By CYRIL TUOHY, managing editor of Risk & Insurance®
Managing Editor Cyril Tuohy spoke with Kurt Schuhl, senior vice president and chief claims officer at PMA Cos., and Jim Walsh, vice president of claims at PMA Management Corp. The following is an abridged transcript of their conversation.
Q: What, in your opinion, is the No. 1 issue facing the insurance
claims industry today? Is it labor issues? Is it technology? Is it claims administration and/or processing?
Walsh: The No. 1 issue is the use of technology to drive superior service and optimal claims outcomes. Claims complexity is increasing, severity is escalating driven by increasing medical costs and regulation is mounting. These challenges will continue to intensify and make it more difficult to manage claims. Claims professionals need comprehensive, relevant and in-depth data to generate the best possible outcome of each claim. The challenge for many companies is that it's still laborious for them to gather and share the necessary data internally as well as with external partners (e.g., medical providers).
Among the keys to successful claims management is effective use of time and information. However, time without critical information is costly. One of the most important functions of technology is to capture information critical to claim-handling and exposure assessment.
In addition, timely access to relevant loss information can enable the claims service provider to promptly assign the adjuster who has the most appropriate--and effective--skill set. Claims of higher complexity can be automatically assigned to a more seasoned adjuster, nurse case manager or litigation specialist.
Technology can also be used to improve medical management of claims, help ensure alignment with claims best practices and special handling requirements, develop better financial controls and provide exceptional data-mining opportunities.
It's all about using technology to achieve better claims outcomes. It's an exciting time for the claims industry, with technology driving performance improvement to new levels.
Q: What are carriers/TPAs such as you doing in terms of technology to improve the claims process for clients?
PMA made a tremendous investment in a sophisticated end-to-end claims technology platform called PMA Claim Center, which was implemented in 2010.
An important focal point for all our claims actions, PMA Claim Center assists our claims professionals in coordinating activities and tracking and managing claims. The new platform contains powerful, dynamic data fields that capture data consistently. Our staff now has significantly easier access to data, allowing them to make more timely and better informed decisions. Our clients now also have access to enhanced loss information.
This new technology also automates tasks that were performed manually and prompts an action plan based on key claims data. In other words, it prompts claims professionals to execute the appropriate tasks at the right time. In addition, it helps us allocate our expertise more effectively, helping drive even better outcomes for our clients. For example, PMA Claim Center automatically alerts our claims professionals to assign a nurse case manager based on an injury-specific diagnosis or a subrogation specialist based on an accident description.
This new technology platform also benefits users of our online risk management information system, PMA CINCH. It offers clients enhanced real time views of loss data that are important to risk managers. By conveying information to clients on a real-time basis, they become more aware of developing patterns and can assess their results.
Q: Are carriers/TPAs like you still involved in training younger talent to process claims? If so, how are you doing that? Through training programs? Subsidizing work/study programs?
Most of the claims professional we hire are experienced and we train them on PMA claims best practices. However, we also have excellent sources for talent within our company and in other disciplines within the insurance industry. For example, professionals from our customer service center have a valuable, accumulated knowledge base and have skills that we rate highly --customer service excellence, strong communication capabilities and ability to solve problems. While these individuals have a level of experience, we bring them in at entry-level claims positions and offer them an opportunity to advance.
Employee referrals are another excellent source of talent. Our employees refer people to us, as do brokers, clients and other sources in the insurance industry.
The key to the success of these efforts is the level and quality of training that we provide. We conduct a significant amount of internal training, as we believe it not only helps us develop young talent, but also helps us retain experienced claims professionals. Our training programs focus on technical issues and fundamentals as well as advanced claims topics and leadership skills. Plus, we bring in outside professionals from our legal and managed care partners to supplement the training we provide.
Finally, we fully support continuing education, whether it's a single course, pursuit of an undergraduate/graduate degree or industry designations. We are flexible with schedules allowing our employees time to study for exams. This support not only improves the skills of our people, but also makes PMA a better place to work. That's one reason we have such a strong employee retention rate.
Q: What are carriers like PMA looking for from their third-party claims administrators? The best service? The best price?
Of course, you want price to be competitive, but more importantly, you are looking for quality claims management, execution of best practices on a consistent basis, excellent audit results and data analytics, and flexibility in program design. It's a value proposition. What are you getting for that price? Is there customer service excellence? Will the TPA be able to drive the best outcomes?
Service is also a critical component and is one of the qualities that distinguish PMA in the risk management industry. We put great emphasis on delivering service that generates tangible value and results for our clients, and we look for the same attributes in a TPA partner.
In fact, our own TPAs--PMA Management Corp., PMA Management Corp. of New England and Midlands Claims Administrators--do a lot of unbundled work for other carriers. They see every day how much clients value quality service and best-practices claims service, all driving down the cost of risk.
Q: Have you seen more clients asking for unbundled services? And what does the unbundling of services mean for a carrier like PMA?
Schuhl: We are seeing clients who want flexibility in the design of their insurance programs and extensive customization. As a result, they may view bundled services as a sign that an insurance program is prepackaged. However, we continue to be flexible, and we go out of our way to be mindful of our client's specific service needs. We have been very successful in implementing and adhering to special handling guidelines.
Our service franchise includes both carrier and TPA options. So clients have the option of selecting the program that fits their needs from the range of options PMA Cos. offers. As long as we maintain the flexibility clients are looking for, we believe the bundled services we offer can provide clients with the same strong value that our unbundled options do.
Unbundling can result in a fractured program. So it's important that employers who opt to unbundle their program work with quality service providers that provide strong management and coordination to drive the best possible outcomes.
Q: The recession has meant fewer claims. What do fewer claims mean for the industry from the perspective of the insurance carriers like PMA?
The recession has led to a smaller workforce and fewer claims industrywide. However, because each carrier is unique in the industries it serves, the impact is different. At PMA, some of the industries in which we specialize, such as healthcare and higher education, have been less affected by the economic downturn. So in our book of business, we've seen some drop off, but that has been balanced by increases elsewhere. We have not seen the overall drop off in business that many other carriers have experienced.
Within our specialty, workers' compensation, the claims dynamics change in a recession. For example, some people are reluctant to go out on workers' comp because they fear they will not have a job to return to. Others may try to prolong their workers' compensation benefits. And while the reduction in jobs has resulted in a decline in claims frequency, there is an increase in severity.
As a result, a carrier and its TPA partner need to be on top of their game and generate tangible value and results for clients--who may themselves be facing financial challenges. Moreover, recession-driven changes underscore the importance of technology in the claims industry. You need to have the right systems to capture data and apply the appropriate analytics to make appropriate decisions. You need to leverage technology to better manage outcomes. We believe that those carriers and TPAs that can most fully take advantage of technology to meet the challenges in our industry will be the most successful going forward.
July 1, 2010
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