Several years ago I lived in Knoxville, Tenn., in beautiful east Tennessee. There was a place in the middle of the city where two major interstate highways, I-75 and I-40, came together. The volume of traffic going through this major intersection had exceeded the original intent of the design and construction. Truckers talking on their CB radios had a special name for this unfortunate traffic engineering nightmare — “Malfunction Junction.” It was so named because truckers and other motorists would sit for long periods of time before they were able to come out the other side and continue on the way to their destinations. Fortunately improvements were later made that eventually relieved this area of much of its traffic woes, making the area somewhat more car- and driver-friendly.
In the claims world, we have another area that can sometimes be a “Malfunction Junction.” This is the point where claims management responsibilities come together, whether they are performed by staff or outsourced to service providers — the mind and desk of the adjuster.
In many cases the traffic flows smoothly and in the right direction through the adjuster, and the claims are resolved efficiently and effectively. However, especially in the case of significant or complex losses involving multiple parties, the traffic may not flow as freely through the adjuster as it should. These delays or blockages primarily occur because of one of two reasons:
The adjuster’s caseload is too high for the adjuster to manage the claims assignments well, or
The adjuster is not efficiently managing his/her time and work while trying to direct traffic from these other avenues.
The outcomes of these delays or blockages are:
Claims that remain open longer than they should,
Misdirection that results in some of the parties heading off in the wrong direction, or
Collisions between the parties.
The most troubling outcome from a financial perspective is that these result in greater cost in both claims costs and loss adjustment expenses.
What Causes these Malfunctioning Junctions?
Sometimes malfunctions occur because managers and supervisors require or allow their adjusters to carry workloads that exceed reasonable levels, dispatching more traffic through the junction than appropriate. Reasonable levels vary by line of insurance, type of claim, efficiency of the workflow and the claims system, experience of the adjusters, and many other reasons. However, as more TPAs and insurers try to differentiate themselves from their competitors, they realize that poor claims service due to excessive workloads is not the type of differentiation they want. Therefore, many of them are reducing and limiting the number of claims or features that their adjusters handle. Also, clients are insisting on more manageable workloads, and these requirements often find their way into the special handling instructions that the claims administration and client negotiate.
The issue I see most often in the course of claims audits and efficiency assessments is that many adjusters and supervisors lack good time management skills, and also fail to manage their work efficiently. Even in cases with low caseloads, adjusters often complain that they do not have sufficient time to properly manage the claims that they are assigned.
This also occurs when much of the work that was previously performed by adjusters has been farmed out to vendors. In some cases, the presence of specialty vendors aids the adjuster because the vendors perform tasks for which they may be better trained. However, in some cases the coordination of these various services requires more organization and execution, resulting in another malfunction junction at the adjuster if they are not properly managed.
Lastly, in some cases the adjusters have assigned work to specialty vendors and have abdicated their responsibilities, relying on the vendors to update them and handle various parts of the claim with inadequate direction. Unfortunately, this often leads to poor results, even when the vendors may be fully qualified and are conscientious about performing their duties.
Insurers or TPAs may have also failed to efficiently develop their claims workflows, resulting in excessive hand-offs, redundant activities, staff/work mismatches, and other issues that require adjusters to perform many manual tasks that should be automated. For example, an adjuster or supervisor may be required to review a long list of open claims to identify those that need large loss reports, rather than relying on reports that identify those claims and automatically route them to the person with the appropriate authority.
One of the greatest efficiency-stealers that I have noted, however, is when adjusters fail to properly plan their workdays. Rather than have a daily or weekly work plan, adjusters let the many daily distractions take them away from their most important responsibilities — planning and resolving the claims.
How to Avoid or Mitigate the Malfunction
There are many efficiency experts who provide excellent guidance on how to work more productively. Execution of these recommendations, however, is the most difficult part of using the tools.
What can insurers, TPAs, or self-administered claims programs do to help their adjusters manage their time and work better? What can adjusters to improve the quality of their daily lives, and provide higher-quality service with better results? The following matrix provides some recommendations, which are categorized by management or adjuster responsibilities:
If management has established a better environment for efficiency and productivity and the adjusters have been properly trained, then the most difficult part begins — discipline and execution. Management and the adjusters must work hard to adhere to these principles and procedures. They must identify and fix distractions that enter their daily lives, and management should formalize the requirements in association with the company’s “best practices.” The use of these tools to create more effective work environments will allow management and the adjusters to avoid “malfunction junction” and get traffic going in the right directions.