Filed Under:Carrier Innovations, Technology Solutions

Walking the Claims Optimization Tightrope

Compliance, Reporting, and Policyholder Satisfaction

Effectively managing claims has historically proved to be a complex task, to put it mildly. With so many steps and variations in each process, it is no wonder that insurers struggle to consistently improve claims operations. Because total cost of indemnity represents a significant portion of an insurer’s costs, reducing the expense of claims processing is imperative for any insurer. However, cost efficiencies cannot come at the expense of a policyholder’s service needs and right to receive a fair and equitable settlement for a valid loss. Given that the claims experience is a primary driver of policyholder satisfaction and loyalty, the need to deliver a high-quality experience is equally as important as cutting costs.

Insurers pursuing opportunities to transform and optimize claims functions frequently consider packaged applications. All too often this technology-driven approach ignores the business outcomes an insurer is trying to achieve and fails to consider the people, process, and integration components needed to enable holistic improvement. In addition, packaged applications rarely offer the agility needed to support claims operations and processes that undergo frequent change, forcing insurers to adapt their business to the way the systeem works. The result is isolated and broken processes beset with cumbersome manual handoffs and work-arounds that only increase costs and can lead to policyholder dissatisfaction.

BPM Benefits

Advanced business process management (BPM) technology has proven to be a far more effective solution for enhancing claims operations than inflexible packaged applications because it delivers the strategic capabilities insurers need to enable an optimized claims-processing environment. Traditional packaged claims solutions are not helping insurers achieve their strategic business objectives. Whether the goal is to lower claims costs, improve service, or both, insurers need more than inflexible packaged applications if they are to successfully institutionalize and improve the claims practices that drive differentiation in their markets.

So how does an insurer strike a cost-effective balance between claims efficiency and policyholder service? Insurers can start by optimizing their claims value chain—as in the people, processes and resources required to achieve the optimal claim outcome—to improve the efficiency and effectiveness of claims operations. A key part of whether any given insurer is successful at this will be determined by how strong a role BPM plays in the equation.

With advanced BPM technology, insurers can unlock the business value of the claims process to substantially improve productivity, drive brand commitment, minimize risk and loss exposure, and improve the insurer’s competitive position. BPM offers a distinctly different approach to claims optimization as it delivers the tools insurers need to achieve an optimized claims processing environment that improves efficiency, drives policyholder satisfaction, and mitigates regulatory and financial risks.

There are six key competitive advantages that insurers can leverage with BPM to transform and optimize claims management:

1. Use an intent-driven process to drive the optimal service experience. With rules and process unified in one solution, insurers can seamlessly integrate claims handling policies and procedures into dynamic, intent-driven service processes that automatically match the needs of a claimant with the intent of the business during a claims interaction. The intelligent process automatically guides staff through the optimal process as the interaction unfolds. This means that service staff no longer need to worry about which system to use or step to take next, and can instead focus on the high-touch activities that differentiate their service experience from the competition. By leveraging intent-led processes, insurers can anticipate what a claimant’s needs may be and match those needs with the optimal claims or service process. Imagine the power of being able to anticipate and respond to a policyholder’s needs before they even ask the question.

2. Drive outcomes with dynamic case management. Insurers can drive claims toward optimal outcomes using dynamic case management to gain a 360-degree perspective that organizes and executes the optimal process for each claim. Most claims have multiple processes that need to be completed to resolve the overall case. The processes get data from multiple systems, are carried out across departments—frequently in parallel or asynchronously—and one process may impact the way another proceeds. Yet all of this complexity must be effectively orchestrated and managed to ensure the claim is progressing toward the right outcome with consistency, accuracy, and efficiency.

Case management provides insurers with a strategic platform that organizes and manages complex pieces of claim work across silos and core systems. It enables insurers to orchestrate the multiple processes of a claim and allow the organization’s goals, embodied by the business rules, to drive the processing of the claim from the top level down to the most minor adjudication task. Unified policies and procedures further this capability by enabling a “channel agnostic” claim intake strategy and seamless handoffs to the optimal claim resources. Business rules ensure that adjudication steps, assignments, service level agreements (SLAs), and so forth are processed in the same manner and tracked at both the claim and sub-task level. With an intelligent system managing the process steps that need little or no human intervention, insurers can automate low-complexity claims or claim activities to better contain costs and achieve gains in efficiency and productivity.

3. Maximize the impact of the claim value chain. By combining rules and process with case management, insurers can manage the orchestration of a complex claims process across multiple systems, analytic tools, data stores or third-party services. This unique capability allows insurers to marshal the right resource at the right time in pursuit of the best case claim outcome. Because BPM provides rules-driven processes, insurers no longer have to rely on adjusters to be the key drivers of the claims process. Instead, automated case management can be easily integrated with back-end systems, accessing and using appropriate assets in real-time as part of the streamlined process.

4. Convert insight to action. Increasingly, insurers are driving improvements in service or operations results by incorporating business intelligence and analytics into their claims management processes. However, many insurers are just beginning to scratch the surface and have yet to realize the full potential of this capability. In addition, while the insight these tools provides is high value, many insurers lack the means to turn that information into the next best action. Insurers need claims solutions that can help them gain greater leverage from analytics by making them actionable. With BPM solutions that embed analytics within the claims process, insurers can use business insight in real time, such as fraud scores, settlement potential, churn risk, and more to drive the next best action in the claims process. This allows insurers to invoke the right processes to actively address any claims issues and remediate potential risks.

5. Create a competitive advantage with strategic reuse. To reduce costs throughout claims operations—and the enterprise—insurers need to share best practices across the entire claims organization. This requires the ability to make changes holistically to all of the processes used to manage claims. With a unified BPM solution that provides a common repository of claim-specific policies and procedures, the best claims process is always available and can be invoked by any adjuster within any area of a claims organization. Leveraging dynamic rules, each core process can be readily specialized and extended based on the markets an insurer serves.

The uplift comes from the fact that insurers need to make changes only to the deltas between the core best practice and unique process requirements via specialized “layers” of instruction to the baseline process. Rather than having to build the process from scratch every time, an insurer can focus on the deltas and the deltas alone, greatly reducing operational expense while ensuring best practices are embedded in every claims process.

6. Maximize business agility. Insurers also need a business-focused platform that can support the constant change that besets claims operations. Unlike rigid packaged offerings, sophisticated BPM solutions take advantage of familiar, configurable business tools, such as Microsoft Visio or Excel, to enable rapid design and delivery of enhanced claims functionality in a matter of months. Changes can also be dynamically applied across the board to any process where the change is applicable.

By eliminating the need for custom coding and the need to maintain multiple versions of a single process, insurers gain business agility that facilitates rapid return on investment (ROI) through reduced operational costs and improved time to market. As insurers continue to carve out new market opportunities or are confronted with regulatory changes, business-focused BPM tools allow them to quickly and easily modify their claims processes and tailor them to match market drivers. Compared to a packaged application that requires extensive customization or work-arounds, the dynamic flexibility of a BPM solution offers a significant competitive advantage.

True Transformation

As insurers drive their visions for the future, BPM is the enabling technology required to truly transform claims operations. By focusing on opportunities to optimize and reuse intent-driven, best-practice business processes in combination with intelligent case management, insurers can break the manual or exception claims processing that they have grown accustomed to supporting. By using BPM, insurers can transform claims operations to accomplish these goals:

  • Gain a competitive advantage with an agile, strategic platform that can rapidly adjust claims processes to meet regulatory, business, and market changes.
  • Reduce costs and risk by leveraging best practices via dynamic process automation to ensure that each claims interaction is not only consistent but also compliant.
  • Increase ROI with intelligent processes that support the business intent of each claims interaction while offering outcomes that promote customer satisfaction and brand commitment.
  • Proactively mitigate financial risk by optimizing existing infrastructure to identify and remediate claims leakage or fraud potential.

As a result, insurers can spend more time delivering on their customer commitments and better managing total indemnity expenditures. BPM also offers insurers the ability to implement claims processes that provide real differentiation and enable substantial gains in customer satisfaction, retention, market share and competitive advantage while reducing losses and claims leakage.

Featured Video

Most Recent Videos

Video Library ››

Top Story

Mitigating against the No. 1 natural disaster in the U.S.

Be proactive in mitigating losses from winter flooding by understanding the risk and types of coverage to protect against it.

Top Story

Cyber insurance soaring as risks rise

Insurance and financial services buy the most cyber insurance — but as the cost goes up, will that dampen desires to ease risk?

More Resources


eNewsletter Sign Up

Carrier Innovations eNewsletter

Critical news on the latest tech solutions, information security, analytics and data tools and regulatory changes to help decision-makers at insurance carriers keep their business thriving – FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.