Claims as a customer touch point opportunity

We hear on a daily basis that an increasing focus for our insurance clients is to improve their customer relationships through impactful, value add touch points.  The need to increase customer satisfaction and retention has become top of mind and organizations are looking for visibility into how to reach their customers throughout the lifecycle from pre-sales to policy administration through to claims processing. 

As one would anticipate, successful achievement of this objective is dependent upon a combination of two things:  (1) customer focused value added processing, and (2) efficient, integrated systems to support customer visibility.  While striving to support these goals, legacy policy administration systems face obstacles in providing easy access to relevant customer information, and more importantly, prevent rich customer interactions due to functional inefficiencies.  Organizations continue to work towards streamlining operations across their enterprise to provide accuracy and efficiency through integration. 

We’ll focus today on the frequently under-emphasized claims processing function – a functional area that offers significant customer perception opportunities if the supporting platform can hold up its end of the bargain.  As customers’ expectations are increasingly influenced by sophisticated web experiences providing “all in one” touch points, carriers’ focus on customer relationships need to incorporate visibility into policy, billing, and claim information.  Even further, customers should be able to perform key transaction activities, though legacy systems inherently struggle to support these demands. 

The catch is in your systems’ ability to position you for success.  The good news is that a number of current or emerging Policy Administration Systems are available who readily support this customer focused perspective to allow for visibility through the full customer lifecycle, across all polices / products they’re related to.  Some of these systems offer workflow capabilities to complete the new business underwriting process, even allowing for integration into back processing for customer support. 

Claims processing on these systems can inherently follow a similar new business underwriting workflow process, to route and facilitate processing of claims medical reviews, receipt of supporting documentation, aging alerts, and overflow capacity support.  (A residual benefit includes visibility on these claims for subsequent new business to automatically search on client record for pending or processed claims to be considered during the underwriting decisioning process.)   The critical consideration is the increasing importance of efficient claims processing through the policy lifecycle, to achieve both a more streamlined and “standardized” method of claims processing.  The AMA National Health Insurer Report Card noted that a one percent reduction in error rates would drive substantial cost savings to the industry.  Flexible workflow automation for claims processing inherently reduces potential error rates, and allows for support of the “unique” instances that surface in claims processing on a regular basis. 

What does this mean to carriers?  The “bar” has been set higher around the need for efficiency, integration, flexibility, and visibility into their claims process.  Carriers should be working towards all of the following improvements in claims processing:

• Streamlining operations and gaining efficiencies by reducing manual operations
• Improving the customer experience
• Reducing errors
• Leveraging a flexible workflow to achieve process agility

According to the recent AMA 2010 “National Health Insurer Report Card,” one in five medical claims is processed inaccurately by health insurers.  This is clearly not caused by a lack of effort on the part of carriers, but is a significant outcome of inconsistencies in claims processing.  (The report reemphasizes the need for standardized administrative processes and requirements throughout the industry.) 

At the end of the day, this increasing streamlined and integrated claims processing will be one of the key touch points that carriers can leverage to provide value added services to their customers.  According to a recent Gartner survey, “Gartner estimates that by the end of 2010, 1.2 billion people will carry handsets capable of rich, mobile commerce providing an ideal environment for the convergence of mobility and the Web.”  While the ability to support mobile applications may still be a future consideration for many carriers, we can guarantee that claims information will be one of the key elements that customers will demand to see.

Bust For Big Three Auto Could Be Boom For Warranty Insurance Companies

With the big three US automakers impacted by the recent recession and becoming very unsteady – closing dealerships, factories, laying off workers, discontinuing lines, and possibly even filing chapter 11 – consumers are faced with a conundrum; To buy or not to buy, that is the question.  The only way for automakers and dealers to get out of this mess is to move cars.  However, will consumers want to purchase a car from a company that may not be around long enough to back their warranty, let alone provide service after the warranty has expired?

For those risk averse consumers that still want to take advantage of these “fire sales”, a great way to get that warranty back is to purchase an extended warranty agreement on their vehicle.  These warranty agreements are backed by warranty insurers like Mercury Insurance, a.k.a. Certified Car Care, Great American Insurance, or Federal Insurance, a Chubb company.  An extended warranty essentially replaces or broadens the manufacturers warranty coverage so that consumers do not have to bear the full burden of repair costs to their vehicles.  Just as with any other insurance, each company’s coverages and benefits are different.  Edmunds’ offers a great description of warranty coverage and how to shop for it.  Here’s an excerpt:

Do you have to pay the bill up front and get reimbursed?  Does the company whose plan it is offer any payment to the repair facility via a credit card over the phone so you don’t have to pay any out of pocket expenses?  How easy is the plan to use at the repair facility that will be dealing with it?  Being on the phone, on hold, waiting to get authorization could cause a major delay in getting your vehicle repaired in a timely manner.  Will a representative from the auto warranty company have to come out and inspect the vehicle?  That will also add delays to the repair process.

The automakers misfortune could become an opportunity for warranty insurers.  Assuming premiums remain reasonable, and there’s no reason not to, warranty insurers could see their business quadruple.  For those insurers that have automated their systems for application and claim processing, they will be in good shape to keep up with the large increases in demand and processing requirements.  The departments that cover these types of policies are no where near the size of the bread-and-butter departments like General Liability.  Those insurers that can keep up with the demand with automated functionality for application entry, quote, and issuance, as well as claim submission and adjudication, should become very profitable.  For those companies whose systems are not ready for the bubble, it could become a nightmare threatening the viability of the company due to reputation and service damage.  Once they cannot keep up with the demand, those requests will dramatically decrease and potentially go away completely.

This can also be another opening for frontline agents.  When consumers come in to request auto insurance, agents could seize the opportunity for the up sell and offer warranty insurance to cover that newly purchased US auto, or any auto for that matter.  Most consumers will expect to hold on to vehicles longer, making the warranty insurance coverage a very attractive option.  Agents are probably already representing carriers that offer this coverage and could easily add this arrow to their quiver.

The Benefits to Insurance Carriers of Automated Workflow Processing

Do you still distribute paper files and mail the old fashioned way?  I see this all the time.  Even Underwriting departments have people that distribute paper policy files to Underwriters for review of applications, renewals, MVR and CLUE reports.

Why do so many insurance organizations still use a manual distribution method for workflow - especially in the Claims arena which has transactions that are so heavily paper based? There are so many problems created by paper files and mail being stacked on adjusters’ desks for handling without regard to priority.  An insurance organization takes on too much risk:

• Increased Error Rates
• Increased Operation Costs
• Reduced Service Response Time
• Extending the Lifecycle
• Raising Adjuster “Burn Out” Rate and Increasing Employee Turnover and Training 

When I was a claims adjuster, every day was the same – about 10:30, after the morning mail was opened (which I had to go to the post office and retrieve because I was a “field adjuster”), a stack about 3 inches tall, wrapped in a rubber band, would be dropped on my desk like a ton of bricks.  At least the claim file numbers were written on them which the administrative staff would spend about 90 minutes researching.  Then I would have to take that stack of mail, and start retrieving all the paper files from cabinets associated with that mail – PIP applications, damage appraisals, attorney correspondence, medical bills, etc.  How was I supposed to go out in the field when I had all those paper files back in the office?  You couldn’t take them with you because they weren’t allowed to leave the office IN CASE THEY GOT LOST.

Granted, this was a long time ago, and I had to consider myself lucky that at least I had a mainframe system into which I could enter my reserves, payments, notes and confirm coverage.  But these days, not storing files electronically and making them accessible remotely is almost inexcusable.  All that wasted time and productivity.  I probably could’ve handled twice the case load and closed files twice as fast if I could have been out in the field all the time.

Like so many of their policy brethren, many modern claim systems include automated workflow and straight-through processing features that insurance organizations with legacy systems can not, or do not, utilize.  But these legacy systems don’t necessarily have to be replaced in order to implement these types of functions.  Many independent automated workflow systems can work right along side existing legacy systems and push work forward.  I know carriers that implement a simple document management system with high speed scanners that scan and distribute 10,000 – yes, ten thousand – pieces of mail every day.

There are those claim managers that are considering making a change to their claim administration system, and may want to increase the priority of the automated workflow function in their search criteria.  By introducing an automated workflow, many insurance organizations have improved productivity by as much as 100%, recognizing savings to the hundreds of thousands of dollars, and supported a 20% increase in business with existing staffing levels.  The additional benefits to an Insurance organization of a workflow utility are that it can:

• Implement continuity in processing,
• Decrease processing costs, and
• Increase efficiencies to improve Service-level Agreements (SLAs) with customers, agents, and company departments. 

Insurance organizations can also benefit by increasing the collaboration of resources using a document repository. A single repository would enable organizations to reduce resource costs associated with searching for non-existent data or recreating data that is unable to be found, such as loss control guidelines, rating specifications, or even just the office fire procedures.  Call center and other service-related expenses can also be reduced by providing customers with access to their documents via the Web for policy documentation and/or claims forms.  In addition, field workers would be more efficient by being able to review and transfer documents remotely, reducing claim processing times and expenses, and allowing for claim payments to be issued more promptly to customers; spending more face time with insureds, claimants, and agents.  Face time is always good for business.

One final note, Enterprise Content Management (ECM) and Workflow can also be utilized as a knowledge broker between the many systems and departments within an Insurance company, and can become an important source for Business Intelligence (BI). It can provide consistent searchable metadata for proper document retrieval that can be used to support Dashboards and other BI reporting tools for executive management, resulting in improved productivity even at those levels. 

But that’s all right.  You keep paying rent on that office space for file cabinets and maintaining resources to pass paper around.  I’m sure you’re not losing market share or unnecessarily increasing your expense ratios.