With computer processing speeds going up and storage costs goingdown, claim organizations are looking to implement sophisticatedclaim systems that provide smart routing, predictive analytics,imaging, and customer self-service. The greatest challenge in thisis underestimating the impact to the organization. The return oninvestment (ROI) for such a system is fundamentally driven byensuring that every claim is handled by the right person at theright time.

In recent years, more claim organizations have started investingin new technology to make their operations less costly to operateas well as more efficient and effective. In the past, these goalswould likely have been mutually exclusive. However, given theacceleration in computer processing speeds and declining storagecosts — as well as the proliferation of the Internet in our dailylives — these goals are more achievable, with potentiallysignificant returns on the technology investment.

Implementing sophisticated systems provides a means by whichclaim organizations can harness these advances to substantiallyimprove operations. While the initial investment in these types ofsolutions can be significant, the payback can be substantial.

Assignment Routing

To be successful, claim organizations must ensure that eachclaim is handled by exactly the right number of touch points tominimize loss adjusting expenses (LAE) while not adverselyimpacting indemnity costs. In some cases, this may result in notouch points at all. For others, there may be the need for manydifferent handling points. The challenge is to be able to decide onproper claim handling at the earliest stage possible. It isimperative to identify claims that may look very similar butrequire dramatically different handling because of subtledifferences.

For property and material damage claims, the most sophisticatedof these systems incorporate analytical intelligence to routeclaims to the correct resources with mobile capabilities such asGPS and high-speed wireless connections to a mobile workforce thatis able to operate in a more streamlined manner. Real-timeassignment and dispatching can create a truly dynamic and efficientdaily routine. The mobile claim professional is not only betterable to service a claim, but is also always ready for the nextclaim. In addition, the capability to communicate work results inreal-time results in quicker claim processing and diminished cycletime. An added bonus of this approach is that with increasing fuelcosts, optimized routing is becoming a desired functionality.

More sophisticated assignment routing creates the ability toprocess claims in a semi-automated manner. Rules and a workflowengine can be applied to ensure that the appropriate claim resourcehandles the claim at the right time. For certain types of claims,this can ultimately lead to no-touch processing. In the past, theno-touch or straight-through processing (STP) workflow model wasreserved for simple claims, such as those involving glass damage ortowing. However, this model also can apply to other, more complextypes of medical, disability, and commercial claims.

Going Paperless

Another area where claim organizations are achieving significantvalue is by incorporating robust imaging systems. These systemsenable a claim organization to truly become paperless. The benefitsof these types of systems include a reduction in paper and postagecosts, reduced cycle times, and more efficient claim processing. Anadditional benefit that cannot be overlooked is the capability toretrieve claim documents with relative ease. This makes thedistribution of documents for auditing or counsel review bothstraightforward and timely. In many circumstances, being able toreproduce an original document was otherwise impossible because ofannotations made during the normal course of events. With animaging system, however, the capability to annotate directly on theelectronic version of the document enables one to view the originalintact.

Involve the Customer

The last major area of opportunity for achieving a positive ROIis customer self-service. Given the reliance on the Internet ineveryone's daily lives, customers are becoming more adept atmanaging their accounts online. This extends to the claim process.From reporting a loss online to interacting with claim adjustersthroughout the process, to checking on treatment options, medicalbill payments, or vehicle repairs, the customer expects to be anactive participant in the claim process.

A great deal of this interactivity is to make basic informationmore readily available. For instance, claim organizations can makeinformation available online to the customer who traditionally hasreceived this data over the phone or via regular mail. By doingsomething as basic as providing claim status in more granular termsthan “open” or “closed,” insurers are teaching their customers tobe better educated consumers and understand what is going on withtheir claims. This approach can also reduce the time involvement ofthe agent or broker in claim handling, especially for small- andmedium-sized business accounts.

It is important to note that in order to provide the greatestvalue, information to educate the consumer must be presentedalongside the claim information. This is because most customers donot file a claim very often. As such, there is an educational needthat must be addressed for each and every claim. The Internet is aperfect medium for this.

Customer self-service extends beyond the loss participants. Theextended enterprise — made up of business partners and serviceproviders — is becoming increasingly proficient in technologicalsolutions. This, coupled with better standards for communication,enable claim organizations to leverage the customer self-serviceinfrastructure and incorporate the extended enterprise into themix. By doing this, claim organizations can streamlineadministrative tasks — such as invoicing and payment processing —by shifting the onus to the vendor to manage those items.

If the policy customer service group provides self-service, thenit is important that this same infrastructure should support claimself-service. For instance, a customer should be able to not onlymanage his policy, but also gain access to the claim self-servicearea with the same user ID and password. Anything short of thiswill not be a seamless experience for the customer and can thus endup doing more harm than good.

Expect Challenges

Once the decision has been made to invest in new claimtechnology, the greatest challenge is effectively managing thesheer magnitude of such an endeavor. A key to successfulimplementation is rigorous project management governance, adequateresourcing — both from the technology and business functions — anddeveloping a clear communication strategy.

Many times, these implementations have failed because the humanside of change is overlooked. The failure is not so much a resultof an inadequate system, but rather underestimating the impact tothe organization. Experienced staff members who have been operatingone way for many years are suddenly expected to learn not only newsystems but new processes, as well. This can be a daunting task.Without the right level of staff buy-in and support, it can lead toproblems down the road.

Finding the ROI

It should be noted that the ROI associated with implementing anyof the aforementioned systems can be significant. Saving just onepoint in LAE or indemnity costs generally exceeds the requiredinvestment in the new technology by a considerable margin. Becausethe development costs can be significant, obtaining funding can bedifficult without a well-documented business case and strongcommitment to change on behalf of claim management.

For claim processing systems that are full-featured, such asthose providing a paperless environment, no-touch processingcapabilities, customer self-service, and so on, favorable ROIs canbe achieved from the related reduction in head count as well as thecost savings attributed to a paperless environment.

ROI is also captured by the infusion of expert knowledge intothese sophisticated systems. This not only enables the systems toperform better, but also provides a hedge against the industry-wideissue of losing staff knowledge as the workforce turns over. Byhaving much of this knowledge within the systems, the claimorganization can bring new staff on-board more quickly. An addedbenefit is that newer employees will be more interested in workingat an organization that has robust, cutting-edge systems to supporttheir work versus a company with antiquated processes andsystems.

In addition, the increase in customer satisfaction attributableto a more streamlined and efficient organization manifests itselfin increased customer retention. Similarly, third-party claimantswho have had a pleasant claim experience are more prone to switchto the carrier the next time they are shopping for insurance.Beyond this, in this day and age, experiences are published onblogs and message boards. Just as bad service can have adetrimental effect, great service can have a very positiveeffect.

So, where does a company start? Unfortunately, that is not aneasy question to answer. It is best for an organization to firstassess its technology maturity across all areas of the business —and not just in the claim realm — to set an overarching strategy.In doing this, a company can identify both short-term and long-termgoals based on a detailed cost-benefit analysis of new technologyoptions. In addition, identifying key success criteria will ensurethat progress is being monitored.

Depending on the maturity of the technology within your claimorganization, you may have already begun initiatives to leveragethe latest technological advancements. The bottom line is thatsmart investments in technology can lead to significant long-termpayoffs. Claim organizations that recognize and exploit thepotential of these new technologies will establish the necessaryfoundation for a competitive advantage and long-term success.

Mark Poisson, PMP, is director of the southeast region forTNC Management Group, a management consulting and projectmanagement firm that works extensively with insurance companies. Hemay be reached at 888-821-1115, [email protected],www.tncmanagement.com.