Filed Under:Agent Broker, Agency Management

One and done: Expediting the claims process for policyholders

Opinion: Going from estimates to payments as quickly as possible is key

Experience matters in both basketball and insurance claims. (Photo: Shuttestock)
Experience matters in both basketball and insurance claims. (Photo: Shuttestock)

The expression “one and done” first arrived on the college basketball scene in the mid-2000s when the National Basketball Association (NBA) began prohibiting high school seniors from entering the NBA draft right after graduation.

Since the league required new athletes to be 19 years of age or play one year of college or international basketball before turning pro, most student athletes opted to play a single year of college ball before entering the draft. 

As Adam Silver, the NBA Commissioner recently said, the “one and done” era may be coming to a close because the current system is unsustainable. The attempt to protect professional basketball from unprepared players has led to an influx of illegal, corporate dollars flowing into college sports and other negative repercussions.   

Related:  Underwriting transformation in the digital era

Young insurance adjuster using a tablet

Technology is allowing adjusters to settle claims faster, but are they capturing all of the critical information? (Photo: Shutterstock) 

Does one and done work in claims?

The insurance claim handling industry has created its own form of one and done in the past couple years. Some carriers and IA firms—seeking to establish faster protocols for handling claims—are hopeful to short circuit the scoping and estimating process. They want insurance adjusters to inspect, estimate and issue advance payments to policyholders as quickly as possible and, preferably, at the customer site after the first inspection: one inspection, one estimate, file “done.”

The logic to accelerate cycle times and process payments to ensure happier policyholders make a great deal of sense. While the logic here is sound, the system is flawed. Fundamentally, today’s market lacks the resources to execute this one and done model successfully. This is because there are limited experienced field people to implement a proper scope followed by an accurate estimate produced quickly on-site.

Related: Here's why some fire damage claims go up in smoke

For example, what happens during hurricane season when those experienced resources are desperately needed in multiple locations at once? Supply is short, and as more inexperienced resources are called upon, their ability to execute a one and done model quickly falls apart. If there is an attempt to do so, there becomes a greater likelihood of re-inspections and other time-consuming challenges that will prolong the process of closing a file.

Further, the one and done model de-values the scoping task itself. Estimates are, inherently, a derivative of a scope. While critically important to settle a loss, estimates are typically delivered alongside general loss reports, scope notes and other supplemental information.

If there is a rush to execute the estimate, is sufficient attention being paid to the creation of the scope itself and the supplemental information? Failure to give those related deliverables proper attention can result in downstream challenges for carriers and service providers, especially if there are estimating discrepancies or a file ends up in court.

Adjuster reviews damage to auto

Specialization may allow adjusters to capture information more quickly and expedite complex claims. (Photo: Shutterstock)  

Turning to claims specialization

A growing number of top insurance businesses are instead segmenting the workforce involved in claims operations currently handled by a singular, field-based labor group. The separation creates focus, scale and greater efficiency. It can also enable a new kind of specialization in tasks such as “drone piloting” or “roof inspecting” in the field, and “central estimating” or “file examining” at the desk.   

We see optimal claims operations like the assembly line that put American manufacturing on the map and continues to drive manufacturing globally. If you were to build a car, you wouldn’t ask each technician to build an entire car single handedly. Why? Because doing the upholstery and installing electronic components requires different skill sets. It’s called an assembly line because interchangeable parts are added as the semi-finished assembly moves from workstation to workstation. When the parts are added in sequence, final assembly is most efficient. Asking a single person to build the whole car is inefficient and produces a less consistent product.

Related: Insurance apps aren’t popular with policyholders yet, finds J.D. Power

We believe that Henry Ford’s assembly line approach — not the one and done approach — is far more effective for the claims process because it creates specialization in tasks and efficiency in the production of the scope and deliverables.

Team handling or inside-outside models with different service offerings can help achieve the desired work products relative to the type and size of losses a carrier seeks. The claims assembly line model enables each person in the line to better specialize and optimize for a specific task. Just like the NBA is changing, it’s time to embrace a better path to faster, more consistent, and less expensive claims operations.

Brett Goldberg is the CEO of Spex. Contact him at brett.goldberg@spexreport.com. Opinions offered are the author’s.

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