In late 2013, we discussed claims audits as a way to update and improve claims programs at p&c insurance organizations, beginning with the September 2013 article titled, "Why Auditing is a Springboard to Cost Reduction."

After all, one of the most important outcomes of effective claims management is to reduce claims costs and expenses to the lowest reasonable values, while adhering to the legal and ethical requirements inherent in good faith claims handling. 

We also began a discussion about some of the steps involved in auditing workers' compensation, liability, and property claims. However, claims audits represent just one of the many components of a quality assurance (QA) program that must be implemented to not only maintain but also improve the claims-handling operations. The size, scope, and complexity of QA programs can differ significantly, depending on:

• Size of the organization
• Lines of business
• Geographic spread of the claims administrator
• Training program for the claims staff
• Experience and expertise of the claims staff
• Structure of the program—for example, claims are managed by insurers or TPAs versus self-administered.
• Extent to which vendors are used
• Client mix that you target
• Other market-specific and industry issues

Development of a comprehensive QA program, however, is beyond the scope of this article. Rather, in this article, we will focus on metrics and evaluation methods that can be used on an ongoing basis to augment the claims audit component of your QA program.