Keys to improving the claims adjusting process

“Be the ball Johnny, be the ball.” Invaluable advice dispensed by Ty Webb in Caddyshack.  Advice we should all live by. As children, our parents, teachers and coaches consistently told us to focus. As adults, this is the same advice we give our children. But what do we really mean?

Focus brings attention to the core competencies of what we do. In football, the focus is on blocking and tackling. In baseball, you keep your eye on the ball. In claims adjusting, focus results in timely and accurate settlements.

Perhaps it is easier said than done, but focusing on key elements of claims results in improved processes, workflow, quality and outcomes. Having been in the world of claims adjusting for most of my adult life, I can attest to the never-ending slew of distractions. Customers, peers, bosses, vendors, meetings, training, education, administrative tasks and more. It seems that as time passes, the commitment to non-claims related activities is increasing, yet there are still the same number of hours in a day.

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Where should adjusters focus?

When diving into the world of claims, just what should the adjuster be focusing on? Here are five key areas where adjuster focus is essential:

• Coverage — This is critical to the outcome of any claim. Oftentimes coverage can seem pretty routine. Was the policy in force on the date of loss? Does the driver meet the definition of an insured? What about the scenarios that take an inordinate amount of time to resolve: Non-permissive use, implied versus explicit permission, unlisted drivers, vehicle usage that falls outside of the scope of the policy? The list goes on, and it is critical that the adjuster makes the right decision for every file hitting his desk.

• Investigation — Having run quality assurance for a large multi-national insurer, this is an area where there is tremendous opportunity for improvement. It seems that with all the competing priorities, the investigation often takes a back seat. There is a reason why adjusters assess comparative negligence on only 3% of claims, while juries assess it more than half of the time.

• Evaluation — Perhaps the most fundamental aspects of the claims process, yet one that can be quite time consuming. Just what is an adjuster to do when a 500-page time-limit demand lands on the desk but he or she needs to attend an HR mandated training course on workplace civility?

• Negotiation — Driving to the right outcome takes both knowledge of the claim and wisdom. When one loses focus on establishing liability and damages due to noise external of the claims process, how can one reach an optimal settlement? The answer is they can’t. Sometimes it is just easier to look at the medical bills and apply a multiplier. After all, we have to close claims to chase a disposition number, right? That is a topic for another day.

• Recovery — There is a direct correlation between not focusing on claims-related tasks results and missed recovery opportunities. Whether it is a delay in moving a totaled vehicle, evidence spoliation, overlooked risk transfers or missed subrogation, the result is the same. Money is left on the table. Industrywide, these misses equate to billions of dollars annually.

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Improving outcomes for all

So how can we improve quality and outcomes? Simply put, let adjusters focus on the basic blocking and tackling of the claims process. Don’t throw unnecessary tasks their way. Leverage this age of digitization to make adjusters more efficient, effective and happy. This approach might even have a positive benefit on staffing models while lowering turnover.

Consider the facets of the life of a claim. How can a robust first notice of loss (FNOL) strategy help improve the claims process? Can we leverage analytics to identify recovery opportunities? Can we use big data to assign and triage claims? If we get the right claim to the right adjuster immediately, there is a reduction in transfer friction and a decrease in cycle time.

As adjusters conduct their investigations, are there tools that can make them more efficient? Does it really make sense to have an adjuster spend three hours sorting, organizing and indexing a demand when technology could be used to free up their time to focus on investigations, evaluations and negotiations?

In this age of digitization, there should be a demarcation between where the adjuster’s touch is needed, and where technology can be leveraged to improve processes. The implications of being more efficient in this regard drive everything from staffing models to outcomes to customer retention.

However, this can be a challenge. After all, the insurance industry is often rooted in the status quo, but we can’t afford to be. Innovation is going to leave those with that mindset at a significant competitive disadvantage.

I once had a boss tell me that to be effective leaders we must always be thinking five years into the future. Technology is changing rapidly. Think about it this way. From the days of Double Indemnity to the early 1990s, a period of about 50 years, the typical adjuster was out on the streets, Polaroid in hand, handwriting estimates and documenting their Face Sheet Notes.

Then came the emergence of claim management systems, where claims, underwriting and policy information went online. Adjusters were armed with cellphones, often contained in an oversized bag.    Phones got smaller, systems got better, estimatics moved online and the world of the internet engulfed us.

In the mid-2000s came the emergence of iPhones, changing the entire world of connectivity. Facebook and other social media emerged, where bad reviews about claims experiences could travel networks in milliseconds. Apps created the opportunity for self-reporting. Many things that the adjuster used to focus on went by the wayside. What didn’t was their need for consistency and quality in the five key areas discussed earlier.

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Recently, a claims executive asked me, “Could I replace my claims operations with robots?” The answer is not a yes nor a no. At least not as of today and probably not for the foreseeable future. Can a robot handle a tow or glass claim? Yes. Can technology and analytics properly route claims and identify recovery opportunities?  Yes.

Can a robot have a meaningful call with a customer whose vehicle was totaled? Think of the love between Americans and their cars and the answer becomes pretty clear. I think of my car, Brad. I loved Brad. I was beside myself when I totaled Brad. That is a pretty personal relationship.

Could a robot have a meaningful dialogue with an attorney about an injured claimant? Hey Alexa, what is the value of a disc bulge in Dade County, Florida, for the L-5 S-1 with spondylosis indicative of mild degeneration? Press one if my offer is sufficient, press two to make a counter offer. There are still some aspects of claims where the human touch is key. There is still a need for talented adjusters who can use experience, savvy and wisdom to achieve the right outcomes.

Will this always be the case? The answer is we don’t know what we don’t know. What we do know is that humans will always need insurance to protect lives and restore dreams. We also know that adjusters are retiring faster than they are being replaced and the average age of the workforce is one of the highest of any occupation. Now is the time for us to focus on adjuster efficiency. By leveraging the trifecta of people, processes and technology, the adjuster can be freed up to focus on the critical aspects of claims, with non-essential tasks being performed in the background by those who can help maximize results.

Christopher Tidball (chris.tidball@exlservice.com) is the vice president of sales and claims transformation strategy at EXL. He is a former claims executive and the author of multiple books, including Re-Adjusted: Taking Your Claims Organization from Ordinary to Extraordinary.