial reporting. This is undoubtedly the most difficult step to achieve.

As claim organizations pin down the operational aspects of their business, they can spend more time ensuring that they deliver on their customer commitment, as well as better managing total indemnity expenditures. They can use claim information to collaborate with the product, distribution, procurement, and various other teams across the organization while they position their products, services, and brand more distinctively within an increasingly fluid and more demanding marketplace. After all, one need only pay attention to the airwaves to see that claims are already being positioned as a differentiating brand platform for many North American personal lines carriers.

Delivering on the Endeavor

Understandably, some carriers are focused solely on the replacement of claim technology necessitated by retiring support, untenable total cost of ownership, or reliability issues. Nonetheless, I contend that the software-only focused investment leaves tremendous ROI on the table if it is not treated (at the very least) as the creation of the engine to generate a more evolution-based transformation.

As carriers endeavor to transform claim operations, there are a host of technical components to consider. In addition, there are a number of technologies that carriers should evaluate to help handle core claim processing, enterprise integration (such as document management and data integration), business information management, and risk management.

However, while technology continues to be a major influence on claim transformation, people, process, and financial management are critical to business value realization.Rather than engaging in a technology conversation, carriers must approach transformation as a business capability conversation designed to align technology, claim, and enterprise data with strategic intent. Thus, before diving headfirst, carriers need to define exactly what they want to achieve over the course of their claim transformation.

In our experience, there are five critical success factors to realizing value from claim transformation:

1. Prioritization - By defining the target state for claims, the enterprise can understand and prioritize the specific claim capabilities that will further the strategic intent of the enterprise. Frankly speaking, this is an exercise in honesty. It is impossible to be best in class in all capabilities; it is just too expensive and difficult to sustain. By targeting and prioritizing those business capabilities that best support the organization's intent, you will be able to lay out a reliable roadmap to achieve value for the organization.

2. Predictability - Predictability is, in part, achieved by using methods that consider business capability as the primary driver of program planning and management. It is also achieved by leveraging the most robust teams in the market to enable those capabilities throughout the claim transformation journey. Experience is critical to success here.

3. Pace - The marketplace has proven that by fully utilizing available tools, assets, methods, and global delivery resources, carriers have accelerated the pace of their program implementations. In addition, our experience shows that at critical points in the transformation program, there are opportunities for laser-focused efforts targeting indemnity expenditures that create early payback and learning regarding the capabilities required to win.

4. Performance - Total cost of ownership is critical. Claim transformation must focus on the long term payback for the program. All too often carriers approach these efforts as software implementations. This leaves two components of future flexibility vastly unaccounted for: upgradability and agility. While pace is important, it is critical to establish a robust solution with an appropriate level of business understanding. A primary reason for making these investments is the creation of a reliable, scalable, and flexible platform. If the architecture and underlying design factors are not well understood, the ROI will be diluted by increasing complexity over time. It is also critical that the solution enables the extraction of information from which the organization (within claims and across the enterprise) can make better decisions regarding the advancement of capabilities and operations.

5. Payback - The critical measures for claim transformation cannot be based on the turning of a technical screw. The effort must provide payback in the following areas:

? Increased net written premiums, achieved through retention and acquisition based on the brand platform.

? Reduced loss adjustment expense, achieved through operational efficiency, flexibility over time, and improved workforce management

? Reduced loss, achieved through an increased adjuster focus on appropriate indemnity expenditures, and an industrialized focus on external adjustment and replacement expenditures

? Improved enterprise risk management, achieved through a focus on fraud, risk control mechanics, product and pricing, brand positioning, and compliance and regulatory issues

Claim transformation will continue to be a strong focus for carriers over the next few years, and with good reason. By making this investment with a claim transformation mindset as opposed to simply a claim technology mindset, carriers can unlock value by leveraging information to drive significant improvement at all points in the value chain.