ASPs Streamline Litigation Management

With all the reengineering initiatives in claims departmentsover the years, one would think they should now be a paradigm ofcost control and efficiency.

Unfortunately, expense problems continue to plague claimsdepartments, particularly as they pertain to litigated claims.Continued inefficiencies make it difficult to control costs or toproactively manage litigation to impact overall indemnity. Legalfees continue to escalate, while wrangling over legal bills afterservices have been rendered has done much to strain relationshipsbetween insurers and their panel law firms.

In an insurance market adversely affected by stagnant premiumgrowth, high underwriting costs and increased litigated claimsactivity, process improvement and cost containment is crucial tomaintain and improve an insurers financial health. Application oftechnology solutions appears to be the most promising way toimprove results.

However, applying technology to streamline the litigationprocess has proven difficult due to geographically dispersedcarrier claims personnel and law firms. Traditional softwaremodels, which require installation and maintenance at all insurancecompany and law firm sites, present too large a logistics challengeto be a viable alternative.

Fortunately, new software solutions supported by the applicationservice provider model have made the challenge of efficient claimslitigation one the insurance industry can meet. By enablingeffective collaboration, improving process efficiency andredirecting focus to core business tasks, ASP-based solutions canunravel the knots in the claims litigation processes.

The ASP represents a literal re-invention of the softwareindustry. Through the use of the Internet as a wide-area network,ASPs are essentially third-party service firms that provide asoftware “rental option” in contrast to the traditionalpurchase-and-install software model. With little to no investmentin technology infrastructure or technical staff on the part of thecarrier or law firm, ASPs offer an easy and affordable option tothe real-time communication, collaboration and accountabilitynecessary for effective litigation management.

An ASPs security layers, which encrypt data flow such that onlyintended recipients can view the transmission, are far more securethan e-mail communications, and they protect clientconfidentiality.

As an information-intensive industry with complex businessprocesses involving many organizations across the world, insuranceis well suited to use ASPs in meeting business challengespertaining to claims litigation management. Technology shouldsupport timely, proactive and ongoing communication between insurerand outside counsel.

With a commitment to a collaborative effort between law firm andcarrier, technology can be employed to support the process. Acollaborative process is a natural fit for the benefits ofInternet-based ASP tools, providing instant, anywhere, anytimecommunication to all involved. With functionality from claims setupto task management, to billing submission and review, todaystechnology provides the insurance industry with the opportunity foran end-to-end collaborative litigation management process.

In fact, traditional infrastructure combined with traditionalsoftware installation and maintenance have made effectivelitigation management very difficult to achieve.

Even with the best intentions at the outset of litigation,substantive issues such as budget approval or overall casestrategies are often ignored, leaving a fertile source of conflictfor counsel and the insurer. Use of phone, fax, mail and e-mailcommunications alone create large gaps of time and informationbetween discussions on important issues. With several hundredclaims files in the typical adjusters workload, managing the highvolume of litigation is often done with less than effectivecommunication and collaboration.

Real-time, instant communication capabilities and “anytime,anywhere” access offered through the ASP software delivery modeldramatically improve communication by finally enabling attorneysand claims personnel to simultaneously view up-to-date informationfrom their desktops with nothing more than Internet access and aWeb-browser.

Good ASP solutions support claims personnel by providing thefoundation for a collaborative, proactive work environment whilecontinuing to provide the process functionality required to shareinformation, prepare documents, manage calendars, and review casedevelopments and progress in real time. Estimates on exposure,chances of success, and settlement objectives are all open forcontinuing review and comment.

Meanwhile, both claims personnel and attorneys can postcomments, request additional information and offer suggestions forstrategy. Through this collaborative process where information isquickly and easily shared, all parties ensure that qualitystandards are established up front and maintained throughoutlitigation. Well-chosen ASP applications not only provideaccountability, but also enable claims personnel to remain informedand involved in litigation matters.

One problem is that while insurance industry executives supportup-front budgeting and strategy development for claims litigation,the reality is that the effort typically falls by the wayside dueto the inability to track and manage the litigation process once itis underway. As a result, there is little analysis of where timeand dollars are actually spent in the litigation.

Although insurers have turned to outside fee auditors to gainsome measure of control, this strategy has severely damaged theprofessional working relationship between insurer and outsidecounsel, while delivering little improvement in eithercommunication or the quality of outcomes.

Effective cost control requires a detailed understanding of theinvestment of litigation time and dollars. ASP support ofcollaborative strategies that encourage insurers and lawyers todevise a “game plan” for each case help the litigation teamdetermine legal tasks required for an individual claim andanticipate a time frame and budget for completion. By trackingbill-to-budget and litigation outcomes, insurers have the abilityto analyze law firm performance and can make decisions on hiringthe most efficient firms providing the best indemnity results.

The bottom line is that ASPs not only provide an easy and costeffective method to take advantage of the potential for technology,but the underlying Internet medium supports the collaborativeprocess and instant communications missing in traditional softwaresolutions.

Implementing ASP capabilities is a relatively simple matter.However, planning for strategic outsourcing requires selecting anASP that fits well within the insurers business requirements andculture while delivering the functionality, availability, andservice levels required.

Once the decision has been made to implement an ASP, insurersneed to choose a partner with the experience and resources bestsuited to their businesses. Can the ASP provide 24/7 service andsupport? Does the ASP offer comprehensive training for insurerpersonnel and outside attorneys?

An IT service provider isnt just another supplier; its a virtualpartner that lends specific technology and process expertise. Italso frees up insurer resources so that the carrier can focus onthe business of insurance rather than information technology.

By carefully choosing an ASP as part of a comprehensive businessstrategy, insurers can improve costs, increase competitiveness andmaximize opportunities. However, ASP technology does not offer“plug and play” capability when it comes to improving claimslitigation. Rather, it provides a tool to promote collaborativecommunication.

It is the commitment to collaborative relationships betweeninsurers and their law firms that creates an approach to litigationmanagement that holds the potential to improve business results.Supporting collaboration with an ASP can have a dramatic effect ona carriers profitability by streamlining communication tasks andcreating cost savings in litigated claims.

Faiz Ahmed is chief executive officer and co-founder ofVisibillity, Inc., based in Chicago. He can be reached at[email protected].

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, April 8, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.