Pole-vaulting was the same sport for a long time. Even theadvent of aluminum poles, which provided a bit more lift, didn'tchange it radically. But advanced technology, in the form offiberglass poles, allowed pole-vaulters to change their techniqueand catapult past the previously unheard-of 20-foot mark. Baseballwas transformed when Babe Ruth clobbered 54 homeruns in 1920,signaling the end of the dead-ball era. The telephone changed thecommunication “game.”

But the business of adjusting claims has remained the same oldgame, despite advances in technology and the advent of theInternet.

Claim handling remains a people-intensive business. Customerservice surveys still resonate with complaints about multiplecontacts by different claim staff personnel asking for the sameinformation — or worse, providing different answers to the samequestion. Claim staff still do what they've always done, spending50 percent or more of their time on repetitive clerical activitieslike making photocopies, shuffling papers, confirming coverage, andcompiling information instead of what they're paid to do — make theright coverage decisions and provide excellent service.

Why Did This Happen?

Many insurers have retained high-paid consultants to re-engineertheir existing claim processes and systems. Unfortunately, very fewcompanies achieved significant benefits from their re-engineeringefforts, and many poured money into a seemingly bottomless pit.Some have even re-reengineered failed re-engineering projects! Inessence, these projects sought to improve the existing process orsystem, akin to trying to improve the aluminum pole instead ofusing fiberglass material.

How did it happen? The answer is simple: the underlying strategywas flawed. It presumed the existing processes could bere-engineered to obtain big improvements in efficiency andconsistency.

Re-engineering takes a mechanistic approach, focusing ontechnology and systems, not people. Re-engineering consultants havenever put people first. They haven't really considered what taskspeople do minute by minute, hour by hour, and day by day. It'speople who make a claim operation go. The consultants used forre-engineering focused on the process of adjusting a claim. Theyfailed to interview the company's best employees — the ones who getmore done faster, and with higher quality. They failed to capturethe unique way a company's best employees work.

Re-engineering or business process management focuses on gettingwork to and from an individual. That sounds logical at firstglance, but there's a hidden assumption that must be challenged.How much of this work really needs to be done at all? Could someexisting tasks become completely automated? If you can reduce theactual work performed and guide employees through the remainingtasks and decisions, you could fundamentally change the way claimsare handled.

That changes the game, instead of just making the existing oneeasier to play.

Processes Don't Work, People Do

When looking to change the claim game, insurers should not beconstrained by their current staff and technology limits. If theycould start fresh, what would they like the claim process to looklike? Ask a claim professional to articulate the perfect claimprocess, and you will hear statements like “dramatically shortencycle times, accurate reserving, straight-through processing exceptin exceptional cases, 'raving fan' customers, pay what is owed —nothing more nothing less on each claim.”

Understanding the ideal process doesn't require re-engineering.Insurance companies should take a more holistic view by looking attheir best claim employees to find out how they do their jobs sowell. What if they could take what their best employees do,replicate the process with technology, and apply it companywide?This would fundamentally change the claim game by making everyemployee the best employee.

Too many insurers make the mistake of examining technology andsystems first, rather than initially looking at their employees,policyholders, and agents. Starting with an examination of whatpeople do rather than basing decisions on the latest technologyhype allows insurers to focus on the true objective of an efficientclaim operation. Only after they have done that can they identifyand apply the appropriate technologies to get the job done.

Implementing technology for technology's sake has proved timeand again to fall short on delivering significant benefits.Technological improvement is essential, but it's easy to forgetthat machines are not the key. People are. They're the ones who getthe work done. Technology is simply a tool that enables a companyto provide services more efficiently and consistently.

Spend time on the front lines of any claim organization and youwill quickly identify those employees who stand out. These“super-employees” have typically spent years honing their skillsand developing a wealth of knowledge that enables them to performtheir work with seeming ease and proficiency. They know how andwhere to find the right information while avoiding unnecessary,time-wasting tasks. These folks have actually designed andimplemented the ideal process using technology as just another toolwhen and where it adds value.

What if technology could actually replicate and enforce thesesuper-employee skills, shortcuts, and best practices?

Data Management Versus Decision Making

When it comes to changing the claim game, it also is essentialto separate data management from decision making.

Claim adjusters spend much of their days collecting and managingdata, searching for policy records, verifying coverages, andreviewing claimant statements. Many insurers have attempted toconquer the mountain of data they must handle by installing imagingand file management systems so they can go “paperless” forspeedier, better document recovery. However, an imaging systemalone doesn't change the game. The work has remained primarilyunchanged, although claim employees are now manipulating screensinstead of paper.

Data gathering is an ideal candidate for automation. Today,adjusters often need to first gain access to the policyadministration system to make sure the policy is in force, thencheck limits and deductibles before they can start doing any realwork toward adjusting the claim. Multiply this by hundreds orthousands of times every workday, and it adds up to a huge drain oftime and money.

It's no longer a far-fetched concept to employ technology toautomate or eliminate much of the required data gathering, andsummarize and display required information in a usable format. It'snot just about automating or eliminating tasks, though. Many of thetasks performed by claim personnel can't be automated, but they canbe performed more consistently. Technology also can play a largerole in bringing consistency to the claim decision-makingprocess.

Once again, it requires a people-first approach. People have atendency to complete their tasks in different ways. Their biases,strengths, and weaknesses influence how they do their jobs. Thisbreeds inconsistency. Technology can fix this by guiding employeesthrough their tasks.

It's no different than what a car navigation system does. Onceyou put in the address, a navigation system guides you to yourdestination in the most efficient way. It even adjusts your routeif there is a traffic accident or detour. All you need to know ishow to drive. The same concept can be applied to changing the gamein claims. Technology exists today that will allow companies tocreate self-adjusting “navigation” systems that effectively bring acompany's procedure manual to life by embedding it in the coreprocesses.

Taking it a step further, the system could become an automatedadjuster, allowing claimants to input their claim informationdirectly via the Internet. With an automated adjustment process,the adjuster's role changes to be an exception handler, strategist,and evaluator — tasks that require their experience, expertise, andknow-how.

By eliminating much of the administration and improving adjusterproductivity, insurance companies can reallocate their staff to themost high-value functions and tasks. Goals that were once thoughtimpossible would now become reality. Cycle times on simple claimswould plummet, claim-handling consistency would rise to close to100 percent no matter where or who was handling a particular claim,and customer satisfaction would skyrocket as the claim experiencewould become predictable and noninvasive.

Quality Without Compromise

It's important to ensure that quality is not the victim in thequest to improve productivity. Any process or technology designedto speed things up and streamline the claim process needs todeliver consistent and high-quality results.

While a slow claim process may severely impact customersatisfaction results, it's the risk of a bad claim decision thatkeeps insurance executives from getting a good night's sleep. Intoday's environment, give two adjusters the same claim with thesame set of information and chances are you'll end up with twodifferent results, no matter how many re-engineering projects acompany has implemented. While the claim information represents thecommon denominator, it's the skill and knowledge of the adjusterthat makes the difference. This inconsistency in claim handling ismore the norm among insurers than the exception.

By turning to technology to not only replicate but also enforcebest practices, insurers can prevent outright mistakes, guideadjusters through complex tasks, and keep everyone on a common pathto resolution. This brings much-needed consistency to theprocess.

Keeping the Customer Satisfied

It is not uncommon for claimants to talk to multiple insurancepersonnel to report even the simplest claim. They report theirlosses to call centers or agents. A few days later, they often needto repeat their stories to an adjuster and are left wondering whythey've gone through the same song-and-dance routine. If it's anautomobile accident with an injury, the customer will often need tospeak to separate physical-damage and bodily-injury adjusters, onlyadding unnecessary stress to their already stressful situation.

Too often, insurers fall into the trap of believing that if theyupgrade their core claim systems, they will be able to improvetheir processes. Unfortunately, it's a trap because it doesn'tfocus on what claim professionals do. By using technology toautomate and coordinate what people do, the claim process can beradically improved. When a policyholder has a single contact whohas immediate access to complete and updated information, this notonly makes the customer happy, it boosts staff productivity anddecreases everyone's frustrations.

Leading-edge insurers are already recognizing that they need toradically change how they handle claims. They know they need afiberglass pole and they are aggressively searching for it. Thenext couple of years should be fascinating as more and moreinsurance companies start breaking through claim-handling barriersthat have plagued the industry for decades. Who will smash throughthe barriers first? Leaders who recognize that the game has changedand that they have to change with it. While technology willcontinue to serve as an enabler, the winning strategy in the claimgame starts with people. They're the key to changing and winningthe claim game.

Brian S. Cohen was a former insurance company seniorexecutive and now serves as president and CEO of Clear Technology,Inc., a global software company based in Denver, Colo. He can bereached at [email protected].