A universal truth in claim processing is that the longer it takes to settle a claim, the larger the ultimate dollar payout for that claim. Reducing claim-processing time is a self-evident requirement for insurance companies. With states' imposing more stringent prompt-payment regulations, the ability to comply is becoming increasingly important. Insurance companies also are realizing that accurate, fast claim processing pays dividends by reducing the number of customer service inquiries, improving customer retention, fostering better relationships with agents, and providing the ability to manage loss-adjustment expense.

How can insurance executives achieve these improvements? Through the use of enterprise content management technology to control both the content (all of the paper, faxes, e-mail, and documentation) and the business processes associated with claim processing. Examples of content supported by enterprise content management include paper documents, internally or externally developed forms, e-mail, electronic documents such as Word documents and Excel spreadsheets, XML, audio, and video.

An important element of any business process is being able to connect to other systems to bring information to the adjuster's desk. Enterprise content management systems can be integrated with existing internal and external applications, with data pulled and pushed from other applications, providing employees, such as claim adjusters, with secure, authorized access.

The typical claim is made up of several different types of information that must be handled by claim employees to either settle or deny claims. In most companies, that information is received and routed to the appropriate people via manual processes. When companies are handling tens of thousands of claims, that seemingly simple process of getting a document to the claim department might take several days, or even longer. Because most claim documents are received piecemeal, just gathering all of the information required to determine the outcome for a claim can takes days, or even weeks.

Business process management is a key component of an effective enterprise content management system. It is business process management that helps reduce cycle times and improve productivity by automating and streamlining complex processes. Most insurance companies understand the advantages of employing business process management technology in claims and other departments; many, however, still are handling claims manually.

The power of business process management technology is its rule engine that enables companies to define and control how information is routed and how business decisions are made. Executives and managers are able to model, simulate, analyze, report, and collect production data, allowing continuous assessment and the ability to adapt as business conditions require. The overall objective is to decrease error rates due to missing information or human factors, lower exception processing, and streamline processing for the majority of claims.

Managing Work

Of interest to many insurance executives is how to view and use this information to improve day-to-day claim management. With the objective of getting claims settled faster and more accurately, business processes need to be documented and simulated for the myriad types of claims that are processed every day. Because most companies manage different types of claims, work flowcharts for each type and sub-type of claim can be created. Workloads also differ, and business process management technology can balance workloads over the entire company.

As processes are better understood, claim executives and managers can examine and analyze different work-flow scenarios and determine their overall effects on the company, prior to the actual implementation of any change. With good accounting information, the cost of each step in the process can be determined. The overall result is that claim managers have control over processes and the ability to modify them as needs or requirements change.

In addition, insurers must be on the outlook for fraud from faked car thefts and accidents, exaggerated injuries, and unnecessary medical procedures. Spotting trends and incidences among claimants or providers helps insurance companies identify the need for further investigation. Enterprise content management technology can allow carriers and their claim departments to communicate with third-party organizations, such as ISO, to obtain claimant, property, or vehicle data.

Reducing claim leakage also is an important step in improving accuracy and, ultimately, profitability. Insurance companies might be unaware that claims are being overpaid when the amount is insufficient enough to trigger a routine overpayment request. While these overpayment amounts are minor on an individual basis, they can be substantial on a cumulative basis. Enterprise content management systems can identify these minor overpayments readily, allowing them to be recouped.

Enterprise content management systems also aid in record storage. Most insurance companies must store and manage huge volumes of paper and electronic records. Because claim records are not all the same, claim retention requirements can vary from a minimum of three years to as long as decades. Components of a record management strategy include how to declare, classify, and dispose of both electronic and physical records. A well defined record management plan allows insurers to reduce the risk of litigation, provide business continuity, and enforce corporate compliance and record-keeping procedures.

Enterprise content management technology offers a variety of advantages depending on the type of insurance company. Workers' compensation claims are paid in a timely manner, eliminating unnecessary delays that may inadvertently prolong cases and increase the benefits paid. Homeowners and auto insurers can handle the deluge of inquiries and claims from policyholders at the time of catastrophes, such as a floods, fires, or hurricanes. Insurance companies can provide field adjusters and policyholders timely and accurate information online, from the first notice of loss to the settlement of the claim. Insurers also can streamline the handling of complex claims, such as disability claims, that require collaboration among several experts for resolution.

Among the contributions that an enterprise content management system can make to a claim department are automatic alerts of changes in benefit schedules and provider contracts, and the expiration of benefit periods; access to state requirements for claim notifications; calculation of reserves on consistent bases; routing claims to subrogation specialists or nurse caseworkers; and identification of trends in suspicious claim activity. Companies also can monitor access to electronic files in order to meet various state and federal regulations for record management and privacy.

Enterprise Content Management at Work

The proof of enterprise content management is in the results achieved. One insurance company that offers medical, dental, and prescription benefits implemented enterprise content management and boosted claim-processing productivity by 53 percent, enabling the company to process more than 200,000 claims per week with a staff of 1,000. While new claim volume grew by eight percent, processing accuracy remained at 98 percent.

Another insurance company that offers automobile, homeowner, mobile home, and commercial insurance policies improved the efficiency of its claim processing, reducing the time to process a claim by 25 to 30 percent. Using such technology to monitor the actual balance of its workload, this company also was able to reallocate almost 100 employees.

One insurer realized a hidden benefit from changes to its claim-processing practices. The company was engaged in underwriting large risks and, although the transaction volume was not high, millions of dollars were involved. Because its own claim was prepared and submitted electronically to its reinsurer, the company received its payment promptly. Normally, these payments would have taken months due to the paperwork involved.

For claim-processing operations, enterprise content management systems help insurance companies to automate complex business processes, streamline procedures, identify bottlenecks, balance employee workloads, and make better business decisions. Insurers continually juggle the effective use of technology to speed up their own processes, detect fraud, and reduce claim leakage, while remaining compliant with state and federal regulations. Through the smart use of technology, insurance companies can gain control, generate uniform claim-handing practices, and help keep premiums affordable.

Therese M. McGee is director of worldwide insurance and health care marketing at FileNet.

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