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.

Claims Outsourcing Strategy – Managing a Smooth and Seamless Transition

Part 1

The focus of this three part series is for the reader to gain insight into and knowledge about managing a smooth and seamless transition for outsourcing claims business processes.  Part 1 concentrates on the upfront gathering of current and future requirements, the Request For Information (“RFI”) and Request For Proposal (“RFP”) process, the selection of the “right” vendor, and a brief on contract negotiation.  Part two will focus on  the development, testing, and conversion that takes place between both organizations, and some of the pitfalls to avoid.  Part three will focus on maintaining the long term partnership relationship with your vendor. 

Outsourcing  for many Insurance and Financial Services organizations is viewed as a strategic tool for bringing about a more productive, cost effective, and profitable business.  The key benefit to outsourcing a segment of a business or an entire business unit is to enable the organization to focus on their core competencies and deploy resources with regard to these core competencies. 

When the strategic decision to outsource has been made, there are plans and best practices organizations must follow in order to guarantee a successful, smooth and seamless transition.  Foregoing any of these steps could lead to a potential disaster and often times a long, drawn out process. 

Detailed Business, Functional, and Technical Requirement

All too often I’ve seen organizations fail at one of the most important steps in the process, creating a complete set of claims business and functional requirements, documenting well defined workflows, and detailing technical and infrastructure reviews and requirements.  Organizations need to allocate the right amount of time and resources upfront to gather and document these requirements and workflows.  Unwilling to do so or short-changing the process will lead to a long and expensive outsourcing transition.

You maybe asking yourself, “Why is this step so important?”

The answer — the detailed documentation sets a strong foundation for all activities and processes that follow, both within your organization and eventually with the outsourcing organization you select.   The goal here is to achieve a clear, detailed, and descriptive understanding of your claims business.  As daunting as this may be the benefits of having your claims processes and workflows clearly defined outweighs the many pitfalls you will encounter should you not execute this step.

Selection of the Outsourcing Organization That Fits Your Needs

Finding the right organization to administer your claims business is critical to the success of your outsourcing strategy.  But how does one find which organization is the “RIGHT” fit for their business?  By creating a high level Request For Information (“RFI”) followed by a detailed Request For Proposal (“RFP”).

If your organization takes  the time upfront to detail the business, functional and technical requirements, then your RFI and RFP are nearly complete. Generating the RFI and RFP is a matter of taking the information documented and formatting it apprpriately.  The RFI is then used to narrow your search from a long list of possible outsourcing organizations to a handful of potentially qualified options.  Once you have narrowed your search, the RFP becomes your driver.  It helps to further narrow the selection process to 2 or 3 organizations.  claims-outsourcing-image-11

Figure 1 — RFI / RFP Process

Contract Negotiations

Once the outsourcing organization is selected the contract negotiations begin.  The outcome of this step is to finalize a contract that both organizations can agree to.  The focus here is to define who is responsible for what, and when.  Items that are imperative to the contract are:

  • Service Level Agreements (“SLA”)
  • Vendor modifications and who pays for them
  • Escalation procedures for disputes and interpretation of the contract
  • Cost basis per transaction

Contract negotiations are difficult and time consuming.  If done right this will set the stage for a successful transition of business and for a long term arrangement between your company and the organization you selected to handle your business.

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Figure 2 – Phase 1 Tactical Roadmap