Have you ever picked up a claim file and just sort of scratched your head at the events that transpired during the life of the claim? During a recent audit of a large P&C carrier, I had a number of head-scratching situations as I pondered steps that could have been taken to achieve a more accurate outcome.
It’s not that this was a big surprise; much of my career has involved claims management, quality assurance, and process improvement. It’s just that basic quality should be such an integral part of the claims process, meaning gaps in handling are the exception, rather than the norm.
While the focus of this article is claims-centric, the steps to success certainly transcend any particular type of organization. In fact, basic blocking and tackling is the fundamental building block upon which success can be universally achieved.
To better understand the concept of accuracy, consider that the result is largely determined before the claim ever happens. To put this in perspective, let’s use the analogy of the winning football team, where the foundation for winning is set before the game even begins.
The Players- More than any single component of success, the players are critical to quality. Certainly things like workflow and technology are important, but lacking a talented pool of players is the single biggest stumbling block to achieving success.
The Coaches- Of equal importance are the coaches. All the talent in the world cannot effectively execute without tactical direction and a strategic vision.
The Process- Once the team has been assembled, a process must be adhered to. Just as a successful football team leverages a dynamic playbook and innovative coaching, the successful organization will leverage the dynamic end-to-end process and dynamic leadership.
The Outcomes- These are the byproducts of effective blocking and tackling. Far too often, processes are managed by exceptions rather than rules. If the process is refined, the outcomes should speak for themselves, with exceptions remediated through a philosophy of continuous process improvement.
Bringing these concepts from the gridiron to the boardroom enables organizations to achieve excellence. By focusing on the fundamentals of claims, insurers have the ability to streamline and refine processes in such a way that will ultimately give them a competitive edge in an increasingly competitive marketplace.
From the first notice of loss to ultimate disposition, recognizing in the potential for errors is critical in defining the workflow. Accuracy begins on day one, with all pertinent information being obtained and followed up on. It is here where many gaps begin to rear their ugly head.
Consider the lack of information often obtained, be it phone numbers, tag numbers, or insurance details. To put this in perspective, nearly 40 percent of files reviewed for missed subrogation opportunities routinely turn up information.
As the claim progresses, consider the gaps that develop from failure to complete timely estimates, missed opportunities on LKQ and aftermarket parts, improper damage calculations, or overlooked joint tortfeasors.
With carriers are doing more with less, other unintended consequences are lurking in the shadows with 15 percent of all claims being closed with a missed subrogation opportunity. Even in claims where subrogation has been identified, errant liability decisions have played a role in reducing the optimal settlement.
While opportunities abound to improve quality, the good news is that success can be achieved inexpensively. By focusing on basic blocking and tackling, it is possible to calibrate an organization so that outcomes are in sync, rather than widely divergent.
It is through the calibration process that total quality is measured, as opposed to a piecemeal approach. As an analogy, consider the auto manufacturer that measures a variety of parts to ensure that they were made properly. At the end of the assembly line, the car looks nice but it doesn’t start. Wouldn’t it have made more sense to measure the totality of the output?
The same holds true in claims. While benchmarking is a necessary tool, it is even more critical to make sure that what is being benchmarked makes sense. While adjusters may strive to exceed expectations, such as timeliness of contacts and inspections, they may falter when it comes to recovery, estimating, or settlement opportunities, leaving significant sums on the table annually. Wouldn’t it make sense to measure to totality of the product, which will ultimately drive results throughout the life of the claim?