NEW ORLEANS–Claims operations in need of making changes must focus their thinking on the individual aspects of their business to make it work, an expert told a meeting of claims professionals here yesterday.
Donald Applestein, a senior consultant with Milliman Consultants and Actuaries, advised that there is no simple cookbook with set answers for claims operations.
He spoke at the ACE claims event on the topic of how to improve claim operations, reduce costs and implement best practices.
In making changes, he advised that management must have a clear set of goals, have good communications to put across their vision, a committed management team, and a strategy of putting through changes incrementally.
He said changes require winning the emotional commitment of employees. A method for this, he said, is to make staff feel there is an immediate need and to imagine they are in the position of a boy who learns to swim because the raft he is floating on is put on fire.
Mr. Applestein suggested employees must be told there is a crisis within and that "we have to fix that now." Management, he said, should "burn the raft."
He noted that centralized operations may achieve more uniformity in claims settlements, while decentralized firms have a quicker ability to settle without uniformity.
Milliman, he pointed out, recommends that the home office's control be focused on the more complicated lines of business such as intellectual property, commercial general liability and construction defects with the creation of specialized headquarters teams.
Mr. Applestein also advised that a good ratio of adjusters to supervisors is five-to-one or seven-to-one.
Reserving authority and settlement authority, he said, should be aligned with staff based on their proven ability, not based on seniority, job title or experience.
Management should do frequent audits of operations, the consultant said, keeping in mind that "you get what you measure."
Audits, he suggested, should be based on randomly selected files and involve a set number from an adjuster's caseload. He added that such checks should be done at established time intervals. The audits, he continued, should involve objective scoring and allow for constructive feedback.
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