Most claim adjusters would agree that we are in a stressful, highly competitive business. Most of us also have a great sense of humor, which might be why the claim business is our chosen profession or, for whatever reason, why the claim business has chosen us.
The claim adjuster arguably has the most challenging job in the insurance company because he is the primary contact with customers when a claim occurs. Also, since the adjuster represents the insurer, prompt and well-informed communication along with quality claim handling can make or break policy renewal. We know the policy contract is most important to the insured upon the occurrence of an unforeseen event. This is when the insurer's promise, and the claim adjuster's credibility, is put to the test.
Is Anybody There?
Supervisors try to shift caseloads to help ease the claim unit's burden by equitably balancing work during maternity leaves, vacations, employee resignation/termination/layoffs, but most claim departments have experienced little change in day-to-day business operations in the last 10 years. We see stacks of paper-intensive claim files and combinations of disparate technology systems, many of which are underwriting-based, which add little value to moving a claim towards resolution. Paperless work environments are becoming more common, but many of these systems still do not communicate well with one another.
Whether senior-level executive, middle management, or front-line claim adjuster, most have first-hand experience of what it is like to handle a claim caseload. It can involve hundreds of files, many with multiple plaintiffs/claimants, multi-lines of business, special account-handling instructions, national-account constraints, diversity of venues, volatile jurisdictions, and ambitious closing objectives. Yet many of us are forced to utilize antiquated mainframe, stand-alone, or outdated claim-management technology.
Cases are "round-tabled" or committee reviewed and discussed with ultimate decision-makers for monetary settlement authority. Then the adjuster is sent on his way to a court-appointed or face-to-face settlement conference, or perhaps to a designated alternative dispute resolution forum.
But are these discussions consistently documented? If so, how? And by whom? Who's watching your back? It is not just the adjuster's back, either. What control is in place to justify the company's claim-handling position?
Impossible to Please
Insurer colleagues outside of the claim department see adjusters arranging trips through corporate travel, coming and going with laptop in hand, and think business travel is easy and glamorous. In reality, however, adjusters diligently travel to towns like Bismarck, N.D., Lincoln, Neb., or Rhinelander, Wis., to negotiate claims in good faith.
Adjusters also are constantly second-guessed by management and by post-settlement auditors, whether via in-house quality control or by outside consultants and regulators. Suppose an adjuster settles a claim for an amount below indemnity reserve. In-stead of hearing words of congratulations, someone might ask, "Why did you reserve so high?" Or, if adverse counsel presents previously unsubstantiated evidence for a claim at the courthouse steps that necessitates a reserve revaluation that is still a solid business decision, comments received usually are along the lines of "Why did you overpay this claim? Why didn't you increase this reserve a year ago? You need to be more aggressive in pursuit of specials."
Talk to most career adjusters and they will overwhelmingly say, "Just give me clear-cut results, expected, well-informed management direction when needed, and the tools, including technology, to do my job and I'll take care of the rest." Career claim adjusters who are not interested in climbing the corporate ladder are still invaluable to claim-department success and need to be pro-vided with tools to achieve favorable financial results.
We all hear that the file should speak for itself. That if it is not documented in the file, it didn't happen. Or if you don't have the right answer, you better find a way to get it and get it quickly. If this is the case, how can the adjuster generate better claim results without the proper tools to clearly document day-to-day file activity?
Outsourcing for the Future
Intra-company business segments can be in conflict, too. For example, the primary underwriting objective is to successfully secure renewals, bring in new business, and meet production goals. At times, however, adverse risk selection translates into unfavorable claim history, hence weak financial results overall. Rather than getting bogged down with production "turf wars," underwriting should seek claim input during policy application whenever possible to confirm venue volatility, line-of-business developments, and adverse loss trends which might not be known to the underwriter. If not for underwriting, there would be no claims for the claim department to handle; without quality claim handling, there would not be a financially solvent insurer.
By embracing technology, insurers can share critical internal communication between designated end-users, justify business decisions, and ensure a well-outlined audit trail for regulatory compliance. We should leverage technology to support claim-adjusting efforts.
Claims Magazine and ADP Claims Services Group recently hosted a web seminar in March 2006 that was entitled, "Claims Management — The Benefits of Business Process Outsourcing for the Insurance Industry." In it, nearly 70 percent of attendees confirmed that insurers are not prepared to compete globally without technology outsourcing. What should an insurer look for to effectively outsource technology?
Vendor selection Choose a vendor with industry expertise and flexible technology to suit business requirements. Technol-ogy should be easily integrated with existing systems, rather than reinventing the wheel from the ground level.
Trust Vendor selection is best performed by word-of-mouth referrals or testimonials from industry colleagues, as well as through due diligence of the proposed vendor selected. A reputable vendor encourages thorough beta testing and "try-it, buy-it" programs prior to implementation.
One solution/all functions Seek to provide claim adjusters with a solution that they can utilize for all functions, or one that can be seamlessly integrated with existing systems. Avoid a bunch of disparate software by stressing ad hoc reporting capabil-ity rather than outdated mainframe MIS reports.
Beta testing Since claim adjusters utilize insurer claim-management systems the most, do not hesitate to empower front-line adjusters as end-users for vendor product testing. Claim adjusters can provide blunt feedback about what works and what does not as well as if the technology will help to perform the job better. A reputable vendor will encourage carrier participation in product customization during implementation. Don't be turned off by a beta testing request as it enables the vendor to produce optimum technology to suit specific business needs.
Training Clear, concise, and well-documented protocol is key in training, which means knowing where to go when ques-tions arise. The vendor must ensure product use is clearly managed by end-users at implementation. Insist they provide an end-user manual, frequently asked questions on their web site, and a live helpline to ensure a seamless transition.
Controls The vendor needs to audit business processes to measure favorable results and improvement opportunities, provide immediate feedback, and ensure consistent communication between insurer and vendor liaison.
Implementation Once a vendor is selected, be patient with the implementation process and try to cultivate the technology partnership. Initially, vendor representatives might sit side-by-side with end-users, look over their shoulders, and ask questions during due-diligence testing.
Non-Disclosure Agreement Insist on a well-documented non-disclosure agreement to ensure confidentiality during product testing, training, and implementation. Include who pays should something go wrong, who is responsible for securely managing/warehousing client data, and address intellectual property issues.
Technology can have a profoundly positive impact on our industry in the upcoming years, which will help to watch the ad-juster's back and ensure quality claim results, motivate and enhance job performance, provide a competitive edge, and strengthen insurer financial solvency position.
Tom Filep, CPCU, is CEO of Greenwich Solutions, Inc., an insurance technology consulting firm dedicated to helping insurance companies strengthen financial results. Filep is also a past president of the New Jersey Chapter of the CPCU Society. He can be reached at tfilep@greenwichsolutions.com.
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