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When it comes to sending claims processing offshore, veteran workers' compensation claims managers are split over whether there's anything to be gained, according to a survey.

The poll, conducted during a session at the 15th annual National Workers' Compensation and Disability Conference & Expo in November, revealed a stunning divide: 43 percent of respondents believed the claims industry can benefit, but 42 percent said there is nothing to be gained.

The results are eye-opening, particularly in light of the fact that offshoring proponents believe they have the answer to making claims processing cheaper and more efficient. For their part, critics say sending claims processing offshore results in spotty service. Further, critics say offshoring ultimately means claims managers lose control of the claims administration process. "What's disturbing to me is that employers aren't offshoring to improve service or improve skill sets," said poll moderator Maddy Bowling, principal of Maddy Bowling and Associates Consulting. "They are only doing it to lower costs and increase operational capacity."

Of the respondents who had outsourced parts of the claims process to a vendor offshore, only 26 percent said the quality of outsourcing initiatives was better than the original services, and 60 percent said the quality was not as good as the original. Just 14 percent said the offshore initiatives were as good as the original services.

Most respondents were longtime workers' comp professionals, with 70 percent having worked in the industry for more than 10 years.

Sending claims processing offshore is expected to become a bigger issue in the future. Proponents of the strategy say it's a way of cutting costs and that it's an answer to the expected shortage of skilled claims staff.

As many as 62 percent of the respondents said they had experienced a shortage of claims staff in the last 18 months. But in a follow-up question, Bowling also found that only 7 percent of those with staff shortages had tried to mitigate it by implementing an outsourcing initiative.

A majority of respondents said they had instead increased their adjuster caseloads, enhanced their system automation to improve productivity and shifted the job of adjusting the claim from adjusters to clerical staff.

February 1, 2007

Copyright 2007© LRP Publications