By GEORGE NEALE, executive vice president and general claims manager, oversees general liability, property, commercial auto and workers' compensation claims, for Liberty Mutual; and GREG VANDAM, senior vice president and general claims manager, oversees group disability and life claims and technology, for the Boston-based carrier.
By looking at four factors, insurance buyers, agents and brokers can make sure a carrier's technology has the greatest possible impact on total claims costs.
Not all claims technology is equally effective. The degree to which a carrier's technology can affect a policyholder's total claims cost is largely determined by its ability to:
-- Transform raw data into meaningful, actionable information;
-- Deliver the right information to the right individuals;
-- Look broadly across an organization and coverage types; and
-- Be easy to use.
Technology is so important in lowering the total cost of insurance programs because of its ability to significantly improve how well the carrier, agent or broker and policyholder manage claims.
By reviewing claims technology in light of those factors, insurance buyers and intermediaries can make sure they gain the greatest possible benefit from the current carrier, or select the prospective carrier best able to protect the bottom line.
Helping insurance professionals sort through mountains of raw data to find actionable information that improves a risk or disability program's performance is one of the ultimate goals of claims technology.
Focus on three questions when evaluating the savings of the current or potential carrier's technology. First, what raw data does the carrier capture? Second, how does the carrier analyze that data? Third, what actionable information do they produce to improve performance?
To answer these questions, understand the metrics used by the carrier to measure and track the performance of the risk or disability program. These metrics drive the raw data captured, how it is analyzed, and the actionable information generated.
Take a general liability program, for example. Since legal costs drive total general liability claim costs, it is essential to understand how the carrier's claims technology helps define and achieve general liability claims success, particularly with regard to legal spending.
Understand if the carrier sets meaningful targets for the number of general liability claims to settle and for the average level of each settlement. Learn if there are different targets based on different claim types and jurisdictions. Targets for a slip and fall in an icy parking lot in Buffalo should be different from a diving accident at a swimming pool in Boca Raton, Fla.
Once a claim happens, can the carrier's technology identify the specific legal provider most likely to produce the best outcome, given the specific claim type and jurisdiction? Bringing the right resources to each claim is critical to managing its total cost.
Be sure to look beyond program- or claim-specific technology, to also understand if and how the carrier spots trends that impact entire lines of coverage. For example, does the carrier monitor how medical providers respond to changes in state workers compensation systems?
Reforms can lead to unintended consequences that actually raise costs.
INFORMATION TO THE RESCUE
Now understand how a carrier uses technology to quickly deliver the right information to those who can improve program performance.
Make sure that the carrier's technology generates information that complies with all regulations and guidelines protecting personal and medical data.
Remember that not all of the fully compliant information will have the same value to everyone involved in the claims management process. Look at how the carrier segments information for specific audiences, which can include individuals throughout the carrier, policyholder and agents/brokers.
Technology should provide three levels of information sharing. The first provides access to a broad range of appropriate information. For example, does the carrier have a single, fully integrated claims management system that provides internal and external audiences instant access to comprehensive claims information? Imagine the value of a disability case manager reviewing notes from a vocational rehabilitation specialist's evaluation of a claimant, and then working with the employer to temporarily modify the claimant's position so that he can return to work.
The second level of information sharing involves the carrier allowing certain groups to select the types of information they want to receive. For example, individuals can fine-tune the standard reports and alerts provided by the carrier, such as a risk manager specifying the level of reserves that trigger the carrier notifying her or him--and other stakeholders--of a claim.
The third level is customization. Here, select individuals access data to find the specific information they need. For example, a policyholder may want to look at all property claims from a single location, or to compare similar claims across multiple locations. A carrier's technology must be able to deliver the "big picture" and dive into the claim detail.
Explore whether the carrier can gather and deliver information on a range of programs.
Such a broad perspective can help the carrier, policyholder and broker to better manage total claims costs. For example, jointly managing both disability and workers' compensation claims eliminates any potential duplicate payments to claimants.
Not every company is ready for this approach--integrated disability management. There is not even a single definition of integrated disability management, with each company deciding the programs they will jointly manage and how closely these will be coordinated. But the ability of a carrier's claims technology to capture, analyze and report on both disability and workers' compensation programs is a good predictor of its ability to effectively manage claims and lower total claims costs.
The same holds true for closely managing short-term and long-term disability programs. Understand how the disability provider's technology captures, analyzes and reports information, particularly to prevent short-term claims from becoming long-term ones.
Looking broadly also means tracking programs from multiple providers. When evaluating the financial impact of a carrier's claims technology, understand if the provider can analyze and report on programs from other carriers.
Also understand if a carrier's claims technology can feed information to other vendors used by the policyholder. For example, many large companies use disease management vendors to coordinate the medical care provided employees with certain conditions. A company's disability provider can be a great source for identifying employees who might benefit from disease management. Can the disability provider's technology spot such individuals and quickly notify the disease management vendor, without violating medical privacy regulations?
The ability to track programs from multiple providers and to feed other vendors signals a carrier that is likely better able to manage a policyholder's total cost of risk.
EASE OF USE
Finally, a carrier's technology must be intuitive if it is to control total claims costs. From a portal allowing a risk manager to access claims data, to a website allowing individual disability claimants to report and track the status of claims, the easier a technology is to use, the greater its impact on total claims costs.
Critically review the look and feel of each tool and system offered by the carrier. Will a user quickly understand what information the system provides? How much navigation does it take to find the needed information?
Since more than one audience can gain value from the information produced by a single technology, understand if and how the carrier tailors the system and information for each audience.
Take a company with an integrated disability management program as an example. The risk manager will need some level of information on disability claims, while the human resource manager will need some idea of developments in the risk program. But each is not an expert on the other discipline and so needs only the information that will help--rather than confuse--them. Can the carrier's technology deliver the right level of information to each audience?
Effectively managing an insurance program means lowering total program costs over time.
Technology, by improving claims management, plays a key role in this, helping risk and disability managers better protect employees and the bottom line.
To judge the ability of a carrier's claims technology to lower total program costs, look at that technology's ability to transform data into information, get information to those who can improve program performance, manage a full range of programs, and be easy to use.
June 1, 2011
Copyright 2011© LRP Publications