Despite the massive expenditure of money, timeand resources to implement and maintain a claims management system(CMS), many claims professionals are not satisfied with thecapabilities provided. In fact, a recent report by Accenture statesthat 78 percent of claims executives surveyed are upgrading theirclaims management systems.

Moreover, 66 percent of survey respondents believe their claimsmanagement systems are not optimized to collect and analyze thegrowing volume of data to improve overall claims management.

Given the challenging economic environment, most insurers do nothave the money or the people-resources to "rip and replace" theirCMS. The good news, however, is that insurance organizations dohave options to extend the life of their CMS by improving thequality and breadth of data flowing into it and by adding morecomprehensive capabilities for data analysis.

Analyze The "Other 50 Percent" of Data

Over the past 20 years, claims departments have seen the volumeof data that they collect increase exponentially. While much ofthis information is electronic data stored in technologyapplications, the fact is that a majority of claims communications,including letters from attorneys, documentation of damages andinvestigative evidence are still communicated via paper.

As a result, systems are loaded with a confusing mix of datacollected from drop down menus, unclear category codes, data infree form text fields such as claims adjuster notes, and documentsin electronic formats such as PDFs. While today's CMS houses all ofthis information, it can fall short of the most important part,namely enabling claims professionals to systematically access andanalyze this content which accounts for 50 percent or more of theinformation relevant to making a prudent claims decision.

Why is this information so important? Following are threeexamples that illustrate how a new approach can help solve some ofthe most complex claims challenges.

Cycle Times and Customer Relationships

Think of how many times each day your customers are wooed by thecompetition with low rates and other promotions when they areonline, watching TV or listening to the radio.

With such high stakes, each interaction, each time thepolicyholder is contacted by your company can either make or breakthat next renewal. Most P&C insurers measure their cycle timearound claims with an eye towards shortening it—speedingresolution—whenever possible.

While this is a start, measuring the quality of customer touchpoints within the life of the claims cycle, as well as their timeframes is equally important.

Some claims management systems are able to provide a certainlevel of insight but cannot analyze the entire universe ofinformation in your claims file. Acting on this information willenable an insurance organization to not only increase customerretention and profitability but also reduce loss payouts andimprove the quality of claims investigations.

For example, while most systems can provide information as tohow quickly an organization attempts to contact a policyholder,they typically are unable to measure the success rate or theeffectiveness of the contact. Were multiple messages left? Was thecorrect information gathered? Did the person representing theinsurer explain the claim process thoroughly to the claimant orpolicyholder? These are all critical questions that must beanswered. When not addressed properly, such interactions can leavea sour taste with your customers.

Of course, most insurance professionals know that theinformation needed to measure these activities is available, but itis often hidden away in files or adjuster notes. If claimsexecutives had access to one dashboard of information that brokedown the cycle time of every claims activity by every line ofbusiness, office, team, and adjuster across the company, then theycould quickly reduce cycle times. This, by extension, would resultin more satisfied customers and a higher level of customerretention.

This approach also provides crucial information to help controlspending, providing full transparency into where money is beingspent wisely (and where it is wasted), based on objectiveinformation. Consider it a "premium protection plan" and a qualityassurance test on all of your claims files, not just a manualreview of a few random ones.

Some of our insurance customers have found that increasingcustomer retention rates by just 1 percent can equate to millionsof dollars directed at the bottom line when considering increaseddirect written premiums and lower acquisition costs. By analyzingall claims data that is not easily accessible from your CMS andtaking action based on this information, insurers can guaranteethat interactions with policyholders foster long-term, profitablerelationships instead of causing customer defection to acompetitor.

Speeding Claims Segmentation

The faster an insurer is able to get the claim in the hands ofthe appropriate adjuster, the more time it will have to take thenecessary steps to manage the claim to an appropriate outcome.

While automated claims segmentations may exist in some claimsmanagement systems, they often miss critical data elements inadjuster notes and other unstructured data fields that can provideessential clues to help route the claim to the right adjuster atthe right time. As a result, even newer systems are vulnerable tomistakes and are thus unable to provide claims professionals with aholistic view of data for any given claim.

Our own survey in late 2012 found that 55.6 percent of claimsprofessionals believe that disagreements about insurance claimsdecisions is a key customer issue, many of which result from issueswithin the claims process, along with less-than-optimal datautilization. For example, many claims departments have dedicatedtotal loss units that specialize in handling, settling, andconcluding auto claims in which the vehicle has been deemed a totalloss.

Total Loss Claims

There are many specialized tasks when handling a total lossclaim, such as getting the vehicle out of storage, determining theactual cash value, and completing the state-specific paperwork inorder to settle and pay the claim.

As these decisions and tasks are best suited for the total lossunit, segmenting these claims at the time of report is critical.While it is not always immediately evident that the car is a totalloss, there are clear indicators if the insurer can analyze all ofthe information in a claims file, especially the adjuster notes.For instance, did the airbag deploy? Is there heavy front enddamage? How old is the vehicle? Is it drivable?

It is critical to uncover these indicators and route that fileto the proper unit and individual to handle that file from day one.In addition to this example for total loss auto claims,comprehensive data analysis can also support other types of claimsthat require immediate segmentation, including bodily injury (BI),special investigative unit (SIU) referrals, and homeowners' claimsthat involve fire, water infiltration, or mold specifically.

By adding better capabilities for data analysis to your currentCMS, you can ensure that that your adjusters receive the rightclaims at the right time, thereby resulting in better qualityinvestigations and speeding settlement for claimants.

Automate Document Analysis

Claims departments receive a massive amount of mail on a dailybasis, despite efforts in recent years to go "paperless." Whileinsurers have streamlined and improved the scanning of thesedocuments over the years, managing the volume of correspondence andhaving an efficient process for analyzing all of their informationremains one of the biggest challenges for insurers.

Many insurers attach these scanned documents to the appropriateclaims file in a CMS, and then rely on individual adjusters to keeptrack of deadlines of when each item needs to be acted upon. Thetruth is, most of the CMS in use today provide little-to-noautomated capabilities for analyzing this information in anefficient and precise manner.

The most critical items that insurers must track, analyze andact upon are time-sensitive documents such as time limit demandsand letters than allege bad-faith handling. Ineffective approachesover the years have caused deadlines for responses to be missedtime and time again. The problem is that just one missed time limitdemand or bad faith allegation can result in a nightmare claim orexpensive litigation that costs an insurer millions in damages andcan destroy its reputation.

By transforming the contents of the scanned document intotextual data that can be logged, analyzed, recorded and reportedon, insurers can create a detailed look into what correspondencethey receive on a daily basis. This timely, accurate analysis ofdata will include the type of document, the date it was received,the correct corresponding claim number, the claims handler, and adeadline for response.

This process can be set up based on type of correspondence, suchas time limit demand, bad faith letter, or even new suits that arereceived and need to be answered. Venue specific time frames can bebuilt into the solution to generate accurate due dates as well.Ignored time limit demands and unanswered suits resulting inpotential defaults will be a thing of the past.

In addition to using this information for tracking, an insurercan also identify trends within a department for traininginitiatives and performance management issues. For example, is onespecific unit experiencing issues in identifying bad faith letters,or is one individual driving your default situations? Theseinstances can be identified by drilling down into the data helpinginsurers can avoid these situations through early detection andidentifying core problems to be corrected. By proactively managingthis process, the number of claims that are placed in an adverseposition due to an untimely response can be minimized and theperformance of your claims personnel can be maximized.

The amount of information contained in scanned documents isstaggering when you consider how much mail is received by insurancecompanies on a daily basis. By enhancing your CMS to automate theanalysis of this information, you can gain unprecedented insightwhile helping your company avoid situations that damage theirbottom line and reputation.

Regardless of size or available resources, there is no need forclaims departments to work with a less-than-optimal CMS. In fact,adding capabilities to an existing system can deliver greatervalue—often in 90 days or less—without the expense and disruptionof implementing an entirely new system. By enabling insurers toleverage all the data at their fingertips, solutions for dataquality and analysis can help extend the life of a claimsmanagement system, eliminate the need for a multi-million dollarreplacement, and improve the overall claims process—driving resultsdirectly to the bottom line.