The auto insurance business environment is changing rapidly, a fact that the Insurance Information Institute (I.I.I.) supports with some telling numbers. The industry-supported organization's data indicate that industry expenses are rising to 26 percent on average, and that 2007 net written premium growth is almost flat at less than one percent. According to the I.I.I.'s predictions, the next few years are going to be tough ones, with the industry experiencing an underwriting loss for 2009 and beyond. With property and casualty companies facing such severe challenges, they must find ways to improve claim-handling efficiency and accuracy to remain competitive, without increasing staff.

These challenges have many in the industry wondering how smaller carriers will survive. Some fear that the cost of technology will price smaller carriers out of the market, leaving only larger carriers with the ability to afford to purchase these efficiency gains. This scenario doesn't have to play out, though. There are specific claim technology advances that can leverage claim workflows to reduce errors and increase capacity without increasing headcount. These developments can give smaller carriers the edge they need to remain competitive in the marketplace by increasing their efficiency and accuracy in claim handling — especially in the direct repair program environment.

Compliance Software

In the past, managing a direct repair program's (DRP) performance meant conducting physical reinspections and managing according to performance metrics that were based on the previous quarter's performance. While these methods can be useful, having today's appraisal jobs influenced by last quarter's historical trends is a bit like trying to drive forward by looking in the rearview mirror. You simply cannot get a clear picture by using this approach. Instead, the ideal situation is to coach by looking over the DRP appraiser's shoulder and making sure the proper decisions on parts and repairs are made before the estimate is uploaded and sent back to the insurance company for review and approval.

Compliance software does exactly this. It acts as the “virtual coach” to guide DRP appraisers to write estimates according to a company's specific guidelines. By using this forward-looking practice, a company can avoid driving with the rearview mirror, which will greatly reduce the number of estimates that fall out of compliance and have to be corrected by a review group at the insurance company. Just how much of a reduction can insurers expect to see? A top 20 insurer indicated that more than 40 percent of its review corrections were sent back due to guideline violations alone. Forty percent! If those estimates could be corrected before shops uploaded estimates from their computers to the insurance companies, the time savings and efficiency gains would be immense.

While compliance software is an incredible tool, it is important to understand that it is different from traditional audit software. Because compliance software acts as a preview of a written estimate rather than a review of the final estimate, an estimate can be corrected before the repair shop uploads the estimate to any of its DRPs, significantly reducing cycle times. Traditional audit software, on the other hand, is conducted only after the review group receives the estimate, when the errors have already been made. With traditional audit workflow, the changes are then sent back to the repair shop for the estimate to be rewritten. Some states have extremely stringent regulations that dictate that changes can only be made to an estimate by the appraiser who physically inspected the vehicle — all of which can be avoided using compliance software as your coach.

When looking at compliance software though, it is imperative to realize that all software is not created equally. Some packages require estimates to be uploaded to a host computer for review, which then returns the estimates with suggested corrections. This practice adds an extra step to the estimate process and strands shop appraisers at their computers, forcing them to wait to catch the returned estimates. In most situations, appraisers usually will wait until a batch of estimates come back and work on them when they have time in their demanding schedules.

Like these appraisers, most of us feel increased pressure each year to push the envelope and do more and more in our jobs. Shops are no exception. But compliance software is a tool that can help relieve some of this pressure. Like any new tool introduced into a busy work environment, the key to quick adoption and utilization of a compliance software package is the ease of use. If the assimilation process is simple and intuitive, it will require a minimal amount of effort and not interrupt a shop's or an appraiser's daily routine. Remember that even when appraisers have low assignment volume at a particular shop, they still need to be able to quickly familiarize themselves and walk through an estimate compliance audit correctly. Again, if this process is user-friendly, writing an estimate will be like riding a bike. After an appraiser writes an estimate using compliance software, the process will be just as smooth the next time around, no matter how far down the road the next estimate occurs. You will definitely be able to demonstrate that running compliance software will actually save time in the estimate approval process.

Dispatching Systems

The opportunity to save time isn't limited to compliance software, though. Field appraiser dispatching systems are another example of a technology investment that can help increase efficiency levels — one that similar industries have taken advantage of for quite some time. Service industries with technicians that need to perform tasks much like those of appraisers have long embraced automated dispatch mechanisms with route optimizers. Field service providers — from appliance repair technicians to satellite cable installers — have long had the ability to reprioritize their fleets of service technicians in common situations such as those where a particular service call took longer or shorter than expected. And we, as demanding customers, have come to expect this as routine from just about every other service industry. So why not the insurance industry?

The insurance industry, which is responsible for performing a very similar task set, be it homeowner, bodily injury face-to-face evaluation, or automobile appraisal inspections, has truly lagged behind for years. Why are insurance carriers unable to embrace this technology, which has been commonplace in other service industries with similar tasks? Like many technology hurdles, the inability to implement these changes hinges on the cost. It has been cost prohibitive for most carriers to build a comprehensive integrated system with dynamic route and skill-set optimizers, GPS capabilities, and the ability to customize task duration based on complexity.

Fortunately, the insurance industry's need has been filled, and it is no longer faced with a build-it-yourself option in order to achieve the all-important goal of increasing efficiency. A few dispatch products are now available for claim department dispatch work. Once you've made the decision to invest, it is paramount that several key features are offered during your evaluation to maximize your buy and leverage your claim staff's productivity. So what requirements do you need to look for when evaluating potential claim field dispatch products?

Key requirements should include the ability to integrate it into your claim management system, eliminating the need to re-key data and automating the dispatch process as a whole. It is also vital that the system sends the data and assignments via the web, e-mail, text message, or PDA to any of the major estimating software applications used in the industry. Likewise, you'll want to make sure that the system offers a web-based architecture, which is a significant consideration that absolutely needs to be met for a fast and safe rollout and implementation. The system should also use your specific business rules, not theirs. You know your staff and business partners better than anyone else, and using your rules will create the optimum schedule for staff adjusters, independent adjusters, and body shops. You'll also want to keep in mind that you will minimize your company's IT department upkeep and be reassured that all of the necessary safeguards have been put into place to protect your system and your business by selecting a vendor that hosts 100 percent of the application.

Compliance review software and claim field dispatch products are technologies that can help you meet the challenge of doing more with less. Both of these highly leveraged purchases have their own sets of benefits. In the case of compliance software, it is possible to audit 100 percent of estimates while also reducing headcount. Automated dispatch systems, on the other hand, can achieve increased productivity per appraiser while at the same time increasing customer satisfaction.

Greg Horn is vice president of industry relations for Mitchell International, a provider of information, workflow, and performance management solutions to the automotive insurance claims and collision repair industries. He can be reached at greg.horn@mitchell.com, www.mitchell.com.

Special Reports /

Doing More with Less

Related Stories

Recommended For You