The 2012 U.S. Property ClaimsSatisfaction Study done by J.D. Power and Associates confirmed whatmost insurers already know: Claims satisfaction is directly linkedto customer retention.

Among highly-satisfied claimants who scored their insurers 901or higher on a 1,000-point scale, 84 percent said they “definitelywill” recommend their carrier, and 81 percent said they “definitelywill” renew. Among claimants with scores of 550 or lower, only 12percent said they “definitely will” renew with the carrier thathandled the claim, and 18 percent indicated that they had alreadyswitched carriers.

“Our retention numbers are higher for people who have had aclaim versus those who have not,” says Jamie Loiacono, vicepresident of claims at ACUITY, which maintains a 95 percent ratingof “very good” or “excellent” from claimants in random surveys theinsurer conducts.

In a second-quarter 2011 survey conducted by Strategy MeetsAction (SMA), over two-thirds of respondents said that improvingcustomer service was a key business objective in claims. “Improvingthe customer experience is particularly important in a flat marketin order to achieve growth,” says Karen Furtado, partner at SMA.“The customer's experience doesn't happen on the annual renewalquote—it happens in claims.”

People deliver claims service, but technology is anindispensable part of helping them do so. “For the customer, theclaims service needs to be seamless. For the claims adjuster,seamless service requires the right systems,” says Bob Khosropur,formerly chief claims officer for Narragansett Bay InsuranceCompany (NBIC) and now senior vice president-operations at MariposaInsurance Services.

“When you're able to take action and help somebody in the first5 to 10 minutes of filing a claim, you will find that the wholeclaim goes much more smoothly and they have confidence in you,”Khosropur adds.

Insurers are finding it increasingly difficult to deliverexcellent service when saddled with legacy technology, which isdriving interest in claims system transformation.

“There is a very high level of investment in claims technologytoday, and it's going up year over year,” reports KimberlyHarris-Ferrante, vice president and distinguished analyst,Gartner.

The level of investment varies with the size of the company.“Smaller companies may just be going through the process of lookingat core system investments, whereas many larger companies havealready overcome problems with the core and are looking at supplychain analytics and other process improvement projects,”Harris-Ferrante says.

In SMA's survey, 11 percent of respondents were looking toreplace core claims functionality, while 16 percent were looking toenhance their core capabilities.

“The top problem reported with claims was that existingplatforms are simply not compatible with a modern claim process,particularly with the evolution of claims platforms since 2002 whenGuidewire came on the scene,” Furtado says. “Claims projects aredefinitely among insurers' top 10 IT initiatives.”

FROM MAINFRAMES TO IPADS

ACUITY's claims technology transformation began in earnest abouttwo years ago. It has taken shape in its “Next Generation Claims”initiative surrounding its core processing platform as well asseveral tactical projects it has completed. The first keydeliverable of the Next-Generation project was a new web-basedfront end for the regional p&c insurer's internally builtclaims system. The project continued with building reusableconnectors to services such as report ordering systems, damageappraisal apps, rules engines for claim triage and decisionsupport, and the company's content management system.

“We needed to give our adjusters the ability to do their workanywhere they were, at any time, and to have full access to otherapplications they needed without leaving the claims system,” saysNeal Ruffalo, vice president of enterprise technology atACUITY.

From a customer service standpoint, ACUITY's Next Generationsystem now provides what Ruffalo deems a “one-screen stop” foradjusters when customers call. “All the information theyneed—coverage information, reminders, fraud alerts—is readilyavailable at adjusters' fingertips,” he says.

“I can't say it's reduced our staff by a certain percent, butit's certainly allowed us to be more timely and comprehensive,while gaining in consistency, efficiency, and data quality,” saysLoiacono, noting that the insurer handled a company-record numberof claims in 2011, which was attributed to the intense stormseason.

By being fully web-based, the Next Generation system has alsoallowed ACUITY to capitalize on mobile technologies. The company'sentire base of mobile employees—claims adjusters, commercial fieldunderwriters, sales managers, and other field staff—have all beenequipped with an iPhone and 3G iPad2 as of January of thisyear.

“Although we had laptops with air cards before, it's clunky toopen a laptop on a construction site, wait for it to turn on, andcarry it around,” says Loiacono. “With the iPad, you've got an easyto use, 'instant on' device that includes a camera, audio, andvideo recorder. With our web-based claims system, adjusters haveaccess to their full calendar, queue, forms, priorreports—everything they need.”

Managers use FaceTime and Skype to connect with adjusters theyoversee. ACUITY also uses a combination of mobile apps to helpappraise damage, such as Pictometry, which uses satellite imageryto help adjusters measure roof sizes and pitches.

Harris-Ferrante says that mobility is the next frontier forservice-focused claims departments. “Some of the biggest ROIs comefrom investments adjacent to core system transformation, such assupply chain management or mobility. That's the big 'aha' for2012,” she explains.

On the customer side of mobility, ACUITY allows both personaland commercial lines customers to report claims via a mobiledevice. “A foreman on a jobsite can pull out their iPhone, notifyus of a claim, and include all the information we need to get aclaim started or provide us instructions when and where to callback,” says Loiacono.

Customers can look up network providers andclinics to direct injured workers for treatment or connect directlywith ACUITY's nurse triage service, called MASH (Maximum ACUITYService for Healthcare). “With MASH, employees can call and speakwith a registered nurse who will evaluate the nature of theincident or injury and determine the employee's immediate medicalneeds,” Loiacono says.

For ACUITY adjusters, the next mobile capability to be deliveredis e-forms that provide “sign and send” capabilities. “Claimsadjusters will have all the forms they need on their iPad that canbe filled out and physically signed on the device, then instantlysent to wherever they are needed—a doctor, clinic, repair shop, orto our content management system,” says Loiacono.

ACUITY's service improvements have also translated into salesopportunity. “Our claims staff goes out on calls to prospects withour agents. They show our claim system, our mobile apps andaccessibility, and how we can use them to deliver better customerservice to them,” says Loiacono.

CORE CONVERSIONS

NBIC completed a full-scale replacement of its claims system inJanuary 2011. The project was part of an enterprise-wide systemmodernization initiative, titled APEX, which the insurer began in2009.

“A new technology platform was absolutely necessary for thecompany to grow,” says Khosropur. “We couldn't support theindependent agency channel without having a robust way forapplications to be quoted, bound, and serviced. As the platformsserving those functions changed, our claims platform had to changeas well.”

NBIC chose the BlueWave claims solution (formerly calledPipeline Claims) from Cover-All. A primary driver of NBIC's claimsinitiative was the need to deliver consistent claims serviceregardless of case load, an objective that is more challenging toachieve when a natural disaster strikes.

“We were very competitive on a regular basis with claimresponse, but any weather-related event can cause a spike ofseveral hundred percent higher claim volume than you normallyhave,” Khosropur says.

In the event of a catastrophe, NBIC will retain temporary orthird-party adjusters as needed to pick up the slack. However,those adjusters need to get up to speed on the company's claimsystem quickly.

“It was essential we implement a system that users could loginto and use remotely, and that they could be conversant with bylunchtime on their first day,” says Khosropur. “Our previous claimsadmin platform was good in its time, but you couldn't achievemastery of it by lunchtime on your tenth day.”

In addition to helping NBIC maintain service standards duringcatastrophes, the BlueWave platform has slashed the time it takesthe insurer to bring new fulltime employees on board, while modernworkflows have allowed NBIC to settle claims a week faster.

“Not only are assignments sent out more quickly, but they go outwith perfect accuracy,” Khosropur says. “Whether an assignment issent to an inside staff member or outside supplier, it contains allthe information that's needed—name, phone number, availablecoverages, deductibles, accident details, and so on.”

The claims staff also is reminded of each taskbefore it is due. “Today a disorganized adjuster has no choice butto be an organized adjuster because of the available technology,”Khosropur says.

By being SOA-based, Cover-All's BlueWave Claims connects withNBIC's policy admin system from Exigen and the company's enterprisecontent management platform. Web-enablement also allows for easierinterfacing with third-party providers, such as NBIC's first noticeof loss (FNOL) vendor and emergency home services providers.Previously, the FNOL vendor was limited to being a message servicebecause NBIC could not extend access to the legacy platform. Now,the provider can access full coverage details via an interface withits own systems and initiate new workflows within rules-limitedparameters.

“Claims don't just happen during work hours. Now, when someonehas a fire in the middle of the night, the first notice vendor canverify coverage and authorize the emergency services provider to doboard-ups or take other damage mitigation steps. That action is fedback into our claim system and happens before an in-house adjusterever becomes involved,” says Khosropur.

IMPROVED EFFICIENCY

Although customer service is a top priority for insurers inclaims, carriers haven't forgotten about improving efficiency.

“Insurers haven't lost sight of the fact that they have manyinefficient processes,” says Harris-Ferrante. “Claims is a veryexpensive process to begin with, and carriers continue to target itto improve it and make it cheaper and more efficient by improvingthe technology that supports it.”

Over 70 percent of respondents to SMA's survey said a keybusiness driver of technology change was the need to manage claimsefficiently. Companies have achieved efficiency gains by leveragingtechnologies in use elsewhere in the enterprise, such as documentmanagement and workflow, and by focusing on pain-point processesunique to claims, such as fraud detection and litigationmanagement.

“I'm amazed at how many insurers do not have litigationmanagement capabilities and instead manage litigation manuallythrough collections of spreadsheets and documents,” saysFurtado.

“Our pending litigation continued to grow, but we didn't have asystem to manage it, perform analytics around it, or share what'son my desk with other people,” says Gabriel Deer, senior claimsrepresentative at Society Insurance. With half of the insurer'sclaims staff based out of their homes, remote and mobile access wasalso a key objective.

Society Insurance implemented the Legal Solutions Suitelitigation management platform from CSC in March 2011. SaaS-based,the solution automates core processes around the handling of legalmatters.

Immediately after the system went live, Society no longeraccepted paper bills from its law firms. All electronic bills aresubmitted by firms into the CSC system, where they are thenautomatically analyzed to ensure they comply with Society'snegotiated rates and terms.

“Our legal spend is down slightly after going live, but wedidn't put the system in place to save a lot of money by auditinginvoices,” Deer says. Instead, Society sought workflow automationcapabilities, which the platform has delivered.

“Everything in the workflow is electronic—nomore pencil marks on the bill, scanning, and faxing,” says Deer.“It has reduced the time it takes me to review and process aninvoice. The savings have already paid for the cost of thesystem.”

Additionally, Society has capitalized on analytics capabilitiesthat allow it to better manage its case outcomes.

“We can now compare law firm to law firm and venue to venue,which we couldn't do before,” says Deer.

“If firm A is getting better results than firm B, we can now runa report to provide evidence of that rather than just sharinginformation through the grapevine,” he adds. “As a result, we cansteer cases to the right firm, down to the particular attorney thatgets the best results.”

A key pain point for Grange Insurance was a legacy, VB-basedletter generation system that Beth Rickard, senior project managerin claims, describes as “clunky.”

Adjusters had to leave the claims handling system to generateletters, which would cause the user to be locked out of the claimsystem until the form was completed or abandoned. It was difficultto search for the particular document adjusters needed, and therewas no prefill of data from the claim system.

“If adjusters didn't remember a coverage or limit to include ona letter, they would often simply call over the cubicle wall tohave a colleague look up the data. Often, letters were created fromscratch in Word, leading to inconsistent messaging among differentadjusters,” says Andrew Hellard, document automationsupervisor.

In February 2012, Grange completed a five-month installation ofHP's Exstream document automation platform. Clicking a button inthe claims system takes users to a middle layer that connects tothe Exstream application, and integration between the Exstream andclaims systems now populates letters with claims and coveragedata.

Letters that used to take 11 minutes to produce now take lessthan two, leading to a time savings of about 15 hours per week andallowing adjusters to focus on more important claims handlingduties. Grange has also reduced the number of unique letters thatthe claims staff has to contend with by using templates and contentblocks.

“We were able to collapse 29 letters into one with differentoptions,” Rickard says. “We estimate we can eventually reduce over2,500 letters in use today to about 350. That's a hugeimprovement.”

ACUITY's claims technology strategy also includes several recenttactical projects that have cut costs. Replacing a Windows-baseddamage estimating system with Audatex's web-based platform was notonly an essential move before the company transitioned to iPads,but also saved the insurer $300,000 over the past two years.

Additionally, a project to use a rules engine to fast-trackmedical-only claims in workers' compensation, completed in January2011, allows ACUITY to process 65 percent of eligible claimswithout human intervention. “We are not replacing the adjusters'decision-making,” explains Tina Pokrzywinski, director, informationsystems at ACUITY. “Instead, we are automating simple tasks toallow them to focus on complex cases that require expertise.”

NBIC has been able to target operationalimprovement through new data capture and analytic capabilities ofthe BlueWave Claims platform. “A key feature, which also has anindirect customer service benefit, is the ability to design newproducts and programs that you may have been very curious aboutfrom an underwriting and pricing perspective but lacked the levelof granularity in claims data to support,” Khosropur says.

For instance, with its previous claims system, NBIC was onlyable to assign claim payments to a particular coverage. “We builtthe ability to assign payments by endorsements and sublimit. Thatinformation rolls up to your financials and can be used to priceyour product more competitively. It's another way that claims cansupport the underwriting and sales processes,” says Khosropur.

SERVICE FOCUS

Regardless of what technology an insurer chooses,service-focused companies understand that people are at the heartof excellent claims service.

“A good modern claim system will put you on the right path toservice improvement, but it won't get you to being customer centricwithout doing more,” says Harris-Ferrante. “Claims transformationincludes not just new technology, but new processes, improved datamanagement, focus on staffing and empowering claims staff throughmobile devices, and so on. Effective transformation requires a verywell rounded strategy.”

“It's important that our adjusters have the tools at theirfingertips accessible from wherever they are. But beyond that, it'sessential that our adjusters have a mindset of being responsive andcaring individuals,” Loiacono says.

“To insurers, claims are a system and a process,” saysKhosropur. “To customers, claims are a voice on the phone andsomeone appearing at their home when they have loss.”