Each year, U.S. Property-Casualty insurers pay over $200 billion in losses and spend nearly $40 billion managing claims. Broadly accepted industry estimates suggest that current payments and adjustment expenses on these claims include $11-$14 billion of overpayment, or leakage. Most carriers have implemented claims management systems to improve claims processing and reduce leakage through improved processing efficiencies. However, many carriers are missing a golden opportunity to reduce leakage by improving the decision making process of their adjusters. Claims adjuster decisions on “moderately complex claims” (i.e. shared liability, soft tissue injuries, litigation) can vary widely, are often inconsistent, and offer limited transparency, all of which can result in a carrier still incurring a loss and leakage rate of 10 percent or higher. Typically, sophisticated analytical techniques are widely used by both property and casualty insurance carriers. While these techniques have been deployed successfully for actuarial and underwriting purposes, it is in claims management where expert-based decision and analytical applications can bring about revolutionary innovation, bottom-line savings, reduced litigation expenses, and marketplace advantage.

Decision Consistency Drives Effectiveness

Many carrier executives are working to meet the following operational goals:

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

Executives realize they cannot reach these goals without injecting discipline and consistency in claims handing processes. Carriers require consistent, transparent, data-assisted adjuster decisions to determine comparative negligence, identify the potential for fraud, estimate injury damages, identify subrogation opportunities, and consistently negotiate outcomes based on facts. Many carrier executives have noted that this consistency in decision-making processes leads to claim handling efficiencies, and supports significant improvement in corporate goals and performance.