Your Claims Playbook: 5 Key Fundamentals

To many, August just means the dog days of summer, family vacations, and a few more trips to the beach before school starts. But to football fans, August takes on an entirely new meaning. From NFL training camps to college workouts to Pop Warner, the gridiron comes alive. It is time to don those pads and get into shape for the upcoming regular season when the Boys of Fall leave it all on the field. 

Within our own claims organizations, August is a great time to pull out the playbooks as well and have a crash course in claims fundamentals. Here are five key areas to guarantee a winning season:

1. Comparative negligence recognition. Arguably one of the biggest stumbling blocks in claims organizations is the failure of adjusters to accurately identify and assess liability. It is estimated that a mere 3 percent of claims are closed with a comparative negligence assessment. When compared with juries who consider comparative negligence scenarios such as intersections, lane changes and slip and falls, more than 50 percent of the time, this is a significant opportunity for improvement. 

This is also a highly quantifiable area, with average paids being directly impacted. Consider an organization with an average claim payment of $5,000 and a 3-percent comparative negligence assessment rate. For every 10,000 claims processed, they are seeing a benefit of $1.5 million. If that carrier were performing among the elite ClaimIQ users, the assessment rate would approach 35 percent, or a benefit of $17.5 million per 10,000 claims processed.   Even incremental gains of 5, 10 or 20 percent can have a huge bottom line impact. 

2. Subrogation. When comparative negligence opportunities are missed, so too is subrogation. It is estimated that approximately 15 percent of all claims are closed with a missed subrogation opportunity. This provides some low hanging fruit for closed file audits.  Imagine if you could go through your closed inventory and identify a significant amount of money that has been left on the table. It is like walking down the street and finding a hundred dollar bill. Only it isn't a hundred dollars. It is tens of thousands or even millions of dollars ready for collection.

3. Consistency. As discussed in Blocking & Tackling: The Playbook for the Winning Claims Organization, consistency is the key to success in anything we do. The entire six sigma methodology is based upon the premise of uniformity and consistency. If 100 adjusters are given the same file, in most environments, then the probability of 100 different outcomes is very high. But should it be? If the repair time to the quarter panel is 4 hours, then there should be a consistent approach and methodology to landing on 4 hours. If the BI claim is worth $7,500, then there should be some level of calibration to ensure the proper outcome.  The lack of consistency leads to leakage and taking steps towards organizational calibration are critical to quality. 

4. Execution. When the coach calls a 3-4 dive, it means one thing and one thing only. The three back runs through the 4 hole in hopes of gaining some yards. Just like the gridiron, organizations succeed when the players, or adjusting staff, follow the guidance of the coaches, or managers. During my tenure overseeing quality assurance for a large multinational insurer, the failure to execute on fundamentals was the leading cause of leakage. 

From the errant liability previously discussed to blown coverage decisions, the root cause was always the same. Adjusters weren't following the playbook. There were often short cuts taken due to ill-defined processes. By improving definition around the end to end claims processes, organizations can take tremendous steps towards improvement. A great exercise is to create a flowchart of every aspect of the life of the claim, from FNOL to recovery and everything in between. 

5. Increase efficiencies. During the flowchart process, there will be a number of head scratching moments. Some of these can be improved internally, some externally. Take the example of the BI adjuster who just seems to be falling behind. The blame will often fall on workload, but is that the root cause? Perhaps the adjuster needs the assistance of a business partner to organized the demand, systemically review the medical bills for UC&R pricing, modifier abuse and other deceptive billing practices. By leveraging such technology, adjusters not only become more efficient but have the tools necessary  to negotiate more accurate settlements, reducing indemnities, cycle time and expenses while increasing productivity. 

On the gridiron, success is derived from the basics. Certainly Hail Mary's are fun to watch, but they earned their moniker for a reason. Success comes from fundamental execution of basic plays.

In this day and age of technology, sometimes it is easy to get distracted. Technology is far too often used as a crutch to prop up an organization, but it is essential. Those who understand this leverage technology to make people perform better. At the end of the day, the most crucial element in any organization, claims or otherwise, is the ability to have people execute on the fundamentals.     

I recall an instance a few years back while coaching a local Pop Warner team and a parent asked why we ran so many running plays. During this undefeated season we had outscored our opponents 239-12, so the answer was quite simple, “It works.” 

Christopher Tidball is an executive claims consultant, speaker and author of multiple books. Tidball  has more than 20 years of adjusting, management and executive experience.