In today's economy, insurance companies are looking for ways to do more with less. However, gone are the days when companies could reduce staff by 10 to 20 percent across the board and still effectively run their claim organizations.
To lower operating costs, companies must first improve processes and then capture the efficiencies achieved within day-to-day operations. Opportunities abound. Start with dusting off all that data you've been collecting and turn it into actionable insight. You can leverage that information to roll out new capabilities such as straight-through processing and customer self-service to achieve breakthrough results.
Accelerate Straightforward Claims
The place to start is with straight-through processing for straightforward claims. How do you know which claims are straightforward? Just look at your claim data. Use analytics to identify the types of claims that have the least variability in outcomes. You would base this on the percentage of deviation between the amount submitted and the amount reimbursed -- excluding limits, co-pays, and deductibles. The deviation in these costs represents the value added by involving an adjuster in the claim process.
In other words, it doesn't make sense to insert an adjuster into the process on claims where an adjuster seldom influences the outcome, such as replacing a windshield or processing an ambulance or towing bill. Calculate the related costs and benefits to determine where to draw the line when selecting claims for straight-through processing. For example, if an adjuster adds 40 percent to the claim-handling cost but saves only 20 percent in loss costs, then evaluate other aspects. The adjuster's involvement could provide other less tangible benefits, such as creating a sentinel effect to deter fraud or abuse. Customers expect that the process will be fast, easy, and fair. However, regardless of the adeptness of an adjuster, a claim resolved by a computer will always be faster.
Create Seamless Electronic Processes
What exactly is straight-through processing? Well, it's certainly not the process in place at many insurance companies today: You receive the claim through your Web application; print it out; assign it to a
processor; input it in your claim system; and then issue a payment. That is nothing more than a Web-initiated process. While straight-through processing starts the same way -- with a Web application that allows a customer to enter loss information -- it also allows claimants to upload photos, receipts, police reports, and other required proofs.
In a straight-through process, if an inspection, repair, or rental vehicle is required, then claimants schedule their own appointments or reservations. Emergency room bills can be uploaded and auto adjudicated, which allows them to be reviewed, authorized, and immediately paid, all by the system. Within a single claim, some components may qualify for straight-through processing while other components could take the traditional path and be reviewed by an adjuster.
An uninsured motorist claim, for example, would likely require an adjuster to investigate coverage and liability and then pursue subrogation while the customer's immediate needs for vehicle repair and substitute transportation could be swiftly addressed by online programs.
Streamline Homeowner Claim Processing
Analytics can also provide the foundation for straight-through processing in homeowners' claims. Why can't the customer provide the dimensions of a water-stained room or a broken window? Your systems can easily assess the cost of these repairs and issue an electronic funds transfer within seconds of receiving the claim. If the model number of a stolen TV is entered, then your system can initiate an order for a replacement to be delivered to your customer's home while their deductible is charged to their credit card. Now that's fast and fair.
Think about how many process steps can be saved by using straight-through processing:
? Receiving loss reports by call center or agent
? Reserving
? Evaluating the loss
? Documenting the settlement
? Authorizing the payment amount
? Generating the check
? Mailing the check and explanation of settlement
Safeguard Against Fraud
Fraud is a major concern these days. But the worry about fraudulent claims slipping through the cracks can be quelled if companies use predictive analytics to identify red flags. Triggers built into online processes can automatically engage claims or SIU adjusters in the process, even if the claim originates online. Claims that generate red flags would no longer be considered straight-through claims and would require skilled intervention.
What if a straight-forward claim has a settlement value that normally would require management authorization? Analytics can easily determine if the value of the settlement components are within the normal settlement range. If so, then the settlement can be system-approved and moved forward for automated payment.
Straight-through processing clearly allows insurers to achieve huge efficiency gains by not only freeing up adjusters and loss report takers, but by also redirecting valuable management resources from process-related tasks to value-added functions.
Lower Call Center Costs with Self-Service
Have you analyzed why customers are calling so much? For every reported claim, you are probably getting between two and six inquiry calls, depending on the efficiency level of your claim operation. Customers may be picking up the phone to ask the following questions:
? Has an adjuster been assigned?
? Where can I take my vehicle for repairs?
? When is my adjuster coming out?
? Where should I send my bills?
? Did you receive my receipts?
? When will I get my check?
Obviously they are calling because your process does not address their needs in a timeframe that they feel is acceptable. We've become an impatient society that likes to wait for nothing, and your claim processes need to accommodate these heightened expectations.
Most inquiry calls can be potentially eliminated with customer self-service. When customers control the process, they select their own inspection appointment; they get online confirmation that receipts were received; and the system either approves the loss for immediate payment or consistently explains the next steps.
It costs insurers a great deal of money and oversight to ensure that each call center resource properly explains the process. Wouldn't it be simpler to deliver the message online? It would certainly be less costly and 100 percent consistent.
Adjusting: Art or Science?
There are numerous opportunities for skilled adjusters to add value when dealing with complex claims. A great adjuster can identify creative solutions that benefit both the customer and the company. They can also help avoid costly litigation by compassionately explaining difficult settlements and can uncover facts that place responsibility on the appropriate party.
There is an artful talent to many experienced adjusters. Even so, are these talents needed when a falling tree limb pierces a picture window; when a car slides on ice striking a tree; or when a bicycle is stolen from a playground?
Look at your data and determine what percent of your losses fall into the "uncomplicated" category. You may be surprised at the volume of claims that are candidates for customer self-service.
Pass Market Conduct Exams
When you learn that a state insurance agency has scheduled a Market Conduct Exam, do you approach it with confidence or trepidation? The more automated our processes become, the fewer opportunities we have to be out of compliance.
These exams could be infinitely less stressful and less costly if we take the time upfront to design sound processes that ensure that all customers are treated equally and fairly. Since most online claims will close faster, there is also less opportunity to forget to send a mandatory status letter. Thus, everyone wins.
Improve Satisfaction for Agents, Customers
Straight-through processing was a big hit with agents when it streamlined the policy quoting and binding
process. Now that this type of efficiency has become the norm, the next big differentiator will be straight-through processing for claims.
It just makes sense that the companies that generate the fewest inquiry calls and create the fewest distractions will be the ones preferred by the agent. An agent's main objectives are to sell policies and to keep customers happy. If they spend their time intervening on claim issues and inquiries, then they'll devote too much time trying to service and save existing customers and not enough time securing new ones.
In the short term, an agent may position your company as having great prices with slow service. As time goes on, however, it will be increasingly difficult to offer competitive prices if your high-touch service carries with it the highest unallocated expenses. Keep in mind that proactive competitors could leverage their streamlined processes into reduced premiums and place your market share at risk.
Customer satisfaction is driven by choice, meaning the choice to consult an agent for advice following a loss, the choice to speak directly to a claim professional, or the choice to independently input claims online and receive immediate notification of the settlement amount. The insurance industry is entering a new frontier where automation is an operational necessity and customers expect fast, hassle-free service. To stay competitive in this environment, your company may need to offer every option.
