Michael Chochrek, is the insurance solutions principalconsultant for Harte-Hanks Trillium Software.

Industry surveys of claims professionals have found that whileimproving the claims process is top of mind for many, their claimsmanagement systems (CMS) lack the capabilities to drive customerretention and bottom line results. For example, according to arecent study by Accenture, 78 percent of claims executives surveyedare upgrading their claims management systems and 66 percent thinktheir claims management systems are not optimized to collect andanalyze the growing volume of data to improve claimsmanagement.

And yet, most insurers don't have the money or thepeople-resources to “rip and replace” their CMS. The goodnews, however, is that insurance organizations have options toextend the life of their CMS by improving the quality and breadthof data flowing into it and by adding more comprehensivecapabilities for data analysis.

The Other Half of the (Data) Story

Over the past 20 years, claims departments have seen the volumeof data that they collect increase exponentially. While muchof this information is electronic data stored in technologyapplications, a majority of claims communications, includingletters from attorneys, documentation of damages and investigativeevidence are still communicated via paper.

As a result, claims systems are loaded with a confusing mix ofdata collected from drop down menus, unclear category codes, datain free-form text fields such as adjuster notes, and documents inelectronic formats such as PDFs. While today's CMS houses allof this information, it falls short of the most importantpart—enabling claims professionals to systematically access andanalyze this content which accounts for 50 percent or more of theinformation relevant to making a claims decision. With only half ofthe relevant data being accessed by claims professionals, many aremaking decisions based on incomplete information. Here are threeinstances that articulate how a new approach can help solve some ofthe most complex claims challenges.

Improve Customer Interactions, Decrease CycleTime Each and every day customers are wooed by thecompetition with low rates and other promotions when they areonline, watching TV or listening to the radio. Given thehighly competitive nature of the market, each time the customer iscontacted by your company can make or break that next renewal. Mostcompanies measure their cycle time around claims with an eye towardshortening it whenever possible. While this is a start, measuringthe quality of customer touch points within the life cycle of theclaims process as well as their time frames is just asimportant.

For example, most CMS can help tell you how quickly yourorganization attempts to contact a policyholder, but cannot measurethe success rate or the effectiveness of the contact. Were multiplemessages left? Was the correct information gathered? Was the claimsprocess explained thoroughly? These are all critical questions thatcan leave a sour taste with your customers if not addressedproperly.

Insurance professionals know the information needed to measurethese activities is available, but it is often hidden away in filesof adjuster notes. If claims executives had access to one dashboardof information that broke down the cycle time of every claimsactivity by every line of business, office, team and adjusteracross the company, they could quickly reduce cycle time resultingin more satisfied customers and a higher level of customerretention.

Increasing customer retention rates by just one percent canequate to millions of dollars directed at the bottom line whenconsidering increased direct written premiums and lower acquisitioncosts. By analyzing all claims data that is not easily accessiblefrom your CMS and taking action on this information, insurancecompanies can guarantee that interactions with customers willfoster long-term, profitable relationships, and don't cause adefection to a competitor.

Better Data Analysis = Faster ClaimSegmentation

While automated claims segmentation capabilities may exist insome CMS, they often miss critical data elements in adjuster notesand other unstructured data fields. As a result, even newer systemsare vulnerable to mistakes and are unable to provide claimsprofessionals with a holistic view of data for any given claim.

For example, many claims departments have dedicated total lossunits that specialize in handling, settling, and concluding autoclaims in which the vehicle has been deemed a total loss. There aremany specialized tasks when handling a total loss claim, such asgetting the vehicle out of storage, determining the actual cashvalue, and completing the state-specific paperwork in order tosettle 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 known that the car is a total loss, thereare clear indicators if you can analyze all of the information in aclaims file, especially adjuster notes. For instance, did theairbag deploy? Is there heavy front end damage? How old is thevehicle? Is it drivable? It is critical to uncover these indicatorsand route that file to the proper unit and individual to handlethat file from day one. Transforming DocumentAnalysis

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.

Most 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. Themost critical items that insurance companies must track, analyzeand act upon are time sensitive documents such as time limitdemands and letters than allege bad faith handling. Ineffectiveapproaches over the years have caused deadlines for responses to bemissed time and time again. The problem is that just one missedtime limit demand or bad faith allegation can result in a nightmareclaim that costs insurers millions in damages and can destroy theirreputation.

By transforming the contents of the scanned document intotextual data that can be logged, analyzed, recorded, and reportedon, you can create a detailed look into what correspondence you arereceiving on a daily basis. This timely, accurate analysis of datawill include the type of document, the date it was received, thecorrect corresponding claim number, the claims handler, and adeadline for response. This process can be set up based on type ofcorrespondence, such as time limit demand, bad faith letter, oreven new suits that are received and need to be answered. Venuespecific time frames can be built into the solution to generateaccurate due dates as well. Ignored time limit demands andunanswered suits resulting in potential defaults will be a thing ofthe past.

Regardless of size or available resources, there is no need forclaims departments to work with a less-than-optimal CMS. By addingbetter capabilities for data analysis and improving data quality incurrent systems, insurance organizations can improve the overallclaims process and strengthen business performance.