The Image of Success

Whoever first called the practice of law the paper chase easily could have been referring to insurance claims operations. Insurance adjusting is paper- and document-intensivedoctor reports, hospital records, damage estimates, proofs of loss, lawyer reports, letters, photographs, estimates, etc. Files and shelves (and occasionally adjusters) groan from the weight. Paper consumes time and space. Both of these are frictional costs impeding operational efficiency. Some insurers and claims operations have gone paperless (or at least with less paper) by using imaging and scanning technology.

Some operations swear by imaging technology for claims document management; others swear at the technology. What factors separate the two perspectives? To answer that question, let us also examine five common implementation mistakes and how to avoid them.

Mistake #1: Inadequate lead time. A natural tendency is to underestimate the time that projects will take. Scanning and imaging are no exceptions. Calculate the amount of time you think you will need. Then, double it.

Factor in all that will be needed to implement a scanning system successfully. This includes:
New workstation hardware and technology, such as more powerful computers, larger monitors to ease eyestrain, and broadband to facilitate the transmission of files.
New software and training processes to acclimate to new systems.
The learning curve, as everyone is more inefficient while using new systems.
Quality assurance process of the files to be scanned.
Physically prepping claims files for scanning.
Reassessing work-flow patterns necessitated by the scanning system.
Getting people comfortable with new systems before going live.
Other emergencies that surface as you try to implement a scanning and imaging system.

All this takes time. No one can precisely estimate how much time implementation will take for ones specific claims operation or department.

Mistake #2: Not preparing the troops. Going paperless represents a significant cultural change for claims staffs. For many, it is traumatic and stressful. Paper is a security blanket. It is tangible and familiar. When claims files are digitized and scanned, they are harder to touch, hold, or transport.

Make the claims staff aware of old habits that will become obsolete. Example: trekking to the file room or drawer to pull files. Instead, claims staff will be indexing on the computer.

Especially for those who are less computer savvy, imaging systems can cause stress. Some employees may be unable to cope. Moral: Prepare your staff. A new scanning system involves more than new equipment. It involves new ways of doing business.

Mistake #3: Failure to factor in labor components. While scanning is automated, prepping claims files for scanning is not. It is extremely tedious and labor intensive. Is this what you want busy claims adjusters spending their time doing? Is this the best use of their time?

If not, consider outsourcing this part of the job or adding staffperhaps temp staffto accomplish this. Be sure to factor in this costand the time this component of the project will takeas part of the scanning project budget and timeline. If you do not, you can find yourself either way over budget or behind schedule at the outset.

If the company relies on an already overworked and harried claims staff to do the preppinggood luck. The quality of claims handling will degrade quickly as the staff has less time to keep current on their files. This leads to . . .

Mistake #4: Failure to plan for ongoing operational needs. What happens when the adjuster needs a file because of some late-breaking development but cannot get access to it because it is being prepped for scanning? An antsy insured or claimant (or mediator or judge) will not understand that.

The world does not stop just because the claims operation is in the midst of a scanning project. It is hard to focus on a side project when new mail still arrives every day along with new faxes, new e-mail, and new claims assignments. How does a claims operation handle these and simultaneously convert to a new paperless system? The nonstop incoming pipeline of information is a huge distraction. Just keeping current on reporting, investigating, and reviewing open, pending claims files is a challenge.

In the conversion process, the claims staff is preoccupied with trainingmaybe all day for three dayson the new system. You are prepping the hard-copy files for imaging and conversion. Those claims files never take a break, never take a day off, and never go on vacation. Insureds and claimants do not care if your company is engaged in an imaging project. That is your problemnot theirs. They just want to know, Wheres my check? Running a busy claims operation while implementing a scanning project is like pulling a racecar over to the roadside for a 500-mile checkup during the race while you are still responsible and accountable for competing in and winning the contest.

The challenge is surmountable if certain guidelines are set in advance. The more closed files scanning in, the bigger the task; the fewer, the greater the odds of occasional scurrying back and forth between digitized and hard copies. Much may depend on the companys normal rate of claim reopenings. For certain types of claims, this is very common; on others, it rarely occurs.

Have claims people involved at every step of a scanning project. If management leaves scanning solely to IT staff or views it as an IT project, trouble follows. For example, the IT personnel may have scanning implementation as a project or performance goal. To them, this scanning project is their main thing. To a busy claims department, handling claims is the main thing. The scanning project may be important, but it can be a distraction to the claims staff, still accountable for hitting certain service and productivity standards.
Avoid friction and disconnects between ITs goals and claims department operational needs. Avoid over-exuberant timelines. Completion dates developed in a vacuum by IT personnel without the input of the claims side invite project friction. Without planning (and sometimes even with), goal tension can cause project friction, cost overruns, and unrealistic timelines in completing a scanning project.
Moral: Have claims people involved from the ground floor of the project. Get the buy-in of claims people into the project timeline.
Mistake #5: A failure to think through the interface with outside constituencies. Imaging and scanning also affect the way a claims staff does business. New technologies not only impact internal aspects of operations and work flow, they also change the way claims people interact with various outside constituencies. These constituencies are vital to a claims operation being able to do its job. Who are these constituencies?

Defense attorneys. Send them a copy of the file? Waitthere is no hard-copy file. Instead, e-mail them the file as an attachment. Or, burn it onto a CD and overnight it to them. Encourage attorneys to report electronically. Attachments can come as enclosures to e-mailWord documents, PDF files, or scanned images. Some may want to bill electronically.

Claims auditors. Claims auditors occasionally analyze claims operations. Since they are used to looking at hard-copy files, a scanning system may disorient them. Make sure they know before an audit what they should expect. There will be no hard-copy files. You may need to set up one or more computer workstations for them in advance. When auditors arrive, someone will need to orient them and give functional training on using the scanning/imaging system.

Reinsurers. Most claims departments undergo periodic audits by reinsurers. If the insurer has different treaties with different reinsurers, it may have multiple audits at staggered points throughout the year. Reinsurance claims auditors may be shocked if they arrive expecting to do the usual flip through the file routine. Moral: Tell them in advance you have a paperless system and you can set them up with a workstation.
Excess carriers. If an excess insurer feels there is a chance certain claims will exhaust an underlying primary layer, it will do a claims audit. In that case, set the stage in advance by calibrating expectationswhat its auditors will and wont see in the conference room. Other key constituencies include insurance brokers, clients and policyholders, third-party administrators, and actuaries.

Know that no matter what your IT department does, paperless document management alone will not transform a mediocre claims outfit into a world-class organization. Adjusters must tackle the fundamentals of investigation, evaluation, and negotiation. They must focus on coverage, liability, and damages. Scanning technology is a toolnot a substitutefor sound claims fundamentals. Bicyclist Lance Armstrong titled his autobiography, Its Not About the Bike. Armstrongs success in the Tour de France is only marginally due to his bicycle. Rather, it is due to his training, conditioning, and tactical acumenthe fundamentals of bike racing.

Similarly, IT needs to remember for claims professionals adopting imaging technology, its not about the technology vehicle. Nevertheless, done right, scanning technology can augment productivity and boost client service, and the odds of this happening increase by reading and heeding lessons discussed here.

Kevin M. Quinley CPCU, ARM, is senior vice president, risk services, at Medmarc Insurance Group, Chantilly, Va. He can be reached at kquinley@medmarc.com.

10 Tips for Successful Scanning Implementation

1. Overestimate the lead time needed for implementation.
2. Prepare the claims staff for new work-flow procedures and ways of doing business.
3. Factor in additional staffing needed during scanning implementation.
4. Plan for and think through operational claims needs that still persist during scanning implementation.
5. Anticipate ways scanning/imaging will affect your interactions with outside constituencies.
6. Have claims staff involved in project planning and implementation from the beginning.
7. Do not view scanning/imaging as an IT project.
8. Stress to clients the benefits of imaging technology.
9. Reassess longer-term staffing needs and efficiencies possible with heightened automation.
10. Make scanning an integrated part of your corporate document-retention policy.