Each year, U.S. Property-Casualty insurers pay over $200 billionin losses and spend nearly $40 billion managing claims. Broadlyaccepted industry estimates suggest that current payments andadjustment expenses on these claims include $11-$14 billion ofoverpayment, or leakage. Most carriers have implemented claimsmanagement systems to improve claims processing and reduce leakagethrough improved processing efficiencies. However, many carriersare missing a golden opportunity to reduce leakage by improving thedecision making process of their adjusters. Claims adjusterdecisions on “moderately complex claims” (i.e. shared liability,soft tissue injuries, litigation) can vary widely, are ofteninconsistent, and offer limited transparency, all of which canresult in a carrier still incurring a loss and leakage rate of 10percent or higher. Typically, sophisticated analytical techniquesare widely used by both property and casualty insurance carriers.While these techniques have been deployed successfully foractuarial and underwriting purposes, it is in claims managementwhere expert-based decision and analytical applications can bringabout revolutionary innovation, bottom-line savings, reducedlitigation expenses, and marketplace advantage.

Decision Consistency Drives Effectiveness

Many carrier executives are working to meet the followingoperational goals:

  • Aggressively grow premiums without proportionately growing theadjuster base
  • Reduce claims processing costs
  • Improve customer service
  • Improve adjuster productivity
  • Maintain or improve corporate compliance
  • Monitor results-based improvement on team and organizationalperformance

Executives realize they cannot reach these goals withoutinjecting discipline and consistency in claims handing processes.Carriers require consistent, transparent, data-assisted adjusterdecisions to determine comparative negligence, identify thepotential for fraud, estimate injury damages, identify subrogationopportunities, and consistently negotiate outcomes based on facts.Many carrier executives have noted that this consistency indecision-making processes leads to claim handling efficiencies, andsupports significant improvement in corporate goals andperformance.

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