Filed Under:Claims, Auto

Don't run your claims management on autopilot

Brokers and third-party administrators provide valuable service, but they aren't affected by the financial outcome like an insurance company is.
Brokers and third-party administrators provide valuable service, but they aren't affected by the financial outcome like an insurance company is.

Too many companies try to operate their claims programs on autopilot. This has never been more prevalent than today, when many companies and public entities have reduced the size of their risk management or claims departments.

The companies outsource more of these functions to “partner” organizations, believing they are looking out for the company's well-being. While outsourcing might be the best ultimate solution for these companies, autopilot should not be the word that describes a firm's program.

The full definition of autopilot according to the Merriam-Webster dictionary is, “a device for automatically steering ships, aircraft, and spacecraft.” It goes on to say, “The phrase on autopilot is often used to describe a person who is doing something in a mechanical way without really thinking about it.” Is this how you want your claims program to run?

This model has been in place in the claims world for a long time, and more and more companies think it applies to the complete risk management program, erroneously believing that these responsibilities can be performed by others outside of the company with specific expertise. While these experts, such as brokers, third-party administrators (TPAs), medical management companies, and the like offer valuable service, they should not be relied upon to run the program because they are not affected by the financial outcome of the services like an insurance company is.

TPAs and other service vendors have done an excellent job of serving their clients’ claims management responsibilities. However, one should never expect a TPA to assign the same importance to reducing claims costs as a client's company, and it is always a good idea to monitor TPA and other service vendors to make sure they are keeping the insurance company high on their list of important clients.

The symptoms of a program on autopilot

Symptoms of a program on autopilot can be identified by certain responses to specific questions. Some of the questions are shown in Figure 1.

Some of these same questions may also apply to other vendors such as:

  • Medical management companies and medical bill
    review companies for Workers’ Compensation claims

  • Appraisers for automobile physical damage and
    property damage claims, or for property claims

  • Defense attorneys for any type of claim.

Continue reading ...

Moving from autopilot to becoming the pilot

The pilot is very important, but the pilot does not do everything to fly a plane. He or she relies on airplane manufacturers, pilot training schools and courses, mechanics, baggage handlers, flight attendants, fuel specialists, and a wide variety of others to provide successful flights for customers. The pilot is responsible for gathering these skill sets for a successful claims program.

Using the previous questions, the third column in Figure 2 now provides examples of a program where the company is actively involved and acting like the pilot.

These pilot responses illustrate the hands-on involvement of the company. They clearly show that the company uses its vendors throughout the claims process, but does not rely upon them without overall supervision and direction. Everyone needs help in performing their responsibilities, but the process works best when all parties are given clear expectations, understand them and how the expectations are measured, and know that their performance is being monitored. Make sure to be the pilot, and don't rely on autopilot to do your job.

Related: Are you prepared for these claims, tech and risk management trends?

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