Tech Can Improve Claims Resolution Decreasedinvestment earnings have caused insurers to take a hard look at theloss side of the business. Those taking the hardest lookswith thedetermination to improve a process they can no longer afford toleave aloneare realizing they can profoundly change their profitpotential by improving their claims-resolution process.

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More and more, p-c insurers are leveragingthe Internet to improve communications with supply chain partnersand to speed up service processing. By automating and streamliningclaims handling processesmanaging relationships with serviceproviders, adjusters, appraisers and suppliers more efficientlytheyare finding new opportunities to control costs, enhance customerservice, improve retention and acquire real-time information. Atthe same time, they are able to reduce loss-adjustment expenses,decrease cycle times, lessen claim severity and increase volumeprofitably.

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Is this possible? Absolutely. Property and casualty insurersthat employ e-claims technology to manage automobile claims mayfind improvements in three areas: fewer calls to suppliers, fewervoice mails from suppliers, and less time on the phone withinsureds selecting vendors

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There may also be faster and more efficient supplier referrals,with an increase in referrals to body shops and auto-rentalsuppliers with which carriers have preferred relationships.Appraisal costs will also be lower from the carriers preferredshops

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In general, these results may be obtained via fundamentalimprovements in business processing. Those process improvements areattributable to communications improvements enabled by exploitingthe Internet as a medium. As a result, claims can be controlledmore quickly by involving all of the right people at the righttime, actually linking all the parties that comprise the supplychain and making them more collaborative.

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Beyond that, e-claims technology can help make particular tasksroutine, ensure consistency, encourage adjuster adherence to bestpractices and preferred programs, encourage suppliers to commit tocompletion dates, and allow carriers to monitor performance alongthe chain throughout the process. And because before-and-aftermeasurements on these process improvements are quantifiable,e-claims is one implementation that can yield readily identifiableROI.

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Beyond the obvious volume, efficiency and customer-serviceimprovements achievable by transferring claims-resolution processesto a shared, electronic medium, e-claims systems can achieve suchpositive outcomes by providing less obvious benefits.

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For example, e-claims can eliminate the time and expense ofreceiving, processing, routing and delivering all thecorrespondence necessary to managing a claim file (and the fearthat any or all of it will end up in a vacationers in-basket orlost in the document scanning process). Correspondingly, theexpenses required to increase staffing levels and expandinfrastructure as claims volumes grow also is eliminated, alongwith the administrative cost of maintaining, closing and archivingfiles.

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Many routine tasks can be automated or eliminated. Since moste-claims systems provide sophisticated imaging capabilities,documents can be acquired digitally at the source (the supplier),transmitted, and automatically stored against claims or policies,reducing the need for “touches” and the possibility of human error.As a corollary benefit of electronic access, all those with theneed and the appropriate security access can view scanned images atthe same time, regardless of where they are.

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As a latter-day version of the paper trail, electronic filesandthe procedural paths created by e-claims systemsmake it easy totrace any action, decision, conversation or document, at any pointwithin the process, and to derive substantive and accuratemanagement-reporting information.

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Significant time and money can be saved by eliminatingthird-party storage and retrieval costs. Once electronic imagefiles have been created, there is no need for off-site claims filestorage and archiving. If the cost of off-site storage andarchiving is eliminated, the cost of file-retrievaland theseemingly interminable waits for storage firms to locate anddeliver filescan be dramatically reduced as well.

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E-claims systems tangibly improve customer service, shorteningthe time it takes to resolve claims; enabling claims-handlers torespond to inquiries without invoking the dreaded call-back; makingit possible for claims-handlers to access any information or imagewithin seconds; and reducing the need for voice mail and faxes.

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These systems ultimately improve customer loyalty by making theentire claims-resolution process more convenient and lessdisruptive to the customer.

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E-claims systems make it possible to more closely measureadjusters and vendors against program specifications, financialprojections, and/or performance standards. Such specificmeasurements also enable claims managers to monitor performance andprocesses in real time, to ensure that all staff, vendors andsuppliers are coordinated in resolving claims. This helps them todevelop and direct training and guidelines for internal staff andexternal vendors, to provide quick and efficient supplierreferrals, and to ensure the accurate information that makes suchmeasurement and monitoring possible always is available.

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Its unlikely that investment earnings on premium dollars everwill re-approach prior peaks. The competitive nature of thebusiness and the regulatory hurdles facing premium increases willcontinue to challenge underwriting earnings. As a result,opportunities are now greater than ever to place process focus onthe loss-resolution side of the business. The industry and thetechnology have come a long way, and insurers who seek everycompetitive edge are paying as much or more attention to theirbottom lines as to their top lines.

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Profit potential can be improved by improving theclaims-resolution process. The Internet can be used to improvecommunications and speed up service processing. And there can benew opportunities to control costs, enhance customer service,reduce loss-adjustment expenses, decrease cycle times, lessen claimseverity, increase volume profitably and improve loss ratios.

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Colin Smith is vice president of operations at Castek, basedin Toronto, Canada. The company develops business software for p-cinsurers. For more information, visit www.castek.com.


Reproduced from National Underwriter Edition, March 31, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.


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