By NEIL WEISS, product marketing manager, claims, at Guidewire Software, a provider of flexible core systems to the property/casualty insurance market
Replacement of legacy claims systems has become a popular, although complex and time-consuming, process for many claims organizations. Some are in the early stages, still considering the idea. Others are in the midst of new system implementation. But, a growing number have reached the other side of the challenge and are now enjoying the benefits of claims system replacement.
New claims technology brings new opportunity for continuous improvement. By utilizing the now easier to access claims data, insurers can analyze their past and current states in order to make the best claim decisions and better control claim costs.
The highest performing claims organizations are seldom happy with the status quo and tend to look for tools and methods that offer the potential for greater insight into their operations, ideally at the individual claim level.
Looking to dissect and closely scrutinize indemnity costs and loss adjustment expenses, these organizations seek to better understand, measure, and track how their claims handling performance influences the customer experience.
Modern claims systems have opened a new door to insurer data, making previously unattainable (or cumbersome to retrieve) data more accessible. Now the challenge becomes one of maximizing this data to help shape processes and improve outcomes.
Business intelligence (BI) tools have often been deployed to assist claims managers in these efforts. But, these tools are too complex for most users, often disconnected from the core claims system, and inaccessible to customer-facing staff.
BI tools tend to gather and display historical transactional data offering a view of the past rather than using real time data to deliver a current state picture and the opportunity for immediate impact. They tend to offer the big picture on an enterprise-wide basis versus a granular claim- by-claim level. While BI tools offer considerable value, to make those tools truly effective, an insurer should consider claims performance monitoring tools as a key component of their BI strategy. In the ideal environment, this functionality would be natively incorporated as part of the insurer's claims administration platform, accessible to all claims staff.
New claims technologies should offer more than just doing things faster and automating more of the handling process. New systems should offer ways to do things better by enabling insurers to rethink or retool processes to take full advantage of the flexibility and power of modern technologies. If an insurer is still in the early stages and currently evaluating potential claims systems, they should consider each system's native performance monitoring capabilities. If the new system selection has already been made, management should explore what performance monitoring tools are available to garner even greater value from the system and foster a claims environment focused on continuous improvement.
Continuous improvement opportunities can be found in costs, productivity and service. The highest performing claims organizations will keep a close eye on all three, adjusting and refining as they gain greater insight.
Better to have made the appropriate claim payment in the first place, rather than recovering the loss after the fact. When managers can take a close look at the claim detail, they are able to more effectively track important performance metrics (to the insurer's standards), such as whether or not payment is in line with similar claims, whether reserve changes indicate a claim is developing poorly, or whether adjudicating costs are escalating disproportionately to the claim value.
Productivity: "Power to the people" is a familiar saying to most everyone. Well, when it comes to claims handling, "power" comes in the form of putting performance information and analysis into the hands of adjusters and claims managers. Visually incorporating this information into their desktop claims application, for at-a-glance status, gives them a better understanding of their individual performance and the power to continuously improve. Self-evaluation against benchmarks and metrics are put into practice. Just as adjusters view their individual performance, managers can monitor performance and productivity across their entire team, at the individual adjuster or claim level in real time.
Service: Claims may be the only personal interface an insurer has with its customers and it can be a stressful and emotional interaction that tests the relationship like no other. So, getting it right the first time and making the customer whole is a key factor in customer retention, especially in today's commoditized market. When a claim remains open for an unnecessarily long time, costs increase while customer satisfaction decreases. When ongoing, claims performance monitoring enables insurers to measure, track, and understand all the metrics that strongly influence the customer experience, they also provide the opportunity to effect change, with insurers and customers alike sure to benefit.
Management reporting has traditionally been retrospective in nature; past tense if you will. As insurers dig into the data warehouse of historical information and produce reports that offer a view of the past, they hope to identify areas of improvement and implement change. They then hope for an improved result in the next set of reports.
To become and remain a high-performance claims operation, insurers need the ability to generate and leverage real-time information for immediate analysis and action in order to impact how individual claims are handled from that moment forward. Effective claims performance monitoring delivers this "power of now" capability with information that is current, relevant, and clear.
By eliminating reliance on batch-loaded data from the warehouse, claims performance monitoring tools leverage data directly from the claims system that is real-time, accurate, and relevant to the insurer's specific benchmarks and targets. By fostering a more proactive approach, real time and native performance monitoring capabilities can more quickly and effectively impact claims costs.
Relevant: Traditional BI activities are typically one-step removed from the daily operations of the claims team. Oftentimes, BI is delivered in the form of a printed report, offering little opportunity for further analysis or immediate action. When current information is extracted from the core claims system, delivered to the desktop in a usable and easy to digest format, and made available for further dissection and analysis, it translates into immediately actionable knowledge. But this level of current data and analysis, enabling quick action, can only be achieved when the performance monitoring tools are native to the claims system.
Effective performance monitoring is of consequence to all levels in the claim processing chain. Adjusters can quickly diagnose when a claim is being processed efficiently if they have good metrics and real-time indicators measured against the organization's benchmarks. Management can continue to monitor group, individual and claim performance with aggregate reports that reflect real-time statistics on the overall health of their claims organization. And since they are monitoring in real-time, they can intervene as soon as claims need to be escalated, while simultaneously ensuring customer service standards are being maintained and costs managed.
More traditional reporting methods limit analysis to "the report" with no opportunity for further dissection or drill down to diagnose at the individual claim detail. When the performance monitoring capabilities are native to the claims system, there is much more opportunity for clarity, ease of use, and consolidation or dissection as needed. Rather than requiring users to rummage through mountains of "view of the past" reports or develop the technical skills to master traditional BI and reporting, adjusters can quickly identify when performance is outside expected parameters, and they can clearly and quickly see how their decisions impact both claim cost and service outcomes.
With a picture of the road ahead rather than a glance in the rear-view mirror, adjusters and managers can most effectively and positively impact open claim files to achieve reduced cycle times and expenses, while increasing customer satisfaction.
While all performance management tools offer some level of value and insight, the best results can be achieved when the capabilities are native to the claims administration platform and data is accessed in real-time. Eliminating the disconnects between users, benchmarks, metrics, performance and timely data gives the power to the people to effect change--not as a one-time event, but as a process and commitment to continuous improvement in the claims organization.
April 1, 2010
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