Is it possible to build a house without a hammer and nails? How about producing a car without an automated assembly line? Surely it could be done with a tremendous amount of effort and some pretty substantial flaws in the end product. The same holds true for our claims organizations, where investigations, negotiations and settlements can happen, but without the right tools there are destined to be flaws.

During a recent meeting with a prominent claims leader, someone expressed that much of this particular carrier's success was derived from improved utilization of “special programs” and tools. In fact, so much emphasis is placed on tools that they have developed an entire department focused on this type of research and development.

From the earliest days of claims, a variety of tools have been used. Initially, this consisted of nothing more than a pen and paper to document the claims adjuster's investigation. Then came cameras, Dictaphones and roller tapes. As technology has advanced, the tools have played a pivotal role in making adjusters more efficient with outcomes that are more accurate.

At some levels, however, insurers may balk at tools. After all, aren't we paying adjusters to adjust claims. Of course, that makes perfect sense, just as we pay construction crews to erect buildings. But having either complete the tasks without a blueprint for success and the proper tools just doesn't make sense.

Technology As A Catalyst

As we have discussed in in this blog before, success stems from three key aspects of the organization; people, processes and technology. Tools in and of themselves will not take an organization to the next level; rather they will improve productivity of people and optimization of processes. Technology is merely the catalyst to derive the outcome. Consider ClaimIQ, which requires the full attention of the adjuster so as to support investigative decisions while providing a framework for negotiations.

The premise of this type of claims optimization is to meld carrier best practices with hands on knowledge and experience which ultimately drive the right outcomes. By modeling the practices of the most effective and efficient in an organization, this behavior can be replicated resulting in calibrated processes and workflows.

Results are derived from the consistent execution of fundamentals. The biggest challenges facing any organization, claims or otherwise, are behaviors that deviate from the norm. By bringing everything into alignment, results not only become normalized, but predictable. This is critical in the world of insurance where predictability is critical to assessment of risk.

To put this into context, consider the traditional audit methodology in many industries, including our own. A random sampling of product in various stages of development is reviewed for quality, accuracy and defects. To achieve Six Sigma success, there can be no more than four defects per million opportunities. This is an incredibly high degree of success, and the reality is that most organizations operate somewhere between the second and third sigma, which translates into 66,000 to 308,000 defects per million opportunities.

When translating defects into process, consider basic errors such as not contacting a party to a claim, missing a witness, not obtaining a police report. Now add to this simple metrics such as missed subrogation or auto physical damage supplement rates. Further compound the challenges to accuracy with improper liability assessments or poor negotiation skills.

While these types of errors can be found with a traditional sampling of claims, the ability to isolate trends can be slow and cumbersome. Arguably, a better approach is rooted in leveraging tools. Consider basic metrics such as allowable medical bills. Reactively, an auditor could pull a file an manually identify what was billed and owed. Proactively, this same auditor could cover exponentially more ground with tools that automate this entire process. The same holds true for other aspects of claims, whereby targeted selection based upon claim tool methodology can produce reports to isolate defects down to the adjuster level.

Back to the hammer can nails analogy. Could a house be built without these tools? Certainly, but much like a house of cards it would eventually collapse. Rather, by providing the builder of a house or a claim, with the necessary tools, a level of certainty about quality and outcome will emerge.

What we see throughout the industry is that claims departments which think and act in a manner rooted in consistency and fundamental execution tend to gain a significant competitive advantage. This advantage is not limited to claims, as these same concepts can be leveraged in all aspects of organizational improvement.

Christopher Tidball is a casualty claims consultant with Mitchell International and the author of multiple claims process improvement books, including Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary! He has served the claims industry for 25 years, having held multiple adjusting, management and execution roles with insurance carriers. He may be reached at chris.tidball@mitchell.com.

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Leverage Tools Wisely To Improve Claims Outcomes

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