Offshoring Comp Claims? Do the Math.
It used to be we feared automation. The machines, we thought, were going to take all of our jobs. Or worse yet, we'd be hunted by Arnold Schwarzenegger in a postapocalyptic junkyard. But now the job thieves are human again--the un-Americans working for pennies in phone-center sweatshops in crowded underdeveloped parts of the world. Isn't it funny that to protect itself from these foreigners, the workers' comp industry uses machines--computers?
Computer automation is now the man in workers' comp, but a look down memory lane--say, to a Risk & Insurance® article from July 1993--takes us back to when automation was still proving itself. Then, even a major health insurer like Provident was processing fewer than one-tenth of its claims electronically, and the author of the article had to explain and promote imaging to the skeptical and confounded reader just as we explain SOA to you today.
That's where we're at now with offshoring. The workers' comp industry is only testing the waters, by shipping overseas such simple functions as paper conversion and data mining, and perhaps a more complicated task like first report of injury. Gradually, however, the industry will ship off more functions of the claims process, and catch up to more advanced industries.
There's no other course in an interconnected, ultracompetitive world. A company spends millions on hardware, software and broadband to be able to connect to anyone, anywhere, anytime--you might as well use that investment. Companies experimenting with offshored paper-pushing are already realizing a return. When it comes to more advanced jobs--such as injury first notice--the benefits are more profound. You can have a qualified person doing a superior job abroad for less money, rather than some overpaid, overfed, undertrained American. The math is so simple and powerful that even somebody educated in a No Child Left Behind school system can understand it.
Why do people fight this proposition? Sadly, usual arguments against offshoring are steeped in the good ol' American traditions of racism and xenophobia. When somebody argues against sending "American jobs" to distant locales like Manila or Bangalore, he typically conjures up images of smelly, dirty cities full of people inherently less qualified than Americans. Worse yet, these people have funny accents, which aren't so funny when clients are trying to do business on the phone.
Certainly offshore firms can screw up, and we all have our story about how some customer service operator, 10 time zones away, was rude or confusing or just incompetent. But that kind of behavior isn't limited to a facility offshore--it could just as easily happen in Scotts Bluff, Neb., or the Bronx, N.Y.
The reality is that offshored jobs can be completed just as well, if not better, than jobs performed stateside. At this very moment, millions of foreigners in distant lands are answering calls for U.S. companies, dealing in data, and problems are virtually nil, besides those few horror stories. Case in point--offshored nurses in the group health industry. Insurers use them to check on American patients after they leave the hospital. The nurses provide, at cents to the dollar, clinical service unavailable in a U.S. call center. The group health industry knows it gets better service from offshored nurses compared with mediocrity from recent American grads daydreaming about "American Idol."
We all know that the workers' comp industry follows group health like a little sister after her big brother, so it's just a matter of time. The workers' comp business is on borrowed time as is. The current claims adjusters will soon find the only thing they're adjusting is the recliner in a retirement home. Who will replace them? American kids chasing more glamorous professions, like law, finance and "American Idol"? Or Asian kids looking for a profession providing the good things in life--a weekly paycheck and a chance to improve their lot?
is associate editor of Risk & Insurance®.
November 1, 2006
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