Michael Chochrek, is the insurance solutions principal consultant for Harte-Hanks Trillium Software.

Industry surveys of claims professionals have found that while improving the claims process is top of mind for many, their claims management systems (CMS) lack the capabilities to drive customer retention and bottom line results. For example, according to a recent study by Accenture, 78 percent of claims executives surveyed are upgrading their claims management systems and 66 percent think their claims management systems are not optimized to collect and analyze the growing volume of data to improve claims management.

And yet, most insurers don't have the money or the people-resources to “rip and replace” their CMS. The good news, however, is that insurance organizations have options to extend the life of their CMS by improving the quality and breadth of data flowing into it and by adding more comprehensive capabilities for data analysis.

The Other Half of the (Data) Story

Over the past 20 years, claims departments have seen the volume of data that they collect increase exponentially. While much of this information is electronic data stored in technology applications, a majority of claims communications, including letters from attorneys, documentation of damages and investigative evidence are still communicated via paper.

As a result, claims systems are loaded with a confusing mix of data collected from drop down menus, unclear category codes, data in free-form text fields such as adjuster notes, and documents in electronic formats such as PDFs. While today's CMS houses all of this information, it falls short of the most important part—enabling claims professionals to systematically access and analyze this content which accounts for 50 percent or more of the information relevant to making a claims decision. With only half of the relevant data being accessed by claims professionals, many are making decisions based on incomplete information. Here are three instances that articulate how a new approach can help solve some of the most complex claims challenges.

Improve Customer Interactions, Decrease Cycle Time Each and every day customers are wooed by the competition with low rates and other promotions when they are online, watching TV or listening to the radio. Given the highly competitive nature of the market, each time the customer is contacted by your company can make or break that next renewal. Most companies measure their cycle time around claims with an eye toward shortening it whenever possible. While this is a start, measuring the quality of customer touch points within the life cycle of the claims process as well as their time frames is just as important.

For example, most CMS can help tell you how quickly your organization attempts to contact a policyholder, but cannot measure the success rate or the effectiveness of the contact. Were multiple messages left? Was the correct information gathered? Was the claims process explained thoroughly? These are all critical questions that can leave a sour taste with your customers if not addressed properly.

Insurance professionals know the information needed to measure these activities is available, but it is often hidden away in files of adjuster notes. If claims executives had access to one dashboard of information that broke down the cycle time of every claims activity by every line of business, office, team and adjuster across the company, they could quickly reduce cycle time resulting in more satisfied customers and a higher level of customer retention.

Increasing customer retention rates by just one percent can equate to millions of dollars directed at the bottom line when considering increased direct written premiums and lower acquisition costs. By analyzing all claims data that is not easily accessible from your CMS and taking action on this information, insurance companies can guarantee that interactions with customers will foster long-term, profitable relationships, and don't cause a defection to a competitor.

Better Data Analysis = Faster Claim Segmentation

While automated claims segmentation capabilities may exist in some CMS, they often miss critical data elements in adjuster notes and other unstructured data fields. As a result, even newer systems are vulnerable to mistakes and are unable to provide claims professionals with a holistic view of data for any given claim.

For example, many claims departments have dedicated total loss units that specialize in handling, settling, and concluding auto claims in which the vehicle has been deemed a total loss. There are many specialized tasks when handling a total loss claim, such as getting the vehicle out of storage, determining the actual cash value, and completing the state-specific paperwork in order to settle and pay the claim.

As these decisions and tasks are best suited for the total loss unit, segmenting these claims at the time of report is critical. While it is not always known that the car is a total loss, there are clear indicators if you can analyze all of the information in a claims file, especially adjuster notes. For instance, did the airbag deploy? Is there heavy front end damage? How old is the vehicle? Is it drivable? It is critical to uncover these indicators and route that file to the proper unit and individual to handle that file from day one. Transforming Document Analysis

Claims departments receive a massive amount of mail on a daily basis, despite efforts in recent years to go paperless. While insurers have streamlined and improved the scanning of these documents over the years, managing the volume of correspondence and having an efficient process for analyzing all of their information remains one of the biggest challenges for insurers.

Most insurers attach these scanned documents to the appropriate claims file in a CMS, and then rely on individual adjusters to keep track of deadlines of when each item needs to be acted upon. The most critical items that insurance companies must track, analyze and act upon are time sensitive documents such as time limit demands and letters than allege bad faith handling. Ineffective approaches over the years have caused deadlines for responses to be missed time and time again. The problem is that just one missed time limit demand or bad faith allegation can result in a nightmare claim that costs insurers millions in damages and can destroy their reputation.

By transforming the contents of the scanned document into textual data that can be logged, analyzed, recorded, and reported on, you can create a detailed look into what correspondence you are receiving on a daily basis. This timely, accurate analysis of data will include the type of document, the date it was received, the correct corresponding claim number, the claims handler, and a deadline for response. This process can be set up based on type of correspondence, such as time limit demand, bad faith letter, or even new suits that are received and need to be answered. Venue specific time frames can be built into the solution to generate accurate due dates as well. Ignored time limit demands and unanswered suits resulting in potential defaults will be a thing of the past.

Regardless of size or available resources, there is no need for claims departments to work with a less-than-optimal CMS. By adding better capabilities for data analysis and improving data quality in current systems, insurance organizations can improve the overall claims process and strengthen business performance.

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Another Option to &lsquo;Rip and Replace&rsquo; Your Claims Management System

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